Video games in US to grow to $28.5 billion by 2021 - PwC
Latest forecast from PwC estimates 13 million high-end VR headsets in the US with VR content driving $5 billion in sales
According to the 18th PwC Global Entertainment and Media Outlook 2017-2021, which covers a number of major industries (not just games), the total video games revenue in the US is expected to grow at a 6.3% CAGR rate to reach more than $28.5 billion by 2021. The research firm notes that the PC games sector looks a bit rosier than consoles in the next few years in terms of growth. While total PC games revenue in the US is set to grow from $3.7bn in 2016 to $5.0bn in 2021, at a 6.6% CAGR, consoles will only grow at a 2.8% CAGR, hitting $9.4bn in 2021.
Consoles' slowed growth "can be attributed to the increase in digital full game downloads which is mostly offset by a decline of physical console game sell-through revenue, which is set to drop by a 4.3% CAGR during the forecast period," PwC noted. At the same time, the PC sector is seeing "healthy growth" in the online/microtransactions department - online PC revenue is expected to climb at a 7.0% CAGR to $4.2bn by 2021. PwC said that much of this can be attributed to the ongoing success of F2P, more subscription services and the rise of eSports. Digital sales on consoles are getting stronger and stronger as well, expected to grow at a 9.8% CAGR to hit $3.7bn by 2021 - but as noted above, the decline in physical is still offsetting much of this growth.
Virtual reality continues to draw lots of attention across the industry, and according to PwC, the segment should grow at an impressive 64% CAGR to reach $5bn by 2021, or roughly 17% of the entire US games business revenue total. The firm estimates that dedicated high-end VR (Rift, Vive, PSVR) should climb to an installed base of 13 million by 2021, while the overall VR headset installed base will reach 68 million. Additionally, "Portable dedicated headsets - a new category of self-contained headset that will emerge from 2017 designed exclusively to render VR experiences - will have an installed base of 5.3mn by 2021 (CAGR of 87.5%) because of their superior capabilities compared to smartphone-based devices, and ease of use," the firm said.
While games as a technology have been the driver of VR, PwC expects VR content revenues to be driven by non-gaming experiences like VR video, which will "grow at a CAGR of 87.8% to represent 58.3% of overall content spending in 2021. It will surpass interactive experiences and games revenue...in 2019." PwC remarked that established media like Netflix, HBO and ESPN, would play a big part in driving VR content along with major game publishers; that said, "expect smaller developers like Jaunt to get an increasing share of this content revenue as they act as the technical partners for both the big studios and non-specialist start-ups."
The other smaller, but quickly growing segment that should boost total industry revenues in the US is, of course, eSports. PwC expects the sector to grow at a 22% CAGR to reach almost $300 million in 2021. Streaming advertising is the lion's share of that total at $149 million, but sponsorships, voluntary consumer contributions and ticket sales all add to the pie as well.
"The US is the largest market in revenue terms, having overtaken South Korea in 2015, although the latter will stay far ahead in terms of per-capita revenue," PwC explained. "The development of eSports has grown at a breakneck pace in the US over recent years, receiving perhaps its biggest boost into the mainstream when ESPN began covering major events on both its streaming and regular channels - most notably the August 2015 final of The International, a tournament for Defense of the Ancients 2 (Dota 2). In September 2015 the company even advertised for an eSports general editor, in recognition of the specialist knowledge required to cover the discipline comprehensively."
Streaming sites are still the dominant medium for eSports viewing, however. Amazon-owned Twitch is said to rank behind Netflix, Google (YouTube) and Apple in terms of peak internet traffic, PwC noted. There's no doubt that eSports is capturing the attention of major corporations and advertisers. "Companies are moving in swiftly to sponsor both teams and events, with fast-moving consumer goods companies like Coca-Cola, Doritos and Snickers all forging a niche...
"Notably, in September 2016 the NBA's Philadelphia 76ers bought the long-time franchise Dignitas and Apex, which offers a guaranteed spot in the League of Legends circuit. For the 76ers, the purchase offers an opportunity to diversify into a market that is particularly popular with the protean 18-24-year-old market and get a named presence at eSsports tournaments, while their newly signed-up players can also live-stream and create content under their parent owner's banner. If the space continues to grow exponentially, sports teams such as the 76ers that become early movers will have the upper hand - as well as a usefully sized stadium for hosting tournaments. Certainly signs are positive here, with the NBA in February 2017 announcing plans to create a new league based around the game NBA 2K."
You can get more information on the full PwC report here.