New research says that the UK games industry is prospering through innovative, nimble and niche business models.
Edison Investment Research also predicted that streaming was likely to be the next big revolution in the sector, as subscription-based services develop alongside an improved internet infrastructure.
The paper, entitled UK Video Games: Heterogeneous not Homogenous analysed the fragmentation, trends and opportunities in the industry.
China will continue to be the largest single market, with a potential worth of $50.7bn by 2021, but Western games are likely to struggle to break through, because of “cultural differences.”
However, the Video Games Tax Relief introduced in 2014, has enabled UK studios to compete on a level playing field globally.
“The games industry has grown exponentially from its beginnings as a fast-moving playground for enthusiasts more than 40 years ago into a $138bn behemoth that has spawned some of the world’s largest companies and created a global superpower that produces revenues greater than the film, television or music industries,” said Richard Williamson, Director of TMT at Edison Investment Research.
“In this report, we have tried to analyse the market, exposing the drivers behind the industry as well as the development of gaming alongside the development of pioneering technology. As such, we hope to give companies and investors valuable insight into the future of this increasingly lucrative market as it matures and continues to innovate.
“What is certain, is that this global industry is continuing to grow, evolve and fragment.”
Across mobile, console and PC games revenues are forecast to grow by more than 10% between 2017 and 2021. This will be led by mobile gaming (smartphone/tablet), which now accounts for a 51% total market share.
Streaming will also see significant growth, although it is still “a number of years away from significant user penetration.” What’s currently holding it back is the communications infrastructure to support it. The report said that significant investment is going into developing streaming models, be they publisher or channel (such as Netflix, Spotify) and the associated hardware.
Researchers also looked into eSports’ role and how it extended the life of games, grew the audience and also ancillary revenues. The industry sub-sector is having a significant impact on gaming’s future development as it provides a way to support communities around successful titles.
You can download the full report here.
