Documente Academic
Documente Profesional
Documente Cultură
Summary 348
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Asia Pacific 380
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Latin America 392
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Summary
Video games
The video game market consists of consumer spending on new console
games (including handheld games), personal computer games, online
games, and wireless games as well as video game advertising. The
category excludes spending on the hardware used for playing the games.
Retail purchases of games are included in either the PC games or console
games category. The online game category includes microtransactions,
which are players purchases of accessories and additional game content
that enhance the gaming experience. Oftentimes, online games are first
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purchased at retail and then played online. When these games are then
played online for a subscription fee, the subscription fee is counted in the
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online game category.
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Market size and Market size and Principal drivers
growth by region growth by component The shift to online and wireless games will
hurt the console game market in the near
The video game market in North America,
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Global console games, the largest category,
EMEA (Europe, Middle East, Africa), Asia at $27.5 billion in 2011, will expand at a term, although new games being marketed
Pacific, and Latin America will expand from 2.1 percent compound annual rate to for the current generation of consolesthe
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$58.7 billion in 2011 to $83.0 billion in $30.5 billion in 2016. PC games will con- Wii, the Xbox 360, and the PlayStation 3
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2016, growing at a 7.2 percent compound tinue to decline, decreasing at a 1.9 percent (PS3)with improved motion-sensory
annual rate. Asia Pacific, with three of rate compounded annually to $3.1 billion technology, which changes the game-play
the top four countries in the world, is the from $3.5 billion in 2011. Online games and experience and brings in a wider range of
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largest region, at $24.3 billion in 2011, wireless games will be the fastest-growing players, will limit declines. The Wii U is the
and is projected to be the fastest-growing end-user categories, with compound annual only next-generation console that has been
region during the next five years, increasing increases of 13.3 percent and 10.1 percent, officially announced, though next-generation
10.3 percent on a compound annual basis respectively. Online games will total consoles from the other manufacturers are
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to $39.7 billion in 2016. Online games and $31.4 billion in 2016, and wireless games, likely to be introduced over the forecast
wireless games, the fastest-growing end- $14.2 billion. As a result, online games will period, spurring sales of games that take
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user components of the video game market, replace console games as the largest gaming advantage of the new technologies, although
constitute a larger share of total spending category in 2016. Video game advertising a dip in sales is to be expected during the
in Asia Pacific than in other regions and will increase from $2.2 billion in 2011 to generational transition period for static
consequently have a greater influence on $3.7 billion in 2016, growing by 11.2 percent consoles. The latest handheld devicesthe
growth. EMEA, the second-largest region in on a compound annual rate. Nintendo 3DS and the PlayStation Vita,
2011, with $18.0 billion, is projected to grow which are primarily gaming consoleswill
by 4.8 percent compounded annually to also continue supporting the market for
$22.8 billion. North America is projected console/handheld games.
to increase from $15.1 billion in 2011 Deteriorating retail sales of games are
to $18.6 billion in 2016, growing by hurting retail stores. If this pattern causes
4.3 percent on a compound annual basis. some retailers to close, it would further
Latin America is projected to grow to exacerbate the decline in the market for
$1.9 billion in 2016 from $1.3 billion in console and PC games.
2011, a 7.2 percent compound annual gain.
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demographic base and stimulate spending. advanced wireless networks, with their
is driving an increase in video game
Some developers are shifting their attention faster speeds, will enable wireless games to
advertising.
from console games to concentrate more on approach the quality of console games.
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online games.
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Global video game market by region (US$ millions)
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201216
Region 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
North America
% Change
13,181
26.6
16,404
24.5
15,584
5.0
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15,382
1.3
15,057
2.1
15,349
1.9
15,754
2.6
16,576
5.2
17,551
5.9
18,569
5.8
4.3
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EMEA 15,087 17,796 17,445 17,736 18,008 18,586 19,261 20,275 21,460 22,760
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% Change 23.5 18.0 2.0 1.7 1.5 3.2 3.6 5.3 5.8 6.1 4.8
Asia Pacific 15,215 18,624 20,942 23,059 24,313 26,982 29,664 32,751 36,099 39,739
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% Change 28.1 22.4 12.4 10.1 5.4 11.0 9.9 10.4 10.2 10.1 10.3
Latin America 966 1,198 1,230 1,282 1,345 1,432 1,527 1,641 1,768 1,908
% Change 29.8 24.0 2.7 4.2 4.9 6.5 6.6 7.5 7.7 7.9 7.2
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Total 44,449 54,022 55,201 57,459 58,723 62,349 66,206 71,243 76,878 82,976
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% Change 26.1 21.5 2.2 4.1 2.2 6.2 6.2 7.6 7.9 7.9 7.2
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PC games 4,346 4,055 3,798 3,777 3,462 3,375 3,312 3,252 3,195 3,141
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% Change 3.1 6.7 6.3 0.6 8.3 2.5 1.9 1.8 1.8 1.7 1.9
Total end-user
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spending 43,383 52,619 53,573 55,557 56,540 59,857 63,406 68,140 73,464 79,261
% Change 25.5 21.3 1.8 3.7 1.8 5.9 5.9 7.5 7.8 7.9 7.0
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Advertising 1,066 1,403 1,628 1,902 2,183 2,492 2,800 3,103 3,414 3,715
% Change 55.2 31.6 16.0 16.8 14.8 14.2 12.4 10.8 10.0 8.8 11.2
Total 44,449 54,022 55,201 57,459
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58,723 62,349 66,206 71,243 76,878 82,976
26.1 21.5 2.2 4.1 2.2 6.2 6.2 7.6 7.9 7.9 7.2
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% Change
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Background on the The Microsoft Xbox 360 has sold over prominent positioning to encourage the
global console/handheld 66 million units worldwide as of the end perception that the 360 is an entertainment
of 2011 compared with about 50 million device that also plays games. In fact, games
hardware market
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by the end of 2010. In North America, the represent only 60 percent of activity on
Xbox 360 has a wide lead over the PS3, the Xbox 360. Use of the console to watch
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Consoles while in EMEA, the PS3 has a slight lead. videos has skyrocketed with the inclusion
By contrast, in Japan, the Xbox 360, which of Netflix.
The current generation of consoles appeals primarily to Western gamers, has
consisting of the Xbox 360 from Microsoft, In February 2012, Kinect for Windows
not performed well.
the Wii from Nintendo, and the PlayStation 3 was introduced worldwide, enabling the
from Sonybegan to be introduced in 2005. In November 2010, Microsoft introduced device to be used with PCs. The Windows
The consoles were available by 2007 in all Kinect, which eliminates the need for a version works with a variety of applications,
regions except Latin America and became controller by using a specially designed enabling other companies to integrate it into
available in Latin America in 2009. camera that enables games to detect a their programs. Microsoft is working with
players motions and replicate them on- many companies such as Toyota, American
screen. Eighteen million Kinects were Express, and Mattel on new applications
Microsoft Xbox 360 shipped worldwide through the end of 2011 that use the device.
compared with 8 million a year earlier.
The Xbox 360 was the first of the current One of Microsofts strengths is Xbox Live,
In December 2011, Xbox released voice-
generation of consoles to be introduced a multiplayer gaming network, social
activated search powered by Kinect and Bing.
when Microsoft launched the device prior network, and media suite. The Xbox Live
to the holiday season in November 2005 in In December 2011, the Xbox Live dashboard Free, which has limited capabilities, such as
North America, Europe, and Japan. was redesigned, giving offerings like Last. voice chat and some downloadable content,
fm and the Zune video rental service more is available at no cost. A paid subscription
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PlayStation 3s worldwide and should hit
and Blu-ray technology. The device is not Wii is not as technologically advanced as
15 million by the end of its 2011 fiscal year
likely to be released before the end of 2013. its competitors. As a result, Nintendo was
in March 2012.
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the first of the three major manufacturers
to introduce its next-generation console, The PS3 is being marketed as the most
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Nintendo Wii the Wii U, at the Electronic Entertainment advanced home entertainment center, with
The Wii, which was launched in November Expo in June 2011 in Los Angeles. The new a Blu-ray player and DVR capabilities as well
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2006, is marketed mainly as a game machine, console, which is expected to be launched as an outstanding gaming console. The PS3
as opposed to the Sony and Microsoft in major markets worldwide in time for online environment is free to users and lets
machines, which are being promoted as the holidays in 2012, will display 1080p game developers control their own environ-
media centers for home entertainment.
Nintendo has expanded the universe of game
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graphics and feature a 6.2-inch touch-screen
controller that interacts with the TV and
also functions as a monitor for continuous
ments. Additionally, other online content
such as movies can be downloaded. In 2010,
Sony introduced PlayStation Network Plus,
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players to include younger children, older
adults, and women. Wii is the most popular use when the TV is turned off. More details an optional paid upgrade that provides free
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console worldwide, having sold over of the device are expected to be introduced games, discounts, and other content. In
95 million units due to its wider appeal. at this years expo and are rumored to February 2012, Sony announced that the
include the ability to act as an e-reader PlayStation Network is being rebranded as
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The most popular titles for the Wii are capable of displaying books, magazines, and the Sony Entertainment Network.
published by Nintendo. Nintendo does not strategy guides for the companys games.
have as much support from third-party In October 2010, Sony introduced the Move,
There will be an app store designed for
publishers as do Microsoft and Sony, though its new motion controller that is similar to
the device that will include apps for the
the Wii controller in that it is waved and can
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a number of publishers, such as Electronic TV screen, with others designed for the
Arts, Ubisoft, and Capcom, continue to be used in lieu of a sword, a baseball bat, or
controller itself. The device is expected to
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release exclusive titles for the Wii. many other devices. Unlike the Wii Remote,
work with multiple sticklike Wii controllers
the Move also makes use of the PlayStation
to enable multiplayer gaming. The app store
The Wii, which originally sold for $250, Eye camera to track the wands position with
and the e-reader will provide new revenue
saw in 2009 its first price reduction when greater fidelity and enable added game-
streams for the company. The Wii U is
the price lowered to $200 in the US and play features such as augmented reality.
expected to be only slightly technologically
included a bundle containing a copy of In the US, the Move comes bundled with a
superior to its current competitors.
Wii Sports. In May 2011, the company copy of Sports Champions or EyePet and the
introduced its second price cut, lowering PlayStation Eye camera. Sony shipped more
the price to $150 and bundling it with Mario PlayStation 3 than 4 million units worldwide in the first
Kart Wii instead. The lower console price month. Sports Champions, which is similar
helped boost device sales. Sales of some of The PS3 was launched in November 2006 to Wii Sports, is a collection of sports that
the popular Wii games also spurred console in the United States, Japan, Hong Kong, show off the controllers capabilities.
sales. For example, more than a million Taiwan, Mexico, and Canada, and in March
copies of Legend of Zelda: Skyward Sword 2007 in EMEA, Australia, and Singapore, Sony has said there would be no
were sold between its November 2011 with subsequent launches, including announcement at the 2012 Electronic
debut and the end of the year, helping spur launches in the rest of Latin America in Entertainment Expo regarding a new
console sales. Similarly, despite launching 2009. Global sales total around 63 million PlayStation console. The company said its
in 2010, Just Dance 2 continues to sell well units worldwide. As with the Xbox 360, current console will have a life span of 10
years. That doesnt mean a new console
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Handheld devices Mario Kart 7 and Super Mario 3D Land was
Sony Ericsson introduced the Xperia PLAY
Combined with interest in the current quite successful, as they were the first two
in 2011. It is an Android-based smartphone
generation of consoles, the market for 3DS titles to reach a million units sold in the
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that is part of the PlayStation Certified pro-
portable game consoles continues to show US and they were the two top-selling titles in
gram, meaning that it can play PlayStation
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strength. The Nintendo DS (dual screen) is Japan in 2011. As a result, the 3DS became
suite games.
the leading portable device on a worldwide the top-selling device in the world in 2011.
basis because of its simplicity, which has The 3DS sold more than 4 million devices The market for dedicated handheld
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broadened its appeal beyond hard-core in the US and Japan in 2011, outpacing the devices is facing growing competition
gamers. The DS has two screens, providing Wii in its first nine months of sales. Sales are from the rapidly increasing capabilities
players with two views of the action, touch- expected to remain strong in 2012 with the of smartphones and tablets. Though in
screen capabilities, wireless connectivity, and
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release of several major titles, including Kid
Icarus: Uprising, Luigis Mansion 2, Professor
aggregate the dedicated devices have
advantages, such as the quality of the games
a built-in microphone, which are innovative
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features in handheld game consoles. Layton and the Mask of Miracle, and Metal being superior to those on a smartphone
Gear Solid: Snake Eater 3D. and having a controller-type feel to them, a
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The DS has broadened the market, attract- shrinking number of people are willing to
ing women and older players with its Touch! The other major game console in the
pay the relatively high prices for the games
Generations brand of games, which includes sophisticated portable market is the Sony
when they can purchase much cheaper
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market, including the DSi and the DSi Excel. media disc, which can hold 1.8 GB of data. gaming platforms. For example, Xbox Live
The PSP was originally launched in Japan in allows PC gamers to interact with Xbox
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Nintendo introduced 3DS, the most anti- December 2004 and in other major markets gamers. Additionally, technology advances
cipated new gaming device of the year, in 2005. Since then, a number of different are enabling smartphones to act as
in February 2011 in Japan, and in the models were introduced, including a budget controllers for some of the consoles.
American and European markets in March model called the PSP-E1000, which was
2011. The device enables users to play launched in 2011.
games in stereoscopic 3-D without the need Social gaming
for special glasses. Some of the games that Sony introduced the PSP Vita, the newest
in its line of handheld devices, in Japan in Social gaming on sites like Facebook,
were available at launch were Capcoms
December 2011 and launched it worldwide Myspace, and Google+ is growing expo-
Super Street Fighter IV: 3D Edition and
in February 2012. The Vita is a touch- nentially. Social games are free, widely
Nintendos Pilotwings Resort and Nintendogs
interface motion-sensitive handheld device available, load in a few seconds, and require
+ Cats. Additionally, since the new device
that is a successor to the PSP. The Vita has only a few minutes at a time to play. They
has backward compatibility, all games
high-definition capabilities and improved use a business model called freemium,
that played on prior DS models also work.
graphics, providing a gaming experience whereby the games are provided free, with
Studios are planning to bring 3-D movies to
approaching that of the PS3. It has a five- the developers gaining revenues through
the device.
inch OLED (organic-light-emitting-diode) microtransactions as well as advertising.
screen running four times the resolution of The games grow virally because users can
the PSP. It also has front and rear touch pads invite all of their contacts to join them in
and cameras. In the US, the Wi-Fi version playing the game.
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that Zynga launched a game worldwide significant hard disk drive capacity to save
LG TVs.
simultaneously that is localized for specific the games as well as the time to download
regions. In November 2010, Zynga acquired them. These two companies are the major In the near term, cloud-based services con-
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Newtoy Inc., developer of Words With digital distribution platforms, though Valves tinue to face competition from companies
Friends, a very popular game online as well Steam is still much more established. Cloud-
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that are already established in the digital
as on mobile devices. Since then, Zynga has computing models will contribute to overall distribution of games, such as Direct2Drive
developed other games in the With Friends growth in online games. OnLive introduced and Shockwave. They are trying to sell their
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series, including Hanging With Friends and an all-you-can-play flat-fee subscription products to a market whose consumers
Scramble With Friends. service called PlayPack plan, which allows are already equipped with the required
unlimited access to the majority of its older technology. Additionally, since the pricing
Cloud computing
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games. It is similar to the Netflix streaming
service for movies. OnLive was initially
is not that much different from the current
pricing of the download companies, theres
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In June 2010, OnLive introduced a available for PCs and Macs. little incentive to switch to cloud gaming.
gaming-on-demand service based on cloud Since multiplayer gaming is becoming a
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of the games on its servers and enables users expanded to the UK in September 2011.
to play the games via cloud computing. next generation of new consoles or playing
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This levels the playing field for all players In December 2011, OnLive introduced an games from the cloud. Cloud computing
regardless of the computer theyre playing on, app for Apple and Android phones, enabling will have an impact on many segments of
and as a result, gamers using computers with them to run full versions of games. The the market, including having a negative
low-end processing capabilities experience app works with Wi-Fi-enabled phones and effect on the retail sales of console games
the games in the same way as those using those that use fourth generation (4G). The and PC games while having a positive effect
high-end machines, because the actual game games cost more than mobile games but are on the subscription-based online game
processing is taking place on the OnLive more advanced than typical mobile games. segment. Since cloud users save game data
servers and not on the gamers hardware. Since the games are based in the cloud, and history in the cloud, this will make the
Games are treated as a service, with the gamers can begin playing on a PC, switch service stickier. Cloud services also will have
business model being either a subscription to a mobile device, and then switch back a positive impact on advertising because ads
or a rental that targets nontraditional to the PC. can be easily updated in the cloud.
demographics, a growing trend in the
market. The service will not replace a high-
end PC or console for core gamers, but it will
add more casual gamers to the market.
The outlook in brief Consumer spending on games will grow at a 3.6 percent
compound annual rate to $16.6 billion from $13.9 billion
Growth of the online market as well as the migration of in 2011, while advertising will increase from $1.2 billion
some players to cheaper games on mobile devices will cut in 2011 to $2.0 billion, an 11.2 percent increase com-
into the console/handheld game market. pounded annually.
The growing number of people playing games on social Console/handheld games will continue to be the domi-
networks and the increased number of microtransactions nant segment of the market, though growing at only a
are driving the online game market. 1.9 percent compound annual rate to $10.6 billion in 2016
Smartphones and tablets, which are becoming the from $9.7 billion in 2011.
preferred devices for casual gamers, are boosting the Online games are expected to increase from $2.6 billion in
wireless game market.
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2011 to $3.9 billion in 2016, growing by 9.0 percent on a
The physical PC game market will continue to deteriorate compound annual basis.
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as digital distribution of games increases and gamers seek Wireless games will increase by 7.1 percent on a
alternative platforms. compound annual basis from $1.1 billion in 2011 to
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Advertising will grow as more advertisers realize the $1.6 billion in 2016.
gaming industrys potential to reach specific audiences.
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The PC game market will decrease to $434 million in
2016 from $534 million in 2011, a 4.1 percent compound
Overview annual decline.
The overall video game market is projected to grow by
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4.3 percent compounded annually to $18.6 billion in 2016
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from $15.1 billion in 2011.
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North America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016
Console/handheld
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games 9,445 11,988 10,863 10,237 9,672 9,474 9,339 9,666 10,105 10,625
Online games 1,747 1,993 2,136 2,319 2,559 2,842 3,150 3,419 3,693 3,932
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Wireless games 462 861 937 1,024 1,115 1,203 1,287 1,370 1,474 1,574
PC games 935 788 751 767 534 502 485 468 451 434
Total end-user
spending 12,589 15,630 14,687 14,347 13,880 14,021 14,261 14,923 15,723 16,565
Advertising 592 774 897 1,035 1,177 1,328 1,493 1,653 1,828 2,004
Total 13,181 16,404 15,584 15,382 15,057 15,349 15,754 16,576 17,551 18,569
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spending 25.1 24.2 6.0 2.3 3.3 1.0 1.7 4.6 5.4 5.4 3.6
Advertising 67.2 30.7 15.9 15.4 13.7 12.8 12.4 10.7 10.6 9.6 11.2
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Total 26.6 24.5 5.0 1.3 2.1 1.9 2.6 5.2 5.9 5.8 4.3
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Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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The video game market in the United States is expected to The Canadian video game market will increase by
grow from $13.3 billion in 2011 to $16.4 billion in 2016, a 5.3 percent on a compound annual basis, reaching
4.1 percent compound annual increase. U $2.2 billion in 2016 from $1.7 billion in 2011.
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Video game market by country (US$ millions)
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201216
North America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
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United States 11,823 14,720 13,885 13,700 13,344 13,572 13,902 14,618 15,469 16,352 4.1
Canada 1,358 1,684 1,699 1,682 1,713 1,777 1,852 1,958 2,082 2,217 5.3
Total 13,181 16,404 15,584 15,382 15,057 15,349 15,754 16,576 17,551 18,569 4.3
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which traditionally supported television production, now
were using.
requires funded projects to have interactive components.
Super Mario 3D Land and Mario Kart 7 were the fastest- This is driving all content creators to develop video games
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selling portable games in 2011 and the first 3DS titles to or interactive Web sites.
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top 1 million in unit sales.
The console/handheld game market declined in 2011 by
A number of highly anticipated games are scheduled for 5.5 percent, reflecting the aging of the current generation
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launch in 2012, including BioShock Infinite, the follow-up of consoles. The launch of Mario Kart 7 and Super
to the outstanding 2007 first-person shooter BioShock; Mario 3D for the 3DS buoyed the market for handheld
Grand Theft Auto V, the latest in the hit series; and Mass U games. There is a migration to more-casual and mobile
Effect 3, the third of the sci-fi trilogy that started in 2007. gaming, which is hurting the console game market. We
All of these games will be available on the PS3 and the anticipate modest declines in 2012 and 2013 followed by
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Xbox 360. The Last Guardian will be one of the exclusive a turnaround in 2014, when it is expected that all three
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PS3 titles to debut in 2012, while Halo 4 will likely be a next-generation consoles will be on the market. Until
major exclusive title for the Xbox 360. then, new games developed to take advantage of the
motion controllers of the PS3 and Xbox 360 as well as
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Online games In June 2011, Electronic Arts launched Origin, formerly
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the EA Store, as a competitor to Steam. Origin is a digital
The PC platform was traditionally the only means to
distribution system that enables users to purchase games
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play games online and is still the dominant platform,
on the Internet and download them to their PCs or mobile
far surpassing the Xbox 360, which is in second place.
devices. Additionally, Origin has a number of other
Consoles are becoming more-important platforms because
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features, including (1) the saving of games in the cloud,
each of the consoles in the current generation of consoles
thereby enabling them to be played on different devices,
supports online gaming. Their online marketplaces
and (2) social features such as networking with friends.
Xbox Live, PlayStation Network (newly rebranded as Sony
Entertainment Network), and Nintendo Wii Shopenable
U Origin currently offers more than 100 titles in its portfolio
of games from a number of different publishers, far fewer
gamers to purchase games, and they allow competition
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than the Steam platform, which has around 1,500 titles.
against other players anywhere via the Internet.
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plan, users get free access to a selection of games that are That should help grow the market for Mac games, because
normally available for sale from the PlayStation Network. in the past, retail game stores rarely stocked themin favor
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to a lesser extent, on smartphones and tablets. Words With
with microtransactions generating the revenues for the
Friends, originally developed by Newtoy Inc., which is now
publisher. After the switch, the number of players for
part of Zynga, has proved very popular on mobile devices.
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these games increased dramatically, as did the number of
Zynga continues to develop new games in the series,
microtransactions. Not all MMOGs that switch from the
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including Scramble With Friends.
subscription model become successful as free games, as
evidenced by the demise of LEGO Universe in January 2012, The major game developers are beginning to realize the
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which failed to achieve enough revenues after switching. potential of social games. Electronic Arts, which acquired
Playfish in November 2009 and PopCap in July 2011,
Another major MMOG title is the free-to-play League of
U recently released a number of social games on Facebook,
Legends, published by Riot Games, which has 30 million
including Sims Social, which reached 30 million users
registered players worldwide.
in its first month. Similarly, Disney entered the social
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A number of new MMOGs are scheduled to launch in 2012, game market by acquiring second-leading social game
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games, including Battlefield Heroes and Need for Speed of online sitessuch as Yahoo! Games, MSNs Zone, and
World, that have reached 25 million players worldwide. Electronic Arts Pogo.comprovide some free games,
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Canada 348 388 414 440 480 526 576 622 673 728 8.7
Total 1,747 1,993 2,136 2,319 2,559 2,842 3,150 3,419 3,693 3,932 9.0
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At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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Wireless games Apples introduction of the iPhone and the App Store
revolutionized the wireless game market. The App Store
Wireless games are games played on mobile phones and
other wireless devices. Almost all new wireless phones
are now Internet enabled, facilitating the ability to
U improves the buying experience dramatically over
carriers decks, has better descriptions, and offers free
trials. The number of games on the App Store increased
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download games. The increasing sophistication of the from around 5,000 in October 2008 to over 75,000 by the
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new handsets will make for a more enjoyable gaming end of 2011. And a number of other online services such
experience. As people upgrade their existing handsets for as the Android Market have been established that compete
newer models, the number of game-capable handsets will with the carriers decks to provide content.
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increase dramatically.
The sophistication of games for the iPhone and iPod Touch
Historically, mobile games were simplistic due to the has caused many gamers to substitute these devices for
graphic limitation of the handsets. As a result, the most their DS and PSP handheld devices.
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as AAA titles are being released for these devices. These that runs all of the iPhone applications, including the
casual games help widen the demographics of wireless games. With its enhanced graphic capabilities and its
game players. In fact, more than half of wireless gamers large touch screen, the iPad is becoming the platform of
are women who enjoy playing casual games such as choice for many gamers. The introduction of the iPad 2,
Tetris and Bejeweled, two of the most-often-downloaded with the advanced A5 processor chip, which renders
wireless games. graphics much faster than the previous model did,
further establishes the iPad 2 as a device on which to play
Originally, many handsets were embedded with games games like Infinity Blade 2 and Real Racing 2, which have
as a differentiator to drive sales of individual phones. graphics that rival those of console games. The newest
Those games provided enjoyment for the users but did not version, the iPad 3, with a higher-resolution screen, was
provide any additional revenue for the operators. With introduced in 2012.
the expansion of Internet-connected phones, operators
saw the potential for additional revenues by users down- The Android mobile device market has skyrocketed
loading of games at a modest fee. However, the carriers because of lower prices relative to the iPhones. These
download platforms were often not consumer friendly. phones provide another platform for gamers.
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of time, as when waiting for a bus or train. on Facebook such as CityVille, is developing a series
of games for mobile devices to expand its user base. It
The business model for mobile games is moving from the
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recently introduced its Scramble With Friends word game
pay to download to the freemium model whereby the
to join Words With Friends and Hanging With Friends in the
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games are downloaded for free, with microtransactions
wireless segment.
and advertising providing the necessary revenues. In
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fact, its estimated that in-game purchases will outpace The wireless game market is expected to continue growing
download fees in the near future. Angry Birds was a as the penetration by smartphones and tablets expands.
hugely successful game as a paid download but has now More people will be playing games, including casual
garnered more fans as a free download. U games, social games, and more-advanced multiplayer
games. The market will also grow as more gamers get
Social network games are finding their way to mobile
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accustomed to making microtransactions in order to
phones, with microtransactions and advertising providing
enhance their gaming experience.
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games on their devices. to grow by a 7.1 percent compound annual rate, reaching
$1.4 billion in 2016, up from $990 million in 2011, while
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distribution of PC games, subscriptions to online games, Star Wars: The Old Republic, a major new MMOG, launched
or microtransactions that take place in online games. in late December 2011, quickly rose up the sales charts
n
Those revenue streams are growing in importance and are to become one of the most popular PC games of the year.
included in the online game category. Another new major MMOG was League of Legends.
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Retail sales of PC games have been deteriorating for a Steam is the major player in the PC game download market,
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number of reasons: Developers are producing fewer PC with around 70 percent of the market. Direct2Drive,
games because of the fear of piracy. Consumers have been EA.com, Blizzard.com, and Big Fish Games are among
migrating from PC games to those played on the current the other download services. PC game downloads are not
generation of consoles. Retailers do not make the same
effort to market PC games, often relegating them to the
U included in PC gaming spending and effectively compete
with PC games.
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backs of their stores. And the move to digital distribution In addition to World of Warcraft, the other major franchise
of games makes downloading them directly to the PC an
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base. PCs give gamers a superior method to play certain Sims 3 Showtime expansion pack was released in 2012.
game genres such as strategy games and MMOGs, because The new PC games expected in 2012 include Guild Wars 2
a keyboard and mouse provide better means of interacting and StarCraft II: Heart of the Swarm.
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are often PC based because the open platform, with no decreases throughout the forecast period but not be offset
certification necessary, as is required with console games, by modest price increases. North American spending on
facilitates more-efficient development of games. PC games will decline from $534 million in 2011 to
$434 million in 2016, decreasing at a compound annual
PCs are offering better graphics than the aging consoles rate of 4.1 percent.
are. The high-end graphics processing unit (GPU) from
NVIDIA is selling well as hard-core gamers upgrade their The US PC game market will decline by 4.2 percent
computers to play games like Battlefield 3 and Elder Scrolls compounded annually from $470 million in 2011 to
V: Skyrim. $380 million in 2016, while the Canadian market will
decline from $64 million to $54 million, a 3.3 percent
The growth of MMOGs is aiding the retail PC game market compound annual rate.
because most MMOGs require retail purchase of the game,
after which the gamer can play the game online.
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Advertising Advergaming is the practice of using a video game to
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promote a product or a service. Such video games are
Advertisers are turning to video games to reach specific
often played for free on corporate Web sites. Many broad-
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demographic groups that are becoming more elusive. The
cast and cable networks promote their programs through
prime example is males 18 to 34 years of age, who are
the use of advergames. Some of the popular advergames
spending relatively less time watching television and more
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are Ace Assault II and LEGO Harry Potter, both of them
time with interactive games. The video game platform
sponsored by LEGO; Mobile 1 Track Challenge, sponsored
provides a unique level of engagement that is missing
U by ExxonMobil; and Kart Fighter, sponsored by Red Bull.
in other advertising media. People are less likely to be
The US Army designed a game called Americas Army to
multitasking when they play games as compared with
promote recruitment.
when they are watching television.
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Advertisers can reward gamers for looking at ads by
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measure of authenticity to the games. games on social networks. For example, Facebook often
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has not grown as quickly as expected, as evidenced by or fantasy worlds, and Blizzard has said ads would never
the closings of Microsofts Massive subsidiary and the appear in World of Warcraft games. Similarly, studies
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downsizing of employees at IGA Worldwide, a leader in found that ads are less effective in violent games because
this market segment. Instead of in-game advertising in such games require a higher level of concentration,
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major gaming titles, advertisers are focusing more on drawing players attention, and players are averse to ads
casual and mobile games. that draw their attention away from the actual game
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playing. Ads in violent games must therefore be less
Double Fusion, a leading independent in-game advertising
obtrusive so gamers can absorb them without distraction;
network, acquired the assets of rival NeoEdge Networks
otherwise, the ads could have a negative impact.
and mobile games. These ads are often placed when a
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in December 2011, which focused on in-game ads in social
Product placement is an effective means of advertising
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round of play ends rather than within the game itself. in video games. Having a character interact with a
Double Fusionwhose clients include McDonalds, product, such as drinking Red Bull to stay alert, drives
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Dr. Pepper, State Farm Insurance, and Toyota and which the message home.
has placed ads in games developed by Ubisoft and THQ,
Microsoft introduced a new suite of advertising tools in
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advertising network, is bringing ad-funded games to product information and maps of local establishments
the iOS and Android platforms. Previously, Greystripe selling the products. By simply saying Xbox more, a
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concentrated its efforts on making games available to gamer can get an e-mail with more information about the
consumers directly on its own Web site Gamejump.com. advertised product.
Angry Birds, which was a huge hit as a paid download
on the App Store, has gained even more fans as an ad-
supported game on the Android platform.
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Video game advertising market (US$ millions)
201216
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North America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
United States 500 650 750 860 975 1,100 1,240 1,375 1,525 1,675 11.4
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Canada 92 124 147 175 202 228 253 278 303 329 10.2
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Total 592 774 897 1,035 1,177 1,328 1,493 1,653 1,828 2,004 11.2
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Retail PC game sales will continue to deteriorate as digital Online games, driven by both casual games and MMOGs,
distribution expands, which is also hurting retail stores. will increase by 11.3 percent compounded annually to
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Video game advertising is being driven by the increase in $6.8 billion in 2016 from $4.0 billion in 2011.
free social network games.
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Wireless games will increase to $2.4 billion by 2016,
up from $1.6 billion in 2011, an 8.4 percent compound
Overview
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annual increase.
The overall video game market is anticipated to increase PC game sales will dip from $2.2 billion to $2.1 billion, a
from $18.0 billion in 2011 to $22.8 billion in 2016, 1.7 percent compound annual decrease.
growing at a compound annual rate of 4.8 percent. U
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EMEA 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016
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Console/handheld
games 9,212 11,180 10,328 9,883 9,534 9,374 9,252 9,520 9,914 10,453
Online games 1,976 2,510 3,021 3,569 4,002 4,550 5,140 5,689 6,274 6,832
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Wireless games 948 1,197 1,342 1,467 1,614 1,764 1,927 2,084 2,252 2,421
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PC games 2,653 2,520 2,312 2,298 2,245 2,197 2,162 2,127 2,090 2,060
Total end-user
spending 14,789 17,407 17,003 17,217 17,395 17,885 18,481 19,420 20,530 21,766
Advertising 298 389 442 519 613 701 780 855 930 994
Total 15,087 17,796 17,445 17,736 18,008 18,586 19,261 20,275 21,460 22,760
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spending 23.1 17.7 2.3 1.3 1.0 2.8 3.3 5.1 5.7 6.0 4.6
Advertising 46.1 30.5 13.6 17.4 18.1 14.4 11.3 9.6 8.8 6.9 10.2
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Total 23.5 18.0 2.0 1.7 1.5 3.2 3.6 5.3 5.8 6.1 4.8
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Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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At $3.8 billion in 2011, the United Kingdom is the largest France, the second-largest video game market in EMEA,
video game market in EMEA. The United Kingdom is at $3.4 billion in 2011, is the home of Vivendi (majority
an important game-developing center that includes
development of such major games as Batman: Arkham
U owner of Activision Blizzard) and Ubisoft Entertainment,
two of the top five video game publishers in the world.
City, Little Big Planet, and the Grand Theft Auto series. Additionally, France has two of the primary producers of
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The UK also has specialist expertise, such as a strong mobile games: Gameloft and Zenops. The French govern-
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visual effects industry, which is important in the final ment provides significant tax benefits for the development
production of games. In the United Kingdom, the industry of gamessame as it does for the film industryand
is concerned that other countriesespecially France, many international game developers have established
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Canada, and Singaporeare luring game developers studios in France. The video game market in France is
away by providing tax incentives, and therefore the expected to grow 3.6 percent on a compound annual basis
UKs video game industry has asked the government for to $4.0 billion in 2016.
r
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Spain has the fifth-largest video game market in EMEA, was the third year in a row that a Call of Duty title was the
at $1.2 billion in 2011. By 2016, the Spanish video game top-selling game in the UK. Some of the other best-selling
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market will total $1.5 billion, a 4.6 percent compound titles across all platforms in the UK in 2011 were FIFA 12
annual increase. and Battlefield 3. Those three titles were among the top
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sellers on both the PS3 and the Xbox 360. By contrast,
Russia is by far the largest market in Central and
the top sellers on the Wii were Zumba Fitness, Just Dance
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Eastern Europe, with revenues of $1.4 billion in 2011.
3, and Just Dance 2. Revenues in the UK are expected to
Additionally, Russia is projected to exhibit the highest
reach $2.3 billion in 2016, a 1.4 percent compound annual
growth rate of any country in EMEA, increasing at
growth rate from 2011.
an annual rate of 11.0 percent compounded annually
through 2016 to reach $2.3 billion. Similar to Germany,
U France is the second major market in the region, with
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the PC game is relatively strong in Russia. In fact, outside revenues of $2.0 billion in 2011 that are expected to
Germany, Russia is Steams largest-growing territory in increase to $2.1 billion in 2016, a 1.3 percent increase
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aging of the current generation of consoles. small compared with the countrys PC market, owing to a
lower penetration by consoles. Germany is the only major
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The market is expected to exhibit modest declines in market where more people play games on PCs rather than
2012 and 2013 before returning to positive growth in on stationary consoles. The market is expected to grow
2014, as many new games will be developed for the next to $1.8 billion in 2016, a 2.3 percent compound annual
generation of consoles, which are expected to hit the increase from 2011.
market in the latter part of the forecast period. We do
not expect the high growth rates that occurred when the
current generation of consoles debuted, because there is
increased competition from other gaming platforms.
Call of Duty: Modern Warfare 3 was the most popular title
in Europe in 2011, as it was in the US and worldwide.
The game broke several worldwide records, including
reaching the billion-dollar level in 16 days, one day faster
than Avatar, the James Cameron movie that became the
biggest-grossing film of all time.
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Germany 2,280 2,631 2,592 2,659 2,757 2,803 2,847 2,959 3,110 3,281 3.5
n
Greece 45 54 55 60 60 65 65 67 73 75 4.6
Ireland 387 470 462 482 488 503 522 549 580 612 4.6
o
Italy 1,112 1,326 1,291 1,371 1,428 1,497 1,580 1,686 1,801 1,926 6.2
se
Netherlands 658 789 801 801 809 831 850 888 929 982 4.0
Norway 184 217 193 190 190 195 201 211 220 233 4.2
Portugal
Spain
39
1,304
49
1,445
47
1,304
51
1,212
U
56
1,223
58
1,247
62
1,288
64
1,363
67
1,442
67
1,529
3.7
4.6
s
Sweden 325 384 353 367 377 389 403 421 446 476 4.8
es
Switzerland 363 441 451 482 500 521 543 571 607 643 5.2
United Kingdom 3,580 4,304 3,974 3,812 3,755 3,844 3,973 4,171 4,399 4,659 4.4
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Western Europe total 13,814 16,324 15,709 15,720 15,805 16,157 16,605 17,399 18,351 19,408 4.2
Central and Eastern Europe
Czech Republic 82 84 98 112 122 131 141 151 162 174 7.4
r
Hungary 20 22 23 25 25 27 29 30 32 33 5.7
Fo
Poland 255 323 334 350 363 375 389 403 419 437 3.8
Romania 11 16 22 23 25 26 28 29 28 29 3.0
Russia 685 759 967 1,207 1,357 1,544 1,728 1,905 2,092 2,285 11.0
Turkey 39 47 49 50 55 58 63 65 68 71 5.2
Central and Eastern
Europe total 1,092 1,251 1,493 1,767 1,947 2,161 2,378 2,583 2,801 3,029 9.2
Middle East/Africa
Israel 59 72 73 76 80 85 89 94 99 103 5.2
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA
South Africa 122 149 170 173 176 183 189 199 209 220 4.6
Middle East/
Africa total 181 221 243 249 256 268 278 293 308 323 4.8
EMEA total 15,087 17,796 17,445 17,736 18,008 18,586 19,261 20,275 21,460 22,760 4.8
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Germany 1,258 1,572 1,600 1,550 1,590 1,579 1,565 1,614 1,683 1,781 2.3
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Greece 22 28 26 26 24 24 22 22 24 25 0.8
Ireland 227 278 250 250 237 228 223 230 239 252 1.2
o
Italy 687 857 807 843 842 835 828 856 897 953 2.5
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Netherlands 316 409 381 344 316 306 298 306 320 337 1.3
Norway 120 143 119 110 104 102 101 103 106 111 1.3
Portugal
Spain
21
885
25
957
22
783
22
680
U 21
647
21
627
21
612
22
626
22
643
22
675
0.9
0.9
s
Sweden 217 252 241 242 240 237 235 240 251 264 1.9
es
Switzerland 194 236 230 232 228 223 219 223 230 241 1.1
United Kingdom 2,524 3,055 2,600 2,326 2,165 2,109 2,077 2,133 2,213 2,326 1.4
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Western Europe total 8,807 10,676 9,808 9,335 8,963 8,768 8,616 8,854 9,209 9,698 1.6
Central and Eastern Europe
Czech Republic 37 40 46 54 58 61 64 67 71 75 5.3
r
Hungary 10 12 11 12 12 13 13 13 14 14 3.1
Fo
Poland 118 149 163 177 188 198 209 220 233 248 5.7
Romania 4 7 8 9 10 10 11 12 12 13 5.4
Russia 109 136 123 129 138 159 175 186 201 222 10.0
Turkey 22 26 24 25 26 27 29 30 31 33 4.9
Central and Eastern
Europe total 300 370 375 406 432 468 501 528 562 605 7.0
Middle East/Africa
Israel 33 39 36 35 34 34 33 34 35 37 1.7
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA
South Africa 72 95 109 107 105 104 102 104 108 113 1.5
Middle East/
Africa total 105 134 145 142 139 138 135 138 143 150 1.5
EMEA total 9,212 11,180 10,328 9,883 9,534 9,374 9,252 9,520 9,914 10,453 1.9
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Digital distribution of content is emerging as an important OnLive and Gaikai are two cloud-based gaming services
segment of the market. In addition to full games, players that let players play traditional disk-based PC games on
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can also download additional game content to enhance entry-level computers, because the processing takes place
their playing experience. on the companies servers. With cloud gaming, theres no
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The online game market is composed of several segments. need to download the games or own the physical media.
Massively multiplayer online games are usually role-playing OnLive has also developed a low-cost console, enabling
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games that take place in fantasy or medieval worlds and games to be played on a television. In September 2011,
can be played over long periods of time. After purchasing OnLive expanded to the UK, making it the first overseas
copies of the game at retail stores, players often pay U expansion since launching the service in the US in June
monthly fees to participate, sometimes making additional 2010. Gaikai has partnered with Eurogamer, a leading
purchases to buy online equipment and accessories. The consumer game site, to become its first media affiliate in
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microtransactions associated with MMOGs are major Europe, enabling gamers to stream Gaikai-powered games
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drivers of online gaming revenue growth. Currently, these across Europe in local languages.
games are played primarily on PCs. World of Warcraft is the The increased penetration of broadband households is a
leading MMOG in EMEA and is expected to maintain its
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is taking hold in EMEA, with microtransactions supplying expected to exceed 240 million by 2016, providing a
strong impetus for the online market.
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gaming service called Bbox games. Bouygues is the first Both MMOGs and casual games are very popular in the
French telecom company to bring high-profile game Netherlands and are driving overall spending. Netherlands-
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franchises directly to gamers TVs with an easy-to-use based Spil Games is a global leader in online casual games,
interface. Playcast is currently providing a similar service with numerous game sites in 19 languages around the
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in Portugal and Spain. world and over 4,000 games in its portfolio. A number
of other Dutch companies are developing online game
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Germany is the home of Bigpoint and Gameforge, two
portals, including Zylom, which delivers casual games to
rising players in the hybrid free-to-play/pay online market,
12 European countries and YoudaGames, which has over
a segment led on a worldwide basis by Zynga. Online
2,000 games on its portal. Online revenues are projected to
revenues are projected to grow to $675 million in 2016,
increasing by 10.1 percent on a compound annual basis
U reach $452 million in 2016, a 6.2 percent compound annual
increase from their 2011 level.
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from $417 million in 2011.
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Germany 257 309 291 371 417 465 511 559 620 675 10.1
n
Greece 7 8 10 11 11 13 14 15 17 18 10.4
Ireland 54 71 81 89 97 109 121 129 138 146 8.5
o
Italy 220 259 282 317 364 423 498 563 626 682 13.4
se
Netherlands 209 243 282 309 334 358 378 401 422 452 6.2
Norway 19 26 30 33 36 40 45 49 52 56 9.2
Portugal
Spain 146
4
186
7
214
7
227
8 U
10
246
11
267
11
295
11
327
13
362
13
390
5.4
9.7
s
Sweden 32 46 53 57 64 71 78 85 92 100 9.3
es
Switzerland 87 113 129 145 162 183 206 224 246 265 10.3
United Kingdom 446 581 674 741 802 898 1,007 1,103 1,203 1,299 10.1
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Western Europe total 1,829 2,308 2,587 2,896 3,184 3,554 3,967 4,339 4,746 5,126 10.0
Central and Eastern Europe
Czech Republic 18 14 17 20 23 26 29 32 35 39 11.1
r
Hungary 3 3 4 5 5 6 7 8 9 10 14.9
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Poland 7 10 11 12 13 15 16 18 20 23 12.1
Romania NA NA NA NA NA NA NA NA NA NA
Russia 102 151 372 601 736 900 1,064 1,227 1,391 1,555 16.1
Turkey 6 8 10 10 11 13 14 15 16 17 9.1
Central and Eastern
Europe total 136 186 414 648 788 960 1,130 1,300 1,471 1,644 15.8
Middle East/Africa
Israel 8 10 12 14 16 18 20 22 24 25 9.3
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA
South Africa 3 6 8 11 14 18 23 28 33 37 21.5
Middle East/
Africa total 11 16 20 25 30 36 43 50 57 62 15.6
EMEA total 1,976 2,510 3,021 3,569 4,002 4,550 5,140 5,689 6,274 6,832 11.3
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Casual games continue to dominate the market because wireless gaming experience increases the likelihood of
theyre quick to learn and easy to play. The most popular these gamers also downloading paid games.
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mobile games are single-player board games, puzzles, and There are a growing number of mobile gamers, both
word games. These casual games widen wireless games because of the rising penetration by smartphones and
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demographic reach. because the games are significantly cheaper to develop
Initially, the only games people could play were those and hence cost much less than console games. Mobile
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embedded in their phones. Currently, Internet-connected gaming provides an enjoyable experience for short periods
phones enable additional games to be downloaded either of time, as when waiting for a train or bus.
for free or for a modest fee.
With emergence of the app stores, such as for Apple
U Wireless penetration in much of EMEA is at a saturation
point, with penetration above 100 percent in many
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and Android devices, the market for wireless games has countries. As a result, future growth will come not from
exploded. App stores have thousands of games available more wireless subscribers but, rather, from a higher
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for download. Additionally, app stores improve the percentage of subscribers who play games and pay to play
buying experience dramatically over the carriers decks by those games. We expect the newer phones and the more-
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offering better descriptions, user reviews, and free trials. advanced networks to facilitate that growth.
Additionally, new forms of payment, such as the iTunes We expect the market for wireless games to continue
Account, are facilitating the purchase of games. growing with the increased penetration by smartphones
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Introduction of the iPad in 2010 and its newer version, the and tablets. Additionally, the growing variety of games
iPad 2, with its faster A5 processor, is driving the market being developed to take advantage of the features of the
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because of its large screen, superior graphics, and familiar new devices will spur the market. The wireless market in
ecosystem. In addition to the iPads are many Android EMEA is expected to increase 8.4 percent on a compound
tablets, such as the Samsung Galaxy Tab 10.1 and the annual basis from $1.6 billion in 2011 to $2.4 billion
Sony Tablet S, which are providing a wonderful gaming in 2016.
experience. And smartphones and tablets have become The UK is the largest market for wireless gaming in EMEA.
substitutes for traditional portable devices like the DS Almost half of the UKs 8 million mobile gamers pay for
and PSP. games. As in most other countries, puzzle games, arcade
In addition to casual games, more-sophisticated games games, and strategy games are the most-popular types of
are being developed for the wireless market. In fact, there mobile games in the UK. Wireless game revenues were
are cloud gaming companies that are delivering console- $330 million in 2011 and are projected to increase to
quality games to wireless devices. Of course, these games $504 million in 2016, an 8.8 percent compound
are much more expensive than typical wireless games annual increase.
that cost as little as 99 cents. Development costs of these
games are accelerating, causing pressure in a market that
values low-cost games.
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publishers. Adictiz, a French company that makes games purchasing of wireless games easier.
for smartphones and Facebook, developed Paf le Chien,
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which is available on both platforms and was the most
downloaded game in France in 2011, garnering over
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3 million downloads between the two platforms.
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U
Build personalized data sets by segment, component, and territory.
Visit the online Outlook at www.pwc.com/outlook
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r
Fo
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Germany 36 46 58 47 51 58 67 79 96 109 16.4
n
Greece 6 7 7 8 10 11 11 11 11 11 1.9
Ireland 58 74 83 93 103 113 124 135 146 157 8.8
o
Italy 102 114 113 127 136 150 163 174 185 196 7.6
se
Netherlands 39 51 60 67 75 79 83 88 92 96 5.1
Norway 14 18 20 22 25 27 29 31 33 36 7.6
Portugal
Spain 154
6
198
7
221
8 10
237
U 11
262
11
285
13
313
13
341
13
369
13
396
3.4
8.6
s
Sweden 26 32 38 43 46 52 58 64 69 76 10.6
es
Switzerland 25 33 35 39 43 45 48 52 55 59 6.5
United Kingdom 191 244 273 302 330 361 395 428 465 504 8.8
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Western Europe total 830 1,044 1,164 1,268 1,392 1,522 1,663 1,804 1,953 2,104 8.6
Central and Eastern Europe
Czech Republic 11 14 17 20 23 26 29 32 35 38 10.6
r
Hungary 3 3 3 3 3 3 3 3 3 3 0.0
Fo
Poland 8 10 12 14 16 17 19 20 22 24 8.4
Romania NA NA NA NA NA NA NA NA NA NA
Russia 66 85 97 108 119 130 141 150 160 170 7.4
Turkey 5 7 8 8 10 10 11 11 11 11 1.9
Central and Eastern
Europe total 93 119 137 153 171 186 203 216 231 246 7.5
Middle East/Africa
Israel 8 12 14 16 18 20 22 23 24 25 6.8
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA
South Africa 17 22 27 30 33 36 39 41 44 46 6.9
Middle East/
Africa total 25 34 41 46 51 56 61 64 68 71 6.8
EMEA total 948 1,197 1,342 1,467 1,614 1,764 1,927 2,084 2,252 2,421 8.4
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been cutting into the retail market for PC games. Retailers France is expected to maintain its position as the second-
have been providing less shelf space for PC games, often leading market, with revenues decreasing to $410 million
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relegating them to the backs of their stores. The pattern in 2016, a modest, 1.3 percent decrease on an annual basis
of modest decline is expected to continue, with revenues from the $438 million registered in 2011.
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projected to decrease to $2.1 billion in 2016, a 1.7 percent
compound annual decrease. The PC game market in the UK was down slightly in 2011,
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falling below the $300-million level for the first time to
MMOGs are providing a positive influence on the market $294 million, and is expected to decline 2.1 percent on a
because many of them require retail purchase of games compound annual basis to $265 million by 2016. Football
before they can be played online. For example, World of U Manager 2012 and Football Manager 2011 were the two
Warcraft, with its various expansion packs, has provided top-selling PC games in 2011, followed by Elder Scrolls V:
a boost for the retail PC market. The next expansion pack,
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Skyrim and Sims 3.
WoW: Mists of Pandaria, is scheduled to be launched in
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2012. The new MMOG Star Wars: The Old Republic was the In Italy, the PC game market is relatively small both
top-selling PC game in the world in 2011. because PC penetration in Italy lags behind that in many
other European countries and because there are high
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In addition to the MMOGs, the PC game market continues levels of PC game piracy in Italy. PC game revenues were
to be maintained by the various Sims games, including $53 million and are expected to decrease by 4.5 percent
The Sims 3, which was launched in 2009 but continues to annually to $42 million. The increase in PC penetration
sell well.
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because a keyboard and mouse provide a better interface Russia exhibits the strongest PC game market in Central
for complex commands than console controllers do. and Eastern Europe, with revenues of $355 million in
Additionally, high-end computers with graphics cards 2011. In fact, the Russian market is the third largest
from companies like NVIDIA provide a visual experience in EMEA, surpassed only by Germany and France.
superior to that provided by the consoles. Nonetheless, we expect the Russian PC market to exhibit
The PC game market also benefits from more-casual gamers a pattern similar to that of the rest of the countries in
who do not want to purchase expensive game consoles and EMEA, decreasing 1.8 percent on an annual basis to
are satisfied using their computers to play games. $324 million in 2016 and reflecting the impact of
competition from other platforms.
On one hand, many console games are also developed
for the PC in order to broaden the number of possible
customers. On the other hand, some games such as those
in the StarCraft series are made exclusively for the PC
in order to take advantage of the platforms superior
processing power and mouse-and-keyboard interface.
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Germany 682 641 575 616 609 601 593 583 573 563 1.6
n
Greece 4 4 4 4 4 4 4 4 4 4 0.0
Ireland 42 40 40 40 40 40 40 40 40 40 0.0
o
Italy 88 77 67 56 53 51 49 46 43 42 4.5
se
Netherlands 79 67 56 53 51 50 49 47 45 43 3.4
Norway 25 23 16 16 15 15 14 14 14 14 1.4
Portugal
Spain 115
4 4
97
4
79 61
4
U 60
4 4
58
4
57 56
4
54
4 4
53
0.0
2.5
s
Sweden 41 41 7 7 7 7 7 7 7 7 0.0
es
Switzerland 45 42 38 41 39 38 36 35 35 35 2.1
United Kingdom 345 329 313 310 294 282 277 274 269 265 2.1
Pr
Western Europe total 2,073 1,936 1,743 1,741 1,696 1,661 1,634 1,608 1,578 1,553 1.7
Central and Eastern Europe
Czech Republic 10 10 10 10 10 10 10 10 10 10 0.0
r
Hungary 2 2 2 2 2 2 2 2 2 2 0.0
Fo
Poland 118 148 142 139 137 135 134 132 130 128 1.3
Romania 7 9 13 13 14 14 15 15 14 14 0.0
Russia 404 381 368 361 355 344 336 329 327 324 1.8
Turkey 4 4 4 4 4 4 4 4 4 4 0.0
Central and Eastern
Europe total 545 554 539 529 522 509 501 492 487 482 1.6
Middle East/Africa
Israel 6 6 6 6 6 6 6 6 6 6 0.0
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA
South Africa 29 24 24 22 21 21 21 21 19 19 2.0
Middle East/
Africa total 35 30 30 28 27 27 27 27 25 25 1.5
EMEA total 2,653 2,520 2,312 2,298 2,245 2,197 2,162 2,127 2,090 2,060 1.7
ly
There are a number of different segments that make up Advergaming is the practice of using a video game to
the video game advertising market: static ads, dynamic promote brands, products, or organizations. These games
are often played for free on corporate Web sites. Many
n
ads, advertising on game portals, advertising around
games on social networks, and advergaming. different advertisers are experimenting with games to
o
get their messages across. Some of the most-popular
Initially, video game advertising consisted primarily of advergames in 2012 are Ace Assault II and LEGO Harry
static ads that were hard coded in games when the games
se
Potter, developed by LEGO to promote its toys; Kart Fighter,
were developed. The ads could include billboards that sponsored by Red Bull; and Mobil 1 Track Challenge,
appeared in the background of sporting events or could sponsored by ExxonMobil.
be product placements within the game. Such ads had a U
few shortcomings: they had to be planned well in advance Currently, display ads and advergames are the most
during the development of the game; once inserted, they prevalent. Dynamic in-game advertising has not grown as
s
could not be changed; and the advertiser had no measure quickly as expected.
es
of how often the ads were seen. The growth of social gaming in particular is a driving
With the advent of online gaming, a more-advanced type force for video game advertising. We project video game
Pr
of advertising became possible. Advertisers can now advertising revenues to grow cumulatively by more than
place ads that can be changed dynamically through the 60 percent over the next five years, reaching $994 million
Internet. For example, a billboard promoting a movie in 2016, up from $613 million in 2011, a 10.2 percent
could be updated as new movies hit the box office, thereby compound annual increase. Advertising is still only a small
r
providing the games with a current feel. Additionally, portion of the overall video game market.
Fo
advertising can be geographically targeted, with online The UK accounts for more than a quarter of the EMEA video
players in the UK seeing a different ad from players in game advertising market, with revenues of $164 million in
Germany. The placements of these ads get planned while 2011, followed by France with $109 million and Germany
the games are being developed, but the actual ads can with $90 million.
be changed via the Internet. Since the online games are
attached to the Internet, its possible to track the number
of times a gamer is exposed to the ads and the amount of
time that ads appear on the screen.
In-game advertising is appropriate only in sports games or
other games that are set in the contemporary real world;
ads would not be appropriate in games set in medieval
times or fantasy worlds. In those cases, advertisers can
reward players with extra levels of play or with additional
content by viewing ads before a game begins.
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Germany 47 63 68 75 90 100 111 124 138 153 11.2
n
Greece 6 7 8 11 11 13 14 15 17 17 9.1
Ireland 6 7 8 10 11 13 14 15 17 17 9.1
o
Italy 15 19 22 28 33 38 42 47 50 53 9.9
se
Netherlands 15 19 22 28 33 38 42 46 50 54 10.4
Norway 6 7 8 9 10 11 12 14 15 16 9.9
Portugal
Spain
4
4
6
7
6
7
7
7
U 10
8
11
10
13
11
14
13
15
14
15
15
8.4
13.4
s
Sweden 9 13 14 18 20 22 25 25 27 29 7.7
es
Switzerland 12 17 19 25 28 32 34 37 41 43 9.0
United Kingdom 74 95 114 133 164 194 217 233 249 265 10.1
Pr
Western Europe total 275 360 407 480 570 652 725 794 865 927 10.2
Central and Eastern Europe
Czech Republic 6 6 8 8 8 8 9 10 11 12 8.4
r
Hungary 2 2 3 3 3 3 4 4 4 4 5.9
Fo
Poland 4 6 6 8 9 10 11 13 14 14 9.2
Romania 1 1 1 2 2 2 2 2 14.9
Russia 4 6 7 8 9 11 12 13 13 14 9.2
Turkey 2 2 3 3 4 4 5 5 6 6 8.4
Central and Eastern
Europe total 18 22 28 31 34 38 43 47 50 52 8.9
Middle East/Africa
Israel 4 5 5 5 6 7 8 9 10 10 10.8
Middle East/North
Africa (MENA) NA NA NA NA NA NA NA NA NA NA NA
South Africa 1 2 2 3 3 4 4 5 5 5 10.8
Middle East/
Africa total 5 7 7 8 9 11 12 14 15 15 10.8
EMEA total 298 389 442 519 613 701 780 855 930 994 10.2
The outlook in brief Advertising will increase from $355 million in 2011
to $649 million in 2016, growing by 12.8 percent
The console/handheld market will benefit from the next compounded annually.
generation of consoles.
Console/handheld games will grow to $8.7 billion in
Growth of microtransactions and increased broadband 2016, increasing by 2.5 percent on a compound annual
penetration will drive the online market. basis from $7.7 billion in 2011.
Growth in smartphones and tablet penetration is spurring Online games became the largest category in 2010,
the wireless market. surpassing console/handheld games, and will reach
The PC game market will continue to decline due to $20.4 billion by 2016, a 15.1 percent compound annual
competition from the other sectors. increase from $10.1 billion in 2011.
ly
Advertising on social network games and other online Wireless games will grow at an 11.1 percent compound
games is driving the market for video game advertising. annual rate to $9.5 billion in 2016 from $5.6 billion in
n
2011. Wireless games will surpass console/handheld
Overview games as the second-largest game category in 2014 and
o
will widen their lead through 2016.
The video game market will grow from $24.3 billion in
se
2011 to $39.7 billion in 2016, increasing at a 10.3 percent PC games will decline by 2.3 percent compounded
compound annual rate. annually to $486 million in 2016 from $545 million
in 2011.
End-user spending on video games will total $39.1 billion
in 2016, growing 10.3 percent on a compound annual
U
basis from $24.0 billion in 2011.
s
es
Asia Pacific 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016
Console/handheld
games 7,742 8,136 8,256 8,188 7,673 7,639 7,648 7,875 8,212 8,691
r
Online games 4,150 6,282 7,698 9,043 10,121 11,944 13,777 15,786 18,015 20,418
Fo
Wireless games 2,519 3,361 4,119 4,929 5,619 6,446 7,244 8,046 8,782 9,495
PC games 643 628 607 581 545 533 519 506 497 486
Total end-user
spending 15,054 18,407 20,680 22,741 23,958 26,562 29,188 32,213 35,506 39,090
Advertising 161 217 262 318 355 420 476 538 593 649
Total 15,215 18,624 20,942 23,059 24,313 26,982 29,664 32,751 36,099 39,739
Create customized bar charts and line graphs instantly. Visit the
online Outlook at www.pwc.com/outlook
ly
spending 28.0 22.3 12.3 10.0 5.4 10.9 9.9 10.4 10.2 10.1 10.3
Advertising 37.6 34.8 20.7 21.4 11.6 18.3 13.3 13.0 10.2 9.4 12.8
n
Total 28.1 22.4 12.4 10.1 5.4 11.0 9.9 10.4 10.2 10.1 10.3
o
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
se
Japan, at $6.9 billion, is the largest video game market Online games dominate the PRC market, accounting for
in Asia Pacific and the second-largest video game market 85 percent of spending. The PRC has by far the largest
in the world, after the United States. It is the home of
two of the three major console manufacturers, Sony and
U online video game market in the world, constituting
35 percent of total global online game spending and
Nintendo, making the console/handheld game segment 58 percent of the online market in Asia Pacific. The
s
more important than in other countries in the region. online market is thriving in large part because it effec-
es
Japan accounted for 45 percent of the console game tively eliminates piracy, which is a major problem in
market in Asia Pacific and 29 percent of total video game the PRC. Online games are not downloaded but are
spending in Asia Pacific in 2011. stored on a server. Some games are played for free, with
Pr
disaster cost the gaming industry up to $100 million Continued broadband growth and growth in the number
Fo
because of delayed launch dates of many titles because of users will propel the market. The console game market
of the emotional mood of the country, which led to less is very small in the PRC because with the exceptions of the
money being spent on entertainment. In addition to Nintendo Game Boy and the Nintendo DS, the country has
the impact of the natural disaster, Japan experienced a banned consoles for the past decade, and therefore the
significant decline in its console/handheld game market, only consoles in the country are imported illegally. Overall
leading to an overall decline of 4.7 percent in the video spending will increase at a 17.6 percent compound annual
game market in 2011. We expect the market to turn rate to $15.5 billion in 2016.
around and continue growing through 2016, reaching
South Korea is the third-largest market in Asia Pacific and
$8.9 billion in 2016, a 5.1 percent compound annual
the fourth largest in the world, at $5.8 billion in 2011.
increase from 2011.
Wireless games represent the dominant category in
The Peoples Republic of China (PRC) overtook South South Korea, and it is the largest wireless market in the
Korea in 2009 to become the second-largest market in region, reflecting the high rate of mobile phone Internet
Asia Pacific and the third-largest market in the world. access. Additionally, the high broadband penetration
It widened the gap by increasing 13.2 percent in 2011 level helps explain its large online market. We expect the
to $6.9 billion based on the growth of its online game market to grow to $8.3 billion in 2016, up 7.7 percent
market, reflecting huge markets for MMOGs as well as compounded annually.
casual and social network online games. The pattern is
continuing, with the PRC overtaking Japan in 2012 as the
leading video game market in the region.
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n
Video game market by country (US$ millions)
o
201216
Asia Pacific 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
se
Australia 1,111 1,566 1,688 1,670 1,716 1,819 1,935 2,100 2,263 2,437 7.3
China 2,110 3,916 5,038 6,076 6,878 8,383 9,889 11,554 13,445 15,482 17.6
Hong Kong
India
224
60
254
86
278
118
300
181
U
322
240
346
309
367
374
387
449
412
539
439
644
6.4
21.8
s
Indonesia 280 329 364 396 429 463 492 521 557 601 7.0
es
Japan 6,601 6,667 6,979 7,270 6,931 7,175 7,503 7,988 8,412 8,903 5.1
Malaysia 156 177 193 207 220 238 254 271 288 304 6.7
Pr
New Zealand 82 95 105 109 110 116 125 131 138 149 6.3
Pakistan 71 80 87 95 101 110 116 124 133 142 7.1
Philippines 118 138 151 164 178 192 205 220 236 252 7.2
r
Singapore 165 191 212 229 250 273 295 317 342 368 8.0
Fo
South Korea 3,507 4,244 4,753 5,287 5,763 6,274 6,731 7,215 7,759 8,343 7.7
Taiwan 464 549 605 660 713 773 825 879 933 989 6.8
Thailand 224 281 314 352 391 434 470 505 545 582 8.3
Vietnam 42 51 57 63 71 77 83 90 97 104 7.9
Total 15,215 18,624 20,942 23,059 24,313 26,982 29,664 32,751 36,099 39,739 10.3
ly
three-quarters of the console/handheld game market in
sales of the 3DS, which became the top-selling device in 2011. Government investment in the industry should help
Japan, selling 4.1 million units in 2011. The two titles are local development of games, which in turn should lead to
n
wildly popular worldwide, whereas the Monster Hunter new titles that will stimulate the market. South Korea will
series, which is very popular in Japan, has not achieved
o
have faster growth during the next five years, averaging
the same success in the West. Monster Hunter Portable 3rd, 3.6 percent compounded annually to $2.5 billion in 2016
which launched in December 2010 and sold 1.0 million as games for the new consoles gain market traction.
se
units in 2011, for a total of 4.5 million units since its launch,
helped drive sales of the PSP, which sold 2.0 million units In Australia, console/handheld games declined for the
in 2011. Another in the popular Monster Hunter series, second year in a row, decreasing by 6.7 percent to
Monster Hunter 3G for the 3DS was the fourth-top-selling
title in 2011. In Japan, the market is driven by updated
U $929 million. After years of debate, it seems that Australia
is inching closer to establishing an R18+ classification
s
versions of popular games that continue to entice gamers. rating for interactive entertainment. An in-principle
agreement was reached between the federal and state
es
It remains to be seen how well games for the PSP Vita will governments in July 2011, but final implementation has
fare in the market, because sales of the handheld device not been completed yet. The previous maximum age
dropped sharply after its launch in December.
Pr
2010, seven titles reached that level, including top sellers want clear guidelines for their children. Australia is the
Fo
Pokmon Black Version and Pokmon White Version, which only major country without an adult classification for
sold 4.7 million copies, and Monster Hunter Portable 3rd, games. We expect the market to turn around in 2014,
which sold 3.2 million copies. Activision Blizzards Call of reaching $991 million by 2016, a 1.3 percent compound
Duty: Modern Warfare 3, the most popular game in Europe annual growth rate from 2011.
and the US, was not among the top 10 games in Japan. In general, we expect the aging of the current generation of
The top 10 titles included three Wii-exclusive titles: Minna consoles to continue having a negative effect on the market.
no Rhythm Tengoku, Wii Party, and Wii Sports Resort as When the next-generation Sony and Microsoft static con-
well as one PS3 exclusive, Tales of Xillia. There were no soles are introduced (expected in the latter part of the
exclusive Xbox 360 titles among the best-selling titles forecast period), we project a modest growth in sales. The
further evidence of the poor reception the console has growth will not mirror the huge expansion that resulted
received in Japan. when the current consoles were introduced, because there
are many competing platforms for gamers. Spending is
projected to expand at a 2.5 percent compound annual rate
during the next five years from $7.7 billion in 2011 to
$8.7 billion in 2016.
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Malaysia 80 88 92 95 98 102 107 112 118 124 4.8
n
New Zealand 43 45 48 46 44 43 42 43 44 47 1.3
Pakistan 36 40 41 43 44 46 48 50 52 55 4.6
o
Philippines 61 68 70 72 74 77 80 84 88 93 4.7
se
Singapore 76 84 87 89 92 95 99 102 107 113 4.2
South Korea 1,595 1,850 1,934 2,035 2,080 2,125 2,171 2,238 2,351 2,487 3.6
Taiwan
Thailand
243
52
279
63
290
65
300
67
U
306
69
315
73
325
76
337
79
349
83
366
88
3.6
5.0
s
Vietnam 20 23 24 25 27 28 29 30 31 33 4.1
es
Total 7,742 8,136 8,256 8,188 7,673 7,639 7,648 7,875 8,212 8,691 2.5
Online games Asia Pacific is the dominant market for online gaming,
r
ly
including Thailand, Malaysia, and Singapore. leading market in the region, growing by 9.5 percent
annually to reach $2.7 billion in 2016.
Although MMOGs get the most publicity, its actually
n
casual games such as puzzles, cards, and arcade games Japan is the home of the second-largest number of
that attract the greatest numbers of players. These games broadband households in the region, with 35.0 million
o
are simple to learn and do not require extended periods homes in 2011 providing a potential source for online
of time to learn and to play. Casual games have expanded gaming. Since piracy is not as much a factor in Japan as
se
the demographic audience of the gaming industry to it is in the PRC, the retail market for games is very strong
include more women and older adults. Many of the casual there. Conversely, the online market is relatively weak.
games are played for free, with banner ads around the The online market is projected to increase 7.9 percent on
games supplying the requisite revenues. U a compound annual basis to reach $2.2 billion in 2016, up
from $1.5 billion in 2011.
s
Social network games are emerging as a huge market for
publishers. These free-to-play games have grown expo- Australia is the next-largest market, with revenues of
es
nentially over the past few years, with microtransactions $316 million in 2011. We project the online market
serving as the source of revenues. to grow by 17.5 percent on a compound annual basis,
Pr
ly
Malaysia 34 39 44 48 52 57 61 66 70 74 7.3
n
New Zealand 3 5 6 6 6 6 8 9 10 11 12.9
Pakistan 17 19 21 24 26 29 31 34 37 40 9.0
o
Philippines 27 31 35 39 43 47 52 56 61 66 8.9
se
Singapore 41 48 55 60 68 76 85 95 105 115 11.1
South Korea 997 1,186 1,353 1,525 1,695 1,884 2,065 2,252 2,442 2,668 9.5
Taiwan
Thailand
102
98
121
121
137
134
153
151
U
169
169
187
188
204
207
221
226
237
246
256
267
8.7
9.6
s
Vietnam 9 11 12 13 15 16 18 20 22 24 9.9
es
Total 4,150 6,282 7,698 9,043 10,121 11,944 13,777 15,786 18,015 20,418 15.1
ly
dramatically improves the buying experience over the
The PRC and India are becoming major wireless game
carriers deckshas better descriptions and offers free
markets because of their large wireless subscriber bases
n
trials. A number of other online services, such as the
and expanding 3G markets. There were 950 million
Android Market, have been established that compete with
o
wireless telephone subscribers in the PRC in 2011, and
the carriers decks to provide content.
850 million in India.
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Introduction of the iPad tablet, which plays all of the
The mobile gaming market in India, though growing
iPhone games, has caused many gamers to substitute
fast, is still in its nascent stage, as compared with other
these devices for their DS and PSP devices.
countries. India has one of the largest mobile consumer
The wireless market is exploding because of the growth of
casual games with mass appeal like Angry Birds that are
U bases in the world, and the percentage of people
downloading games is expected to grow dramatically. In
s
easy to learn and easy to play. Additionally, the growth of India, the wireless game segment of the market dominates
es
social networks with mobile games is driving the industry. the video game industry because mobile phones are
The business model is migrating from downloading for widespread, whereas few consumers have consoles or
a fee to free games, with microtransactions providing PCs. The wireless market, which was $145 million in 2011,
Pr
to play games on the go. The9, an online game developer in the PRC, is developing
its wireless segment by introducing and localizing
Fo
ly
Malaysia 33 42 48 55 62 71 78 85 92 98 9.6
n
New Zealand 26 34 40 47 51 59 67 73 78 85 10.8
Pakistan 14 17 21 24 27 31 33 36 39 42 9.2
o
Philippines 24 32 39 46 54 60 65 71 77 83 9.0
se
Singapore 33 44 54 64 74 86 95 104 114 123 10.7
South Korea 847 1,132 1,389 1,646 1,899 2,171 2,397 2,623 2,858 3,075 10.1
Taiwan
Thailand
98
58
128
78
156
96
184
113
U
213
132
246
152
270
166
294
179
319
194
338
205
9.7
9.2
s
Vietnam 11 15 19 23 27 31 34 38 42 45 10.8
es
Total 2,519 3,361 4,119 4,929 5,619 6,446 7,244 8,046 8,782 9,495 11.1
ly
n
PC game market (US$ millions)
o
201216
Asia Pacific 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
se
Australia 119 131 115 97 96 95 94 93 92 91 1.1
China 7 5 5 5 5 5 5 5 5 5 0.0
Hong Kong
India
22
7
20
9
20
13
U
20
15
20
17
19
19
19
21
19
23
19
26
19
28
1.0
10.5
s
Indonesia 14 13 13 13 13 13 12 12 12 12 1.6
es
Japan 359 336 331 326 294 286 276 266 256 246 3.5
Malaysia 8 7 7 7 6 6 6 6 6 6 0.0
Pr
Singapore 14 14 14 14 14 14 13 13 13 13 1.5
Fo
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was the first type of advertising. Static ads were placed in
games to give the games a more realistic feeling such as Japan has the largest video game advertising market in
Asia Pacific, at $188 million in 2011. Advertising in Japan
n
banners at the finish line in an auto racing game.
slowed dramatically in 2011 as a result of the economic
The emergence of the Internet has enabled dynamic
o
impact of the earthquake. We expect advertising to
advertising, which enables ads to be changed online rebound and to remain strong during the remainder of
to reflect changes in the market such as promoting the
se
the forecast period, increasing to $326 million in 2016,
newest films. Online gaming provides advertisers with an 11.6 percent increase on a compound annual basis
feedback on how often and for how long ads are seen. from 2011.
The explosive growth of social network gaming and the
U
South Korea, with its significant online game market, had
migration of many MMOGs from a subscription business the second-largest video game advertising market in 2011,
s
model to a free-to-play model have encouraged the gam- at $59 million, a total we expect will grow to $91 million
ing community to embrace advertising as an additional
es
set in historical times or fantasy worlds. For games that 2013, with the gap widening through 2016. Revenues are
are not appropriate for in-game advertising, players are expected to grow from $54 million in 2011 to $128 million
Fo
rewarded with extra levels and aftermarket add-ons for in 2016. Focus Media and Bihu Technology dominate the
watching ads before the games begin. in-game advertising market in the PRC.
Studies have shown that gamers actually appreciate in- Gamers in Australia are continuing to spend more time
game advertising if it does not interfere with game play playing online games, thereby enhancing the reach of video
and provides a more realistic game environment. Gamers game advertising. We expect video game advertising in
develop a positive attitude toward the advertised products Australia to increase to $39 million in 2016 from $17 million
and buy more of them. Conversely, if the advertised in 2011, an 18.1 percent compound annual increase.
products are obtrusive and interfere with the gaming
experience, gamers adopt negative attitudes toward those We expect total video game advertising in Asia Pacific
products. Therefore, its very important to place ads in a to increase from $355 million in 2011 to $649 million in
manner that does not interfere with game play. 2016, a 12.8 percent compound annual increase.
Display ads, advergames, and advertising on Web-based
game portals are the major advertising segments. Dynamic
in-game advertising has not grown as quickly as many
had anticipated.
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Malaysia 1 1 2 2 2 2 2 2 2 2 0.0
n
New Zealand 1.0
Pakistan 1 1 1 1 2 2 2 2 3 3 8.4
o
Philippines 1 2 2 2 2 3 3 4 5 5 20.1
se
Singapore 1 1 2 2 2 2 3 3 3 4 14.9
South Korea 26 36 41 49 59 66 72 78 85 91 9.1
Taiwan
Thailand
4
2
5
3
6
3
U
8
4
10
4
11
4
12
5
13
5
14
6
15
7
8.4
11.8
s
Vietnam 1.0
es
Total 161 217 262 318 355 420 476 538 593 649 12.8
The outlook in brief End-user spending will grow to $1.8 billion in 2016,
increasing at a 7.1 percent compound annual rate.
High piracy rates and expensive consoles will limit the
console game market. Console/handheld games will grow by 2.9 percent
compounded annually from $614 million in 2011 to
The PC game market will be limited by piracy and the $708 million in 2016.
increased digital distribution of games.
The PC game market is expected to reach $161 million in
Increased penetration by smartphones as well as 2016 from $138 million in 2011, a 3.1 percent compound
improvements to wireless networks will drive the wireless annual increase.
game market.
The wireless game market will increase from $441 million
The online market is being driven by the increase in in 2011 to $759 million in 2016, growing at 11.5 percent
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broadband penetration, the growth of social network on a compound annual basis.
games, and increased digital distribution of games.
The online game market will reach $212 million in 2016
n
Video game advertising is growing as a result of the from $114 million in 2011, growing by 13.2 percent on a
increase in the online game market.
o
compound annual basis.
se
annual rate from $38 million to $68 million in 2016.
The overall video game market in Latin America is
projected to grow by 7.2 percent compounded annually U
from $1.3 billion in 2011 to $1.9 billion in 2016.
s
Video game market by component (US$ millions)
es
Latin America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016
Pr
Console/handheld
games 565 702 659 638 614 619 622 642 668 708
Online games 24 44 66 88 114 139 158 177 194 212
r
Wireless games 247 310 350 395 441 488 550 614 686 759
Fo
PC games 115 119 128 131 138 143 146 151 157 161
Total end-user
spending 951 1,175 1,203 1,252 1,307 1,389 1,476 1,584 1,705 1,840
Advertising 15 23 27 30 38 43 51 57 63 68
Total 966 1,198 1,230 1,282 1,345 1,432 1,527 1,641 1,768 1,908
Export your own data selections to Excel and PDF. Visit the online
Outlook at www.pwc.com/outlook
ly
spending 29.9 23.6 2.4 4.1 4.4 6.3 6.3 7.3 7.6 7.9 7.1
Advertising 25.0 53.3 17.4 11.1 26.7 13.2 18.6 11.8 10.5 7.9 12.3
n
Total 29.8 24.0 2.7 4.2 4.9 6.5 6.6 7.5 7.7 7.9 7.2
o
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
se
A small but growing number of companies are developing Brazil has very high taxes on video games, causing
games in Latin America. For example, QB9 is one of around consoles and games to cost up to three times what they
65 video game companies in Argentina. The company has
introduced a popular online childrens game called Mundo
U cost in the US. This helps explain why the video game
market is much stronger in Mexico, a significantly smaller
Gaturro, which has a million registered users. country. The high tax rate in Brazil also contributes to
s
piracy, which further dampens investment in the industry.
es
company DeNA, and Argentinas Three Melons was Brazil has the potential to be the largest market for video
acquired by social games company Playdom, now part games, a position held by Mexico. A plan is being evalu-
of Disney. ated to reduce the tax burden on games in Brazil, but it
has been under evaluation since 2006. Game developers
r
Continuum Entertainment.
have started providing some small government incentives
to help the industry develop. The Brazilian game market has been limited by its inability
to monetize its large number of playersespecially
Mexico has the largest video game market of the region, at
because of a lack of credit cards. Thats beginning to
$636 million in 2011, 47 percent of the total, with Brazil
change with the expansion of prepaid gaming cards that
next, at $420 million, 31 percent of the market. Of the
are purchased for cash at retail outlets.
countries in Latin America, the Mexican game industry
is closest to that of the US in that the console/handheld
segment is the dominant segment of the market. Sony
introduced its consoles in Mexico before it did in other
countries in the region, in part accounting for Mexicos
dominant position. By contrast, online and mobile games
dominate in the other countries in Latin America.
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Total 966 1,198 1,230 1,282 1,345 1,432 1,527 1,641 1,768 1,908 7.2
n
At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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se
Console/handheld game market than the same games sold in the US. This helps explain
the high rate of illegally acquired games. Xbox games do
Gamers in Latin America are at a disadvantage relative to
U relatively better than PS3 games in Mexico because the
players in the rest of the world in that console games arrive Xbox console is relatively cheaper.
in Latin America later than in most other regions and are
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typically priced much higher than in other regions. Sony is beginning to focus more on the Latin American mar-
ket by localizing its key titles for the Latin American market.
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small minority of the console/handheld game market. $708 million in 2016 from $614 million in 2011.
The growth of the console/handheld game market in Mexico will continue to be the largest market in the region
Mexico is being hurt by the relatively high cost of games in despite growing only 1.8 percent on a compound annual
r
Mexico, which are often 30 to 50 percent more expensive basis from $298 million in 2011 to $326 million in 2016.
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ly
PC game market (US$ millions)
201216
n
Latin America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
Argentina 8 8 8 8 9 9 9 9 10 10 2.1
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Brazil 33 34 37 38 41 43 44 46 48 50 4.0
se
Chile 8 8 9 9 9 9 9 10 10 10 2.1
Colombia 7 7 8 8 8 9 9 9 9 9 2.4
Mexico
Venezuela
56
3
59
3
63
3
U
65
3
68
3
70
3
72
3
74
3
77
3
79
3
3.0
0.0
s
Total 115 119 128 131 138 143 146 151 157 161 3.1
es
Wireless games have high potential in Latin America. America, helping further expand the market.
Wireless penetration averaged around 100 percent in 2011
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compared with 34 percent for broadband, and wireless Spending on wireless games rose by 11.6 percent in 2011
carriers are upgrading their networks to 3G. to $441 million. We expect similar increases during the
next five years, averaging 11.5 percent compounded
The mobile game environment will continue to become annually to $759 million in 2016.
more and more enjoyable as wireless markets expand in
much of Latin America both in terms of coverage and with
the deployment of 3G networks.
Mobile games, with their free-to-play business models,
are growing in Brazil, with microtransactions generating
the requisite revenues. Angry Birds was a major hit on the
iPhone, but the game has generated even more players
since its adoption of a free-to-play model on GetJar and
the Android Market.
ly
Total 247 310 350 395 441 488 550 614 686 759 11.5
n
At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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se
Online games enables users to purchase virtual goods using a personal
identification number they purchase from retail stores.
The online game market has been hampered by low broad- Mentez publishes Playdom games in Latin America and
band penetration and fewer consoles that are connected
to the Internet. Online spending totaled only $114 million
U also has a number of its own games on Orkut.
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in 2011, just 8.7 percent of end-user spending on video The digital distribution of games through systems like
games. In North America and EMEA, online games con- Steam is quite popular in Latin America.
es
stituted 18.4 percent and 22.5 percent, respectively, of Browser-based MMOGs and social games are becoming
total end-user spending on video games; in Asia Pacific, increasingly popular in Latin America.
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growth of the online game market. However, broadband to-play games, with microtransactions and advertising
penetration in Latin America is expected to show tremen- providing the revenues. Since most gamers play at public
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dous growth over the next five years, which is expected to Internet cafs, there is very little downloading of games.
have a strong impact on the online game market.
Brazil is the fastest-growing online game market in Latin
Social network Orkut, which is similar to Facebook and America, owing to the explosion of social network games,
is operated by Google, is quite popular in Brazil. In fact, with microtransactions accounting for the bulk of the
around 60 percent of Orkuts worldwide users are located revenues. Additionally, Brazil is the home of numerous
in Brazil. Games on Orkut are attracting a growing number Internet cafs where many gamers play MMOGs. The
of Brazilians. Googles Orkut had been the most popular growing penetration of broadband households is increas-
social network in Brazil. However, the number of Facebook ing the number of gamers who play games at home. The
users tripled in 2011, surpassing Orkut for the first time. online game market is expected to grow 16.0 percent on
Latin America does not monetize online games well a compound annual basis from $40 million in 2011 to
because of the lack of credit cards. Leading online gaming $84 million in 2016.
company Zynga is partnering with leading Brazilian Government intervention has limited the growth of online
social game publisher Mentez to sell prepaid social game games. In Brazil, for example, several popular online
cards at numerous locations in Brazil and Mexico and games like Counter-Strike, Bully, and EverQuest have been
is planning to sell the cards in other Latin American banned because of their impact on youth.
countries. Mentez operates a Paymentez network that
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Online game market (US$ millions)
201216
n
Latin America 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016 CAGR
o
Argentina 1 3 5 6 7 9 10 12 12 13 13.2
Brazil 10 17 24 30 40 49 58 67 75 84 16.0
se
Chile 2 4 7 9 11 14 15 16 17 18 10.4
Colombia 1 2 3 4 5 6 8 8 9 10 14.9
Mexico
Venezuela
10
17
1
26
1
U
37
2
48
3
58
3
64
3
71
3
77
4
83
4
11.6
5.9
s
Total 24 44 66 88 114 139 158 177 194 212 13.2
es
ly
Total 15 23 27 30 38 43 51 57 63 68 12.3
n
At average 2011 exchange rates.
Less than US$500,000.
o
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
se
U
Filter digital and nondigital spending data. Visit the online Outlook
at www.pwc.com/outlook
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