Digi-Capital has just published the Q2 2013 update to its global Games Investment Review, and according to the firm’s findings, games investment is recovering from the 2012 decline; however, it is still well-below the $2 billion record logged in 2011 and mobile development is “fundamentally disrupting the games market” on a global scale.
According to notes made by Digi-Capital Founder Tim Merel, PS4 and Xbox One launches in Q4 2013 could help turn the tide in the console decline, but “uncertainty persists about the size of potential installed bases for next-generation consoles.”
The console market decline continued in 2012 despite the Wii U launch, falling 25% and software falling 44% into May 2013.
Sony PS4 and Microsoft Xbox One launches in Q4 2013 could “revitalize the market,” according to Merel , but the shift in digital distribution and impact of free-to-play business models could have an affect.
“Games investment to Q2 2013 is recovering from 2012’s decline,” said Merel. “Games investment value to Q2 2013 grew by 63% in proportion to 2012 to $706 million but is still well below the $2 billion record investment levels of 2011. Games investment volume to Q2 2013 grew by 7% in proportion to 2012 to 89 transactions, with average investment deal size up by 51.7% compared to 2012 to $7.9M.
“Mobile games (56% investment value, 37% investment volume) and tech/gamification (35% investment value, 35% investment volume) dominated games investment to Q2 2013.”
According to the firm, Mobile internet is “the most disruptive technology today,” as Mobile internet could create up to $11 trillion in value globally by 2025 across all industries, not just games.
All mobile tech along with apps are driving growth and causing disruption across all tech related markets.
“For games, the transition to free-to-play and communal gameplay is changing sector dynamics, delivering up to 10x-20x revenue uplifts for market leaders,” Merel continued. “Mobile games dominate mobile app usage, downloads and revenue.”
The report states that mobile games make up 43% of mobile app usage across iOS/Android tablets and smartphones, and account for 67% of all tablet usage. Revenues in the app sector account for 72% of total revenue compared to 40% in 2010.
Mobile games monetize around 4x more “effectively than all other mobile app categories combined.”
Merel’s firm expects the mobile/online games could grow the total video games market size to $83 billion and take over 55% of revenue share at $48 billion by 2016.
“We haven’t seen a market as large, growing as fast as mobile apps/games,” said Merel. “We think this could be the highest growth, large technology market today. Yet capital markets aren’t taking advantage of the opportunity.
“Particularly in mobile, we think the opportunity cost of not investing is potentially more significant than the investment itself. As well as being a major opportunity, mobile disruption could pose a significant risk for those who don’t learn how to play.”
You can look over the entire report through the link which includes lovely pie charts, graphs and other visual tools.