In a series of tweets, Executive Director at the NPD Group, Mat Piscatella, shared some fascinating insight into US consumer spending on the video games industry throughout 2020, based on full-year data collected by the company.
The games market in Asia-Pacific is particularly active, and Research Dive predicts that the in-game advertising space in APAC will grow at a CAGR of 12.9%, generating a revenue of more than .6 billion. This will make APAC the most lucrative global region for in-game advertising, although not the largest – the report forecasts that the North American in-game advertising market will be larger, reaching more than .7 billion by 2028.
Video games & gaming behaviour
Worldwide gaming market to be valued at more than $314 billion by 2027
In 2020, the number of consumers that watched traditional TV on a weekly basis was lower than it had been in at least the last 4 years, at 79%, according to a December 2020 study conducted by AudienceProject.
Game On For Advertisers – an October 2021 report from in-play advertising platform Admix and Atomik Research – has found 81% of media buyers want to increase their in-game advertising spend over the next 12 months. This is, in part, thanks to a renewed interest from advertisers in the power of gaming as part of the marketing mix. Added to that is the huge uptake in the hobby from consumers throughout the pandemic. By the end of the year, three billon active gamers, globally, could spend up to 6 billion on games.
According to global market research firm Research Dive, the global in-game advertising market will generate just shy of billion between 2021 and 2028, up from a little over billion in 2020, at what Research Dive has called a “healthy” CAGR of 11.2%.
55% of US gamers said they played more games during the pandemic, with 90% expecting this to continue
Research Dive also predicts that the adoption of smartphones and the increasing popularity of mobile gaming will be a driving force in the growth of in-game advertising to 2028, although its projection indicates that PC and laptop gaming will still hold the dominant share of the in-game ad market even in 6 years’ time, surpassing .9 billion by 2028. However, the smartphone/tablet sub-segment will display the fastest growth, surpassing billion by 2028 with a CAGR of 12.2%.
While not wholly surprising during a time when the general public has been forced to spend long periods confined indoors, the statistic is still evidence of the increase in interaction with gaming brought about by the pandemic, an increase which many expect to last even as other entertainment options become available again.
As a result, nearly one in five (17%) UK consumers are now ‘pure streamers’ – that is, individuals who have ditched traditional TV altogether in favour of streaming services. The figure will no doubt increase over time, especially on account of new habits formed during the pandemic. Indeed, last year, 27% of UK respondents to the study said they had either watched less traditional TV or had begun using streaming services more than they did in 2019.
Additional data shows puzzle gaming continues to dominate as the top mobile gaming sub-vertical around the world, accumulating a 16% share of downloads. This trend is reflected in most regions with the exception of APAC, where role-playing games have the largest lead (at 23% of all downloads).
Gamers will make up more than half the population of Europe by 2023
In the 2021 edition of the ‘Essential Facts About the Video Game Industry‘ report, released by the Entertainment Software Association, the ESA found that 55% of video game players in the US played more games during the Covid-19 pandemic, with 90% expecting this to continue even once social distancing was no longer required.
When advertisers scaled back on media spend of all kinds during the onset of the Covid-19 pandemic and drastically recalculated their advertising strategies, one form of advertising benefited enormously – video game advertising. With video game engagement and consumption increasing exponentially during the lockdown, advertisers saw a golden opportunity and took it. Now, forecasts indicate that the growth of in-game advertising will continue to increase well into the 2020s.
Total spend on video game content across PC, console, mobile, portable, cloud and VR platforms in the United States reached .9 billion in 2020, growing by 27% year-on-year.
While console gaming may have initially benefited from the lockdown (as evidenced by the record profits and sales enjoyed by Nintendo in 2020, driven by a boom in popularity for the Switch), it and PC gaming have been less able to withstand the after-effects. According to the report, mobile gaming grew by 7.3% year on year, while PC gaming shrank by 0.8%, and console gaming by 6.6%. Altogether, gaming brought in a total of 0.3 billion in 2021, with a growth rate of 1.4% – clearly kept in the black by mobile gaming’s growth.
US consumer spend on video games increased 27% in 2020
The report also identified the top five global regions for mobile games spending: in descending order, the United States, Japan, China, South Korea and Taiwan. Prior to 2019, Japan topped the list, but was overtaken by the United States, which has since continued to grow its market share. In 2020, the US had a market share of 28% of mobile games spending, followed by Japan at 22%, China at 18%, South Korea at 7% and Taiwan at 3%. Sensor Tower also noted that countries outside of the top five have been slowly gaining market share, “suggesting that mobile game publishers have turned to less-tapped markets with higher growth potential.”
Over the Top (OTT) streaming platforms – platforms that serve their content directly to viewers over the internet, like Disney+ and Netflix – experienced an immense surge in popularity during the first year of the pandemic. According to Forrester, by June 2020, 48% of adults in the US alone had subscribed to at least one streaming service. This makes advertising on OTT platforms an increasingly key way to reach audiences.
While not known for being one of the major video gaming markets in the world (lagging behind regions like the United States and China, or Asia-Pacific, in size), Europe is still set to enjoy major growth in its gaming population in the coming years, according to data from Statista and betting website MejoresApuestas.com, published in July 2021.
When it comes to what consumers prefer about these services, more than half of them say that platforms like Netflix, YouTube and Prime Video had higher entertainment value than linear TV channels, often for a much lower price. Currently, one-third of TV viewers in the UK are spending over £50 on a cable or satellite subscription, while just 1 in 8 spend the same amount on the popular video streaming services they use, combined.
In a way, it is unsurprising that media buyers underestimate the number of gamers worldwide, given that gamers themselves often do. “Perceptions persist that only certain types of video games on certain types of platform “count” as video gaming,” notes the report author, citing a statistic from Savanta that only 11% of people who play exclusively on smartphones or tablets think of themselves as gamers, compared with nearly half of those who play on consoles or PCs.
Mobile gaming
In 2021, mobile gaming brought in more revenue than console and PC games combined
Looking to the future, almost one-third of consumer respondents stated they would like to be watching more SVOD content this time next year. This will mostly be driven by Gen Z and Millennial cohorts who, on average, are watching videos on both free and paid streaming platforms far more than the average individual (42% vs 29% and 40% vs 29%, respectively).
It is clear why user-acquisition in mobile gaming remains so high during 2021. Currently, gaming apps comprise one quarter of all downloads on iOS, and 21% of downloads on Android systems. While the number of sessions spent in-game so far in 2021 is unsurprisingly lower than the spike we saw at the peak of the first wave last year, engagement grows steadily – up 4% on Q4 2020. Total mobile gaming sessions in February 2021, for example, outperformed January 2021 by 47%.
An April 2021 YouGov survey found the pandemic-induced surge in mobile gaming is most likely here to stay. Thirty-six percent of British mobile gamers said they have played more often since the start of the pandemic, with female gamers most likely to contribute towards the rise (42% compared to 29% of male mobile gamers). This figure grows to 39% of mobile gamers in the US, but growth has been more evenly split between males and females (40% of females vs. 38% of males).
Digital Shift Q1 2022 Chapter 3 – Expanding Gaming Worlds
Mobile gaming revenue spiked at the beginning of the Covid-19 pandemic, followed by continued strong growth into 2021
By comparison, the second largest category on mobile – ecommerce – represented just a 16% share of user-acquisition spending worldwide. In EMEA, this divide between investments is less pronounced, with a below-average 39% of user-acquisition spending dedicated to mobile gaming, and 27% to mobile ecommerce.
Newzoo forecasts a compound annual growth rate (CAGR) of 11.2% for the mobile games market between 2019 and 2024, predicting that mobile games will generate 6.1 billion in 2024, driven by growth markets such as the Middle East and Africa, Latin America, Southeast Asia, and India.
TBRC highlights some of the key advantages that OTT ads hold over other forms of advertising: namely, that they are 100% viewable and non-skippable, and not susceptible to ad blocking. In addition, programmatic advertising on OTT platforms offers an increased level of flexibility and precision targeting, as well as making ad purchasing faster and cheaper.
36% of British mobile gamers have played more often since the start of the pandemic, and the habit is here to stay
In this article, we’ve collected together statistics, reports and figures that illustrate how the ongoing Covid-19 pandemic is affecting everything from gamer demographics to in-game advertising to streaming TV, and what that means for the marketing opportunity they present.
But as we have seen, the power of the mobile gaming market is very real – and yet 60% of advertisers surveyed felt that console games offered more “premium” video game inventory when compared with mobile. This may be an image issue that vendors of mobile gaming inventory need to tackle, but the perception gap will also detrimentally affect advertisers themselves if they are missing out on the opportunity to target mobile gamers as a result.
The report also yielded some interesting insights into the demographics of who is getting more involved in gaming: it found that 74% of parents in the US now play games at least weekly with their children, up from 55% in 2020’s edition of the report. Seventy-one percent of parents also agreed that video games provided a “much-needed break” for their child, with 70% allowing their children to do more when it came to gaming.
In H1 2021, gaming accounted for half of all global mobile user-acquisition spending
While Q3 and Q4 2020 saw proportionally slower growth, revenue again jumped significantly in Q1 of 2021 (a year-on-year increase of 24.7%, despite the elevated levels of Q1 2020), “easily outpacing” the growth of the prior two years, in the words of the report. Altogether, global gaming revenue exceeded billion in Q1 2021, up from just billion in Q1 2019.
The gaming population of Europe had been enjoying steady growth before the pandemic, but – unsurprisingly – leapt dramatically upwards with the onset of Covid-19, with more than 51 million Europeans taking up video gaming after the pandemic struck. Between 2019 and 2020, the number of European gamers swelled from 278.55 millon to 316.07 million, and continued to grow to 329.48 million in 2021. By 2025, it is predicted that European gamers will number more than 367 million.
According to an annual report by Sensor Tower, The State of Mobile Gaming 2021, global revenue from mobile gaming spiked at the beginning of the Covid-19 pandemic, with year-on-year growth in Q1 2020 jumping by 18.6% – more than the growth recorded during the entirety of 2019 (18%). Q2 2020 brought even higher growth, with revenue increasing by 32.9% year-on-year. For the first time that quarter, mobile gaming earned more than billion globally.
Mordor Intelligence identified mobile gaming as the fastest-growing segment of the games market, attributing this to its accessibility – “Nearly everyone has a smartphone with games”. Additionally, technological advances like VR, AR, cloud gaming and 5G have all contributed to a rise in popularity for mobile gaming. However, mobile games advertising has become more challenging thanks to the implementation of Apple’s IDFA, which presents a barrier to targeted advertising on iOS; Mordor Intelligence has predicted that marketing creative will “become more critical than ever before” in 2022 as a result.
In-game advertising
In-game advertising forecast to generate $14 billion by 2028, up from $6 billion in 2020
Increased time at home, versus pre-pandemic, was rated the top reason for subscribing to SVOD brands (56%), however, the ability to watch shows and films anytime, anywhere was also appealing (42%), as many people return to their busy daily lives.
The UK still has some way to go before it catches up with the viewing habits of consumers in the US, who lead the way globally, with one-third (32%) now classified as pure streamers.
As a result of all of this growth, revenues from gaming in Europe are also expected to surge over the next two years, growing by billion between 2021 and 2023, with an additional billion worth of growth in the two years after that. Altogether, they will rise by close to billion in the coming four years, from .5 billion in 2021 to .6 billion in 2025, illustrating the economic clout that gaming can wield even in “smaller” regional markets.
This consistent drop in traditional TV viewing is being replaced, unsurprisingly, by popular subscription streaming services like Netflix, Disney+ and Amazon Prime. In the UK alone, those that use streaming platforms at least one a week has risen from 49% in 2018 to a much larger 77% in 2020, with under 45s dominating the shift.
Advertisers underestimate the scale of gaming audiences – and overestimate the opportunity in console gaming
Gaming and home entertainment in all their forms have soared thanks to the pandemic, creating an unprecedented opportunity to marketers and advertisers, who are intent on reaching these newly captive audiences.
This wariness and confusion translates more strongly among US clients, 23% of whom have directly resisted spending on the ad format versus just 9% of those in the UK. Similarly, 52% of UK media buyers’ clients are requesting that money be spent on in-game marketing compared to 33% in the US.
As interest in video game advertising continues, it opens up even more possibilities for marketers looking to promote their brands within the vertical. The availability of programmatic options, third-party verification for in-game advertising performance and an increase in in-game inventory have all been cited as the biggest causes of growth in the category.
81% of US and UK-based media buyers want to increase in-game advertising spend into 2022
This means that mobile gaming revenue is more than that of PC gaming and console gaming combined: the former bringing in more than billion, and the latter more than billion, in 2021. Unlike mobile gaming, PC gaming and console gaming have not been as resilient to the supply chain disruption brought about by the Covid-19 pandemic, as well as the delays in game releases it has caused.
VentureBeat reports on H1 2021 data from Adjust that finds gaming accounted for half of all global mobile user-acquisition spending, following a huge boost in engagement across mobile games since the pandemic began. This figure is even higher in APAC, at 64%, and in North America (57%).
What marketers can learn from the evolving gaming industry and ‘Generation Next’
The Global Games Market Report 2021, released by Newzoo, has revealed that mobile gaming brought in more than US billion in 2021, accounting for more than half (52%) of the total gaming revenue for the year.
TV and OTT
Growth of TV advertising over coming 4 years will be driven by OTT platforms
Two thirds of US parents (66%) also believe that video games had helped smooth the transition to distance learning, with 63% finding educational games to be “very” or “extremely” effective. This points to gaming filling a role in households that doesn’t exclusively revolve around entertainment, as parents become more open to video games as a tool for learning and stimulation for their children. Other statistics in the report showed video games taking on a social role, with 77% of respondents playing games online or with others at least weekly, up from 65% in 2020’s report.
In December alone, .7 billion was spent on such games, up 25% compared to the same month in 2019, while spend on hardware grew to .35 billion (+38%), no doubt boosted by the release of the new Xbox and Playstation consoles in November.
With more than two-thirds of British consumers now regularly playing games on their mobile devices, game developers and (by extension) in-game advertisers can expect to maintain a large share of consumers’ designated entertainment time in the future.
62% of Britons watch more SVOD since the pandemic began, even after lockdown
Perhaps most importantly for advertisers, 40% of consumers claim that ads shown on SVOD platforms have had an impact on their purchasing behaviour over the past year.
Similar patterns can be seen in behaviour across regions like Germany, Denmark, Sweden and Norway. The trend is even more pronounced in the US, where just 59% watched traditional TV in 2020 compared to 83% in 2017.
It forecasts that the gamer population of Europe will jump to more than 351 million by 2023, with gamers making up more than half of the continent’s population.
Further data shows the majority of both GB and US gamers hope to sustain their heightened mobile gaming habits post-pandemic, despite returning to busier lifestyles. Sixty-eight percent of British respondents agreed that they were very or somewhat likely to continue spending more time on the activity once Covid-19 has subsided, rising to 77% of US respondents.
The survey of more than 400 media buyers from the US and UK also shows there are plenty who do not have the budget to advertise in the next year, but are including it in their long-term plans – 93% say they intend to run in-game ads by 2025. However, one-fifth of respondents stated the key reason they would be hesitant to purchase in-game advertising space is a lack of understanding around the process and execution.
Nearly 1 in 5 UK consumers are pure streamers
Advanced Television reports October 2021 data from Criteo that shows the popularity of SVOD (subscription video on demand) with British consumers has not waned since lockdown was lifted. Sixty-two percent of those surveyed said they were watching more content provided by paid streaming services now than they did before the onset of the coronavirus.
Despite the well-publicised explosion in gaming activity brought about by the Covid-19 pandemic, an October 2021 report from Admix shows that there is still a gap between perceptions and reality when it comes to how advertisers approach the games market. A survey of more than 400 UK and US media buyers, conducted by Atomik Research, found that a third of respondents believe there are between 100 and 500 million active daily gamers, while 27% believed there are between 500 million and one billion. In reality, there are three billion, of whom 2.8 billion game on a mobile device.
The Nintendo Switch was the best-selling console in 2020, as evidenced by the huge rise in demand seen throughout the spring and summer months when many looked to distract themselves from life in lockdown. According to analysis, the annual dollar sales of the Switch were only outstripped by the launch of the Nintendo Wii in 2008. The PlayStation 5 came in second place for dollar sales in 2020, but its predecessor beat it in unit sales.
According to figures from The Business Research Company (TBRC), the rising use of OTT platforms will drive the growth of the TV advertising market over the coming four years. TBRC predicts that the size of the global TV ad market will grow from .98 billion in 2022 to 5.96 billion in 2026, at a CAGR of 2.5%. OTT ad spending, meanwhile, totalled 0 million in 2020, and is predicted to grow to .373 billion by 2025, an increase of 139% – “suggesting that advertising on streaming services is expanding at rapid speed”, in the words of the TBRC report.
The report singled out Asia Pacific as the largest market for games, pointing to the rapid growth of mini-games in China that are played within apps like WeChat, as well as China’s growing technological adoption. However, Mordor Intelligence predicts only “mid” level growth for much of the Asia Pacific region between 2022 and 2027, with only Japan and South Korea expected to deliver high growth. Other high growth markets include North America and Europe, while the Middle East and Africa is expected to have the fastest growth of all regional markets going into 2027.
A forecast by Mordor Intelligence has predicted that the worldwide gaming market will be worth 4.4 billion by 2027, up from 173.7 billion in 2021, and registering a compound annual growth rate (CAGR) of 9.64% between 2022 and 2027.
