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PS4, Xbox One could help “revitalize” games market despite mobile’s “disruption” – analyst

Wednesday, 17th July 2013 14:44 GMT By Stephany Nunneley

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.

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8 Comments

  1. OlderGamer

    I know that is the hope. But I am not sold on that. The only revitalizing I have been seeing is in the indies. Everything thing is about finding innovative ways to monetize. And that doesn’t revitalize much at all. It should first and foremost be about the games. Not too much exciting, gamewise is on tap. Just more of the same ole same ole.

    #1 1 year ago
  2. SplatteredHouse

    Europe has its say about that: http://gamasutra.com/view/news/196302/European_devs_heavily_favoring_mobile_PC_over_consoles_GDC_survey_says.php

    #2 1 year ago
  3. Cobra951

    @2: Liars, damned liars and statistics. That link of yours is bundling all tablets and all smartphones into one category, while separating out home consoles and dedicated portable gaming devices into 8 categories. They should at least group together the home consoles into one bar on that graph, and portable gaming systems into another one. What we have now is way too stilted because of the inconsistent divisions. I could also argue that tablets and smartphones are more different from each than an Xbox 360 and a PS3, that they should be separated out as well.

    #3 1 year ago
  4. bradk825

    I am somewhat befuddled that tablet and mobile gaming is having any significant impact on sales for console and PC gaming, or as I like to call it, real gaming.

    The numbers don’t lie, I don’t dispute that it’s true, I am just puzzled by it. As a console gamer, I have played cell phone games only when I am stuck waiting for my wife somewhere to pass the time. When I want to sit down and do some gaming, I turn on the Xbox and text my friends to see how many want to play right now. I don’t consider them to be anywhere in the same realm, let alone significant competition for my time and money.

    It makes me wonder how many people were buying consoles who don’t really find a difference in the experience between playing Skyrim or Angry Birds.

    Does anyone else feel weird about this?

    #4 1 year ago
  5. bradk825

    @3 Studies show 130% of people don’t use statistics properly.

    #5 1 year ago
  6. Ireland Michael

    @4 There is nothing wrong with mobile gaming. It’s cheap, affordable, and fun.

    It seems core gamers are threatened by the idea that not everyone wants “real” (that’s a debate for another time) games, and that a bit of casual fun might be all people want… not million dollar movie wannabe games with stupidly high budgets that need to sell millions to just about eek out a slight profit.

    Mind you, gamers got themselves in this mess entirely of their own doing, but expect bigger, faster, better looking games again and again and again. The market simply cannot sustain the increasingly higher budgets required to keep up with consumer expectations of graphical fidelity.

    This is also why we’re getting so few original ideas at the moment, except in the indie space / mobile market.

    “It makes me wonder how many people were buying consoles who don’t really find a difference in the experience between playing Skyrim or Angry Birds.”

    There isn’t one.

    #6 1 year ago
  7. bradk825

    I never said there was anything wrong with mobile gaming, I just am puzzled that it would disrupt the AAA market at all. Core gamers do expect great graphics, storytelling and diverse gameplay that most mobile games don’t offer. They are fun and fill the time when your wife is STILL shopping, but to me they are not on the same level as XB and PS games.

    If you don’t see a difference in the experience between Skyrim and Angry Birds though, I can see why you would put them in the same basket. I’ve played both, and the idea someone saying there isn’t a difference makes me laugh, and I’m trying not to write you off as a troll for saying that, but common, that was a bit much.

    #7 1 year ago
  8. sebastien rivas

    Like many have said or mentioned. Revitalizing is a big word that does not encompass various new monetizing mechanics but which profit margin comes in longer terms, and perhaps more.
    I do not deny the fast pace evolution of gaming on mobil. Although the way this article is formatted and thoughts about “revitalizing” is like comparing Apple to Orange….
    I understand the intention but that comparison does not hold. Unless perhaps we should see why motocycles are disrupting the car business?

    I never bought a game for my phone but it does not mean I will never do so.

    An interresting analysis that is a kept out is “if” the mobil game platform is so disruptive then show averages of title shipping out per month, the average cost versus PC & Console game shipping per month & their cost average.
    Maybe there is something to be said in cost to create a game versus cost out of the door and duration of creating a title?

    Maybe the reader will know if gamers prefer one or the other and then the what can be assume or drawn from it.

    Then do gamers prefer same game genre for each, “Mobil vs PC/Consoles”.

    I forgot something… Btw, I will not support Microsoft revitalizing anything as long as NSA Prism stay in place. I am no thief but I don’t like being percieve as one and on top of it pay for the box.

    #8 1 year ago

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