Revenue from the combined sales of games software and hardware is set to reach more than $150 billion in 2017, according to research by Digi-Capital. The firm estimates a growth rate of 7.9% over the next five years, resulting in an estimated $200 billion in revenue by 2021. Software represents about three-quarters of that sum, with hardware occupying the remainder. In addition, the firm asserts that games have turned into a two speed market: massive sectors where giants rule, and small high-growth sectors where nimble indies can still make their mark.
Among the giant sectors, Digi-Capital expects mobile games to top $50 billion in 2017, but also anticipates a slowdown in growth that will have it reach approximately $80 billion. By comparison, console games and MMO/MOBA games should each deliver less revenue individually than mobile this year, and with slowing growth the two verticals could bring in approximately $30 billion revenue in five years time. PC hardware and console hardware are expected to stagnate, with about $30 billion in combined revenue by 2021.
The firm predicts that VR hardware such as headsets, peripherals and PCs/GPUs could deliver in the low single digit billions range this year, and drive over $7 billion revenue by 2021. As VR hardware is dominated by giants like Facebook and Samsung already, Digi-Capital anticipates that solutions for specific technical problems are the best prospects for startups.
In the realm of augmented reality, if mobile AR goes mass market in the next twelve months, AR games software could drive almost $7 billion revenue by 2021. AR’s close sibling of virtual reality could top $6 billion in the same time span.
In addition, the last year has seen a resurgence in games investment, with over $2.8 billion invested globally in the last twelve months. The previous high water mark for games investment was $2.4 billion in 2014. Unsurprisingly, investment has been pouring into the highest growth sectors, with AR/VR and games tech/services each taking around one third, and mobile games around a quarter of all investment dollars.