By 2017, the same year that IDC forecasts digital PC/Mac revenues to reach $24 billion, the entire global games business could be worth more than $100 billion, according to the new Global Games Investment Review from Digi-Capital. The research firm says that mobile and online gaming is becoming such a huge force worldwide that it could grow at a compound annual growth rate of 23.6 percent, ultimately accounting for about 60 percent of software market share in 2017 while generating $60 billion of the predicted $100 billion for the overall industry.
While North America remains important, Digi-Capital expects Asia and Europe combined to represent about 80 percent of the mobile and online gaming sectors. Asia, in particular, continues to show its muscle when it comes to mobile and online gaming.
"Asia is becoming the biggest growth driver of economic value in mobile/online games, with the best games companies' revenue growth and profit margins being the envy of foreign competitors," said Tim Merel, managing director at Digi-Capital. "...9 of the top 10 games M&As of 2013 had Asian buyers, continuing the trend from 8 out of 10 in 2012. Global and pan-regional M&A deals were significant in 2013, and pan-regional relationships and profile remain critical for entrepreneurs selling via trade exits and for major corporates buying games companies. 13 out of 15 games IPOs in 2011-2013 were by Chinese, Japanese or South Korean companies, although there are also attractive IPO prospects in Western markets. Everyone is searching for the next Unicorn."
The Asian gaming boom helped drive games M&A up 29 percent from 2012 to a record $5.6 billion in 2013, excluding $2.3 billion from the management-led portion of the Activision Blizzard/Vivendi spinout. The good news for companies seeking investments is that business seems to be on the rise, as investment levels rose back to 2010 levels, up 16 percent from 2012 to $1 billion - mobile, tech and gamification dominated investments in 2013.
While much of the industry is focused on mobile and online, consoles are making a recovery from their last few sluggish years. "The 8th generation console cycle is beginning to address the decline of recent years, but questions remain about potential new installed bases, transition from the 7th generation and mobile cannibalization," Merel noted.
"Where 2013 was a year of transition, we anticipate 2014 to be a year of both growth and disruption for the games market."
For more details, you can check out the full Digi-Capital report on the firm's website.