It's not that often you get solid numbers on sales for digital games, so the crowded talk on digital game sales was a welcome event. Digital game and downloadable content sales are growing at a rate of 33 percent year over year in the US and EU. Spending on games in China, which is almost all digital, is projected to grow over 10 percent annually for the next three years. And Asia is projected to dominate online and mobile games globally by 2016, according to the speakers.
Liam Callahan, games industry analyst from NPD, presented some interesting data on digital game content across the USA, UK, France and Germany. Together those four countries accounted for $10 billion in sales for 2012, with a US total of $5.9 billion followed by the UK at $1.7 billion, Germany with $1.4 billion and France with $1 billion. In the US, digital content now accounts for 40 percent of the total spend on games, up from 28 percent in 2010.
The annual spending on games in the USA for new retail games in 2012 was $7.1 billion, which represented about 48 percent of the total of $14.8 billion spent on games. That's right, the retail market for new games is now less than the combination of other revenue. The other revenue, according to NPD estimates, includes used games at $1.59 billion, digital games and DLC at $2.22 billion, subscriptions at $1.05 billion, social network gaming at $544 million, game rentals at $198 million, and $2.11 billion in mobile game sales. New retail game sales dropped over 22 percent from 2011, and used games dropped 17.1 percent. Digital full games and DLC combined grew 33.9 percent for the year, with subscriptions gaining 12.9 percent and mobile games growing 10.4 percent.
Callahan pointed out that each country seems to have a particular favorite category of device that it prefers, looking at the usage patterns of gamers. The UK had the highest percentage of console players, while France preferred portable consoles, Germany preferred computers, and the US was most partial to gaming on mobile and tablet platforms.
While Europe and the US had similar percentages of the population that owned mobile phones and played games, the amount of people who paid for mobile games were substantially different. In the USA, only 27 percent of gamers paid, while 40 percent of the players in Europe paid for mobile games. As far as time spent gaming, though, people in the UK, France and Germany all spent more time playing than people in the US did; in the case of the UK there was a 15 percentage point difference in favor of the UK. Average spending in the UK was nearly double that of the US ($16 instead of $9).
"In the USA, only 27 percent of gamers paid, while 40 percent of the players in Europe paid for mobile games"
The market in China is still changing, though its rapid growth (66 percent in 2008) has slowed down to only 19.4 percent in 2012. Subsequent years are expected to grow more slowly, according to Will Tao of iResearch. Additionally, the MMO is no longer the only significant type of game in China; gradually social games, game platforms (hubs with multiple simple games) and web games are claiming a growing share, projected to reach over 20 percent of the market in a few years. Mobile game spending is projected to cross $1 billion this year, on its way to an estimated $2.8 billion in 2016.
The top game company in China is Tencent; its revenue from online gaming is greater than the next nine companies combined. Chinese game demographics, according to Tao, skew younger than the USA with 37 percent of the gamers under 18; about two-thirds of the gamers are male. Perhaps because of their age, a third of Chinese gamers spend between 5 and 10 hours gaming in a typical day.
Finally, Tim Merel of Digi-Capital spoke about how online and mobile games are growing and fragmenting the market. He noted that while America tended towards 'value' markets like console games and subscription MMOs, countries such as China and Brazil were much more likely to see 'volume' games like mobile, social, and free-to-play MMOs as the dominant games. Merel projected that Asian games could dominate the online and mobile games markets globally, if trends continue. He pointed out that game mergers and acquisitions broke all records in 2012, and 8 out of 10 of the biggest acquisitions last year were with Asian acquirers.
Merel's advice to developers: "Start building relationships in Asia now," he said. It takes years to build those relationships, and when you are looking for an investor or an acquirer it's good to have those relationships to draw on. Merel suggested GDC attendees plan on going to the next China Joy conference to begin establishing contacts in Asia.