Exclusive interview with Jelle Kooistra, Newzoo’s Head of Market Analysis, on current online gaming trends, the company’s latest research findings and future market developments.
G2A PAY (GP): Gaming is a booming industry, with revenues expected to reach almost USD 137.9 billion in 2018, according to your research. What are the main factors driving this growth?
Jelle Kooistra (JK): Consumers will indeed spend USD 137.9 billion on games this year. In 2021, we estimate that this will grow to USD 180.1 billion. This growth can mostly be attributed to games reaching a wider audience. But games are also becoming better at monetizing their current audience.
First, more consumers now have access to a gaming device. Particularly, smartphones have developed into a viable main gaming platform, which is especially relevant in markets that didn’t typically buy PCs or consoles in the past. Overall, gaming has become easier to access across the world. Over 2 billion consumers will play games on their smartphones this year, generating a total of USD 70.3 billion in revenue.
Titles have also become more diverse. This year alone has seen the rise of the battle royale genre, which took a long-established genre (shooter) and adapted it to the modern gaming era. Battle royale games are competitive, matches play out differently each time, and the continual addition of new weapons, items, and ways to traverse the environment keeps the gameplay fresh. It is also one of the core gaming genres that made its way onto mobile this year. MMOs, MOBAs, strategy games, and now battle royale games are making mobile gaming more diverse than ever.
Finally, developers are mastering the free-to-play business model. Despite their differences in genre, Fortnite, League of Legends, and Candy Crush have each tested out hundreds of new ideas to make games more enjoyable for players. In the end, this makes these titles more worthwhile for consumers to spend money on.
GP: Most recently, you have released your annual Global Mobile Market Report. In a nutshell, what are its key findings?
JK: First of all, we found that a huge number of consumers are using smartphones: 3 billion people. This number will increase to 3.8 billion in 2021, mostly due to countries such as China and India rapidly developing their infrastructures, resulting in a bigger middle class. This provides an enormous userbase for services and games to monetize, so we expect global app revenues to grow from USD 99.1 billion this year to USD 139.6 billion in 2021.
What’s more, non-game services will continue to expand in scope. Services such as Tinder, HBO, and Uber have shown there are plenty of opportunities to make consumers’ lives easier—all by utilizing the power of smartphones. Time will tell which kinds of services will be disrupted next.
GP: What are the major trends currently dominating the online gaming industry?
JK: Video has a larger role than ever in the games industry. Twitch has newfound competition from Mixer, Facebook Live, Caffeine, and a number of Chinese streaming platforms. For game developers, this has become an important tool for marketing their games to select groups of players. It has become a core element of game design, too: games that are more entertaining to watch will get broadcasted more by streamers, exposing games to even more viewers. This then snowballs. Rocket League and Fortnite are two examples of games that have done this exceptionally well.
GP: What about esports? How does this segment disrupt the industry and what are some of the innovations you have noticed lately?
JK: By taking video content and streaming to the next level, professional esports leagues and tournaments have given lapsed and current gamers a chance to renew or expand their interest in games.
Major innovations are currently happening in the selling and managing of esports media rights across different platforms. The Overwatch League is a recent example, offering its content through Twitch but also licensing content to via traditional broadcasters ESPN, Disney, and ABC. The Overwatch League is also an example of leagues finding new ways to monetize its users, allowing users to buy an All-Access pass that provides access to additional content.
Also, mobile esports has a bigger presence than ever, with both Clash Royale and Arena of Valor boasting tournaments with prize pools bigger than half a million dollars.
GP: From your perspective, what is the most popular game genre and why?
JK: The genre with the most buzz surrounding is definitely battle royale. Although it has been around for a couple of years, it was PlayerUnknown’s Battlegrounds—better known as PUBG— that popularized the genre, introducing it to many players. And Fortnite built on PUBG’s framework. Fortnite is free to play, has colorful visuals, and a less realistic aesthetic, which makes it more accessible to a wide range of players and ages. It also features building mechanics, adding an extra layer to the gameplay. In the US, Fortnite is played by almost 25% of core PC gamers, while 10% play PUBG. Outside of the PC space, the genre has made a significant entry into the console and mobile markets alike.
GP: In your opinion, what is the potential of blockchain for future gaming industry development?
JK: I think we’ll see plenty of interesting applications of blockchain in the games industry. After all, gaming has always been the first to experiment with monetization and consumer engagement, and blockchain provides many new possibilities for both of these things. Games could use blockchain to expand or alter the dynamics of their in-game marketplaces. For example, a player could hire another player to complete an in-game task; the other player would then be automatically rewarded when the task is done. And all this would be powered by blockchain.
GP: What’s on the horizon for the gaming industry in the years to come?
JK: One thing we are keeping a very close eye on is cloud gaming. Not only does it have the potential to fundamentally change how we play games, it could also change the entire economics of the games industry. Cloud gaming’s promise is that consumers will be able to play every game— regardless of its graphic fidelity—when they want, where they want, and on whichever device they want.
If this becomes a reality, gamers will have to invest significantly less money in hardware, removing a massive barrier to entry for many consumers. For developers, it means more freedom and confidence to develop games with powerful hardware in mind, instead of developing for a wide range of PCs, laptops, graphic cards, consoles, and even mobile devices. Cloud gaming has the potential to revolutionize how we play games. However, it has many hurdles to overcome before it becomes a reality.
About Jelle Kooistra:
Jelle Kooistra is Newzoo’s Head of Market Analysis.
In particular, his team is responsible for modeling and continuously updating the company’s forecasts, as well as spotting relevant new trends across industries.
Newzoo is the leading global market research company in games, esports, and mobile and a global market intelligence partner of choice for any company with an interest in the field.