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Console declines delay $100 billion mark for industry to 2019 - DFC

DFC Intelligence is revising its global forecast because consoles are "losing their second tier audience"

Earlier this year, research firm DFC Intelligence predicted that the worldwide game software market would reach $100 billion by 2018. This week, however, DFC revealed to that it's now revising that forecast thanks to trends in the console space. While total software revenues (online plus retail) will still come close to $100 billion in 2018 (hitting $97.9 billion) it won't be until 2019 that the industry eclipses the mark with $102.7 billion in sales.

As you can see from the data table below, while console software does climb by several million in the next few years, by 2019 it's expected to drop back down to be essentially flat with 2014 numbers. Meanwhile, the smartphone and tablet gaming sector continues to soar; DFC's forecast shows it nearly quadrupling 2013's numbers totaling over $35 billion in 2019.

"The console market is still very robust for AAA products. The concern is losing that second tier audience that made products like Wii, PS2, Guitar Hero, Kinect, Singstar, etc. so successful," noted DFC's David Cole. "Basically the more casual audience now has so many low cost options."

At the same time, portable software sales are expected to plummet to just $1.68 billion in 2019. That's not even five percent of the forecasted mobile and tablet gaming revenue. Factoring in online revenues bumps that up slightly, and it's clear that digital is where we'll see the greatest growth in PC and console gaming. In fact, console online revenues are expected to nearly triple 2014's numbers, totaling over $15 billion in 2019, while PC online revenues will jump another $10 billion over 2014 to arrive at $35.45 billion in 2019.

"Digital only console game sales are continuing to grow, as are digital sales of retail games, however in terms of overall units the former is still larger than the latter but big AAA retail games are steadily increasing their digital percentage of total sales," observed DFC analyst Jeremy Miller.

"Day 1 digital releases on Xbox One and PS4 are helping the digital shift, but we can't overlook the value of strong catalog management on both XBL and PSN. Digital catalog game prices have to compete with greatest hits, used games and the bargain bin at retail. It takes smart curation of these digital stores not unlike on the PC with Steam, which has gone through many evolutions in its history and not always smoothly as catalog sales become mostly dependent on discounts. That said, Microsoft and Sony, as well as Nintendo despite the Wii U trailing in next gen hardware sales, recognize the importance of digital sales of AAA retail games though will still have to simultaneously make it convenient and competitive for consumers while keeping retailers happy."

So how can game companies leverage this information? DFC says it's important to recognize the strength of games or brands that can transcend platforms. Minecraft, for example, has been successful no matter what platform it's launched on. "The biggest leverage area is strong cross platform plays. Think games like Angry Birds and Minecraft," said Cole.

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Latest comments (6)

Thomas Glen President & Co-Founder, ValorCon LLC6 years ago
I am confused. The ESA Essential Facts report for 2014 (based on NPD data) states that the "Total Consumer Spend on Games Industry 2013" (meaning hardware and software and accessories) was $21B. This report claims that software and hardware sales for the same year = $57B. That's a huge difference.

The linked article about the DFC report implies that they are including mobile ($10B) and PC. l'd be surprised if NPD/ESA excluded those?

I wish we could actually see the reports from these companies when they are used as the basis for journalism.

Edited 1 times. Last edit by Thomas Glen on 21st October 2014 5:13pm

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Nick Parker Consultant 6 years ago
I'm not sure about the forecasts for online console. $15bn in 2019 added to the $14bn of packaged goods software equals $29bn which would be almost $8bn higher than the above 2009 combined sales which was the second highest console software year ever after 2008. Console sales have started rapidly compared to the previous generation but my view is that this is a pulling forward of sales (PS3 had a slow start with a price 50% higher) and so I'm not sure such momentum will last for the next few years and therefore will not generate the levels of 2008/2009 when Wii had such an impact.

Overall the forecasts are on the high side.

Edited 1 times. Last edit by Nick Parker on 21st October 2014 5:16pm

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Caspar Field Consultant, Talk Management6 years ago
'Because consoles are "losing their second tier audience" ...DFC wildly speculated. Those games they're talking about (SingStar et al) came along much later on in previous console cycles, so for someone to say that there's a problem because there aren't equivalents to those games today on PS4 and Xbox One is simply incorrect. Those games are not supposed to exist at this point in the cycle!
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James Brightman Editor, North America, GamesIndustry.biz6 years ago
@Thomas, this DFC data is for software - it doesn't include hardware and accessories, which is what you were referring to.
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Nick Parker Consultant 6 years ago
@Thomas ... and these are Worldwide compared to the NPD USA data you have.
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Eyal Teler Programmer 6 years ago
I've seen it said before that Wii and Kinect gamers are moving to mobile, and I can't understand how people are making that connection. The difference between Wii and Kinect games and mobile games is much vaster than the difference between PC or console games and mobile. People who want what the Wii and Kinect offer simply have little to move to. The console companies have seemingly lost interest in this audience, or didn't understand it in the first place. (For example, Kinect games are generally fine, but controlling UI with hand movements is terrible. If Microsoft made Kinect game creators support controller as a must have for UI control, it would make Kinect games so much better IMO.)
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