Global revenue from video games is expected to climb by 6 per cent annually to reach $257 billion by 2028, stealing revenue share from other media types, according to new research by Bain & Company. The global video game market reached $196 billion in 2023, generating more revenue than streaming and box-office sales combined.
For its inaugural Gaming Report, Bain surveyed more than 5,000 consumers across six countries, including Brazil, Indonesia, Japan, the United Arab Emirates, the United Kingdom, and the United States, to learn more about the habits and expectations of gamers worldwide.
“We’re seeing a surge in global video game audiences, driven by young people who are spending more time on games and less time on video and other media,” said Daniel Hong, leader of Bain’s global Media & Entertainment practice. “Players say they want more immersive games and more interoperability across devices and platforms. They’re also spending more time in game environments, socialising, shopping, and consuming other media. Bain is watching five key trends that will dictate the future for game publishers and developers”.
Five trends to watch in gaming
Of the people Bain surveyed, more than half (52 per cent) said they play games on a regular basis. Younger consumers spend a greater share of their entertainment budget on video games when compared to older players. To understand these dynamics, Bain mapped out five key trends to watch.
Young gamers drive growth. The clearest source of future growth comes from the youngest players: those 2 to 18 years old. Nearly 80 per cent of 2- to 18-year-olds are gamers, spending 30 per cent of their entertainment time gaming. Older players (those ages 45 and older) are a smaller market, with 31 per cent identifying as gamers. Older players tend to spend less time on average (2.5 hours per week compared with 9.5 hours for 13- to 17-year-olds) playing games, and mostly do so on their mobile phones.
Gaming is about more than gameplay. A third of those surveyed listed a game that offers an immersive experience as being their top game. For gamers younger than 18, that percentage was closer to half. Immersive gamers are more engaged, spending about one and a half hours more per week in the game when compared with those playing games that are not immersive.
Gamers are cocreating the gaming experience. Video has been dramatically changed over the past two decades by the rise of user-generated content (UGC). Nearly 80 per cent of gamers say they have played a game with UGC, and one in seven have created content in a video game. Generative AI will accelerate this trend by empowering players with tools to fine-tune their gaming experience.
Gamers want to play across platforms and devices. Nearly 70 per cent of gamers play on at least two devices, and half of survey respondents say they would like to see more accessibility across devices in future games. Ninety-five per cent of game development studios with more than 50 people are working on cross-platform games.
Gaming IP is taking share in other media. Interoperability across devices is a factor in two of the top three features gamers say they want. Another top factor included the desire to have new content added regularly to games. Additionally, game-related shows and movies have a significant impact in terms of consumer engagement, with an average 28 per cent lift in average concurrent users (ACUs) six months after release.
Growing demand for consolidation and mobile games
Bain predicts that as technology in non-gaming devices (mobile phones, TVs, non-gaming PCs) advances quickly and cloud gaming becomes less expensive and more common, players will access games without a console, gaming PC, or other dedicated gaming device. One sign this shift is underway: Although console sales continue to grow in absolute dollars, their penetration level has been flat for about a decade while the global gaming population has steadily increased over the same period. Mobile gamers make up most of new growth, representing slightly more than half of the global gaming market. And while 70 per cent of gamers say they play on several devices, almost all (90 per cent) say they wish to consolidate—many say they are willing to pay for that consolidation.
“Game console and device providers have been hearing for years that their industry will become more device agnostic, and we’re seeing indications that this transition is beginning to take place,” said Anders Christofferson, leader of Bain’s gaming sector and partner within Bain’s Media & Entertainment practice. “As consolidation happens, a few industry leaders will capture customer relationships, using that engagement to ultimately gain market share. Gaming companies will need to redefine their relationships with customers, competitors, and the various other players that make up the video game industry landscape as this shift plays out.”
Boosting performance through effective marketing
The audience for video games is becoming increasingly saturated, and effective marketing is more important than ever. Bain found competition for players’ attention is fierce, with 67 per cent of game players saying that they often consume other media while gaming. This is likely to make it more difficult to maintain high advertising rates, as advertisers may require proof of attention, rather than just reach. Given these challenges, successful marketing will make or break many game developers.
When compared to other software companies, game companies tend to spend more on marketing. On average, gaming companies with revenue less than $1 billion spend about 25 per cent of their revenue on marketing. That’s higher than spending at other software companies which spend about 15 per cent. Yet much of that spending is being misdirected as companies fail to market their games effectively in a crowded field.
One strategy Bain suggests to overcome marketing challenges: using generative AI in early efforts to accelerate marketing campaigns with precision-targeted ads. This includes generating marketing copy and images, quality control, content tailoring and tagging, and measurement.
