Global video game revenue is projected to increase by 6 percent annually, reaching $257 billion by 2028, according to new research from Bain & Company, a global consultancy. The market for video games hit $196 billion in 2023, surpassing the combined earnings of streaming services and box office sales.
In its first Gaming Report, Bain surveyed over 5,000 consumers from six countries, including the United Arab Emirates, Brazil, Indonesia, Japan, the United Kingdom, and the United States, to better understand gamer habits and expectations worldwide.
Daniel Hong, leader of Bain’s global Media & Entertainment practice, noted that there is a remarkable rise in global gaming audiences, especially among younger individuals who are spending more time gaming and less on video and other media. He indicated that gamers have a strong desire for more immersive experiences and greater interoperability across devices and platforms. Furthermore, they are increasingly engaging in in-game environments for socializing, shopping, and consuming various media. Bain has identified five key trends that are expected to influence the future for game publishers and developers.
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Five trends to watch in gaming
According to Bain’s survey, over half (52 percent) of respondents play games regularly. Younger consumers allocate a larger portion of their entertainment budget to video games compared to older players. To explore these dynamics, Bain highlighted five crucial trends.
- Young gamers propel growth: The most significant growth is anticipated from younger players aged 2 to 18. Nearly 80 percent of this age group are gamers, dedicating 30 percent of their entertainment time to gaming. In contrast, only 31 percent of players aged 45 and older consider themselves gamers, and they spend less time gaming (2.5 hours per week) compared to 13- to 17-year-olds (9.5 hours).
- Gaming beyond gameplay: A third of respondents identified immersive games as their favorites, with this number rising to nearly half among those under 18. Immersive gamers engage significantly more, spending about 1.5 additional hours per week in such games compared to those playing non-immersive titles.
- Gamers as co-creators: The evolution of user-generated content (UGC) has transformed gaming in recent years. Nearly 80 percent of gamers have played titles featuring UGC, and one in seven has contributed content within a game. Generative AI is expected to further enhance this trend, allowing players to personalize their gaming experiences.
- Cross-platform play: Almost 70 percent of gamers utilize at least two devices, with half expressing a desire for greater cross-device accessibility in future games. Additionally, 95 percent of game development studios with over 50 employees are focusing on cross-platform titles.
- Gaming intellectual property (IP) expanding into other media: Interoperability ranks among the top three desired features for gamers, along with the regular addition of new content. Game-related shows and films significantly boost consumer engagement, resulting in an average 28 percent increase in concurrent users (ACUs) six months post-release.
Rising demand for consolidation and mobile games
Bain anticipates that advancements in non-gaming devices (like mobile phones, TVs, and PCs) and the growing affordability of cloud gaming will enable players to access games without the need for dedicated consoles or gaming PCs. Notably, while console sales continue to rise in dollar terms, their market penetration has remained static for the past decade, even as the global gaming population has expanded. Mobile gaming now constitutes more than half of the new growth in the sector. Although 70 percent of gamers report using multiple devices, a substantial 90 percent express a desire for consolidation, with many willing to pay for it.
Moncef Maghrebi, partner at Bain & Company Middle East, remarked that the gaming industry is moving toward greater device neutrality, with early signs of this transformation becoming evident. He suggested that in this changing landscape, leading companies will need to strategically consolidate customer relationships to increase their market share. This shift will necessitate that gaming companies rethink their interactions with both customers and competitors as the industry adapts to new technological realities.
Enhancing performance through strategic marketing
The video game audience is becoming increasingly saturated, making effective marketing more crucial than ever. Bain has discovered that the competition for players’ attention is fierce, with 67 percent of gamers frequently engaging with other media while playing. This trend complicates the ability to maintain high advertising rates, as advertisers are now seeking proof of engagement rather than mere reach. Given these obstacles, effective marketing strategies could determine the success or failure of many game developers.
In comparison to other software companies, gaming firms typically allocate a larger portion of their budget to marketing. On average, gaming companies with revenues under $1 billion invest around 25 percent of their revenue in marketing, which surpasses the 15 percent spent by other software firms. However, much of this investment is misdirected, as many companies struggle to market their games effectively in a crowded marketplace.
One strategy Bain recommends to address these marketing challenges is the use of generative AI in early-stage campaigns to enhance precision targeting in advertising. This approach includes generating marketing copy and visuals, ensuring quality control, tailoring and tagging content, and measuring effectiveness.
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