Today, Newzoo published its latest global games market estimates, forecasting the 2019 global games market to reach $148.8 billion. While this is a healthy +7.2% growth from 2018, it is slightly lower than our earlier forecast of $152.1 billion. The revision is a result of our continuous analysis of the H1 financial results of more than 100 public companies, app analytics, and key market developments year-to-date.

One of the key factors contributing to this revision is the slowdown in spending for the console game segment. We estimate the console games market segment will reach $45.3 billion this year (+7.3% year on year)—down from our previous estimate of $47.9 billion. We also made small downward adjustments to PC and mobile game revenues. We now estimate the PC game market will grow to $35.3 billion (+2.8% year on year), while the mobile game market to grow to $68.2 billion (+9.7% year on year).

The good news is that all major segments of the market continue to grow—an impressive feat given the record-breaking year of 2018. By 2022, the market will grow even further to $189.6 billion, with mobile and console game accounting for a combined 80% of revenues.

Looking toward the future, we firmly believe that the games market is in great health and on track for continued growth. The key takeaway for the first half-year of 2019 is that the market is returning to its normal state after a uniquely strong 2018.

A more detailed breakdown of the revised growth numbers by region, country, and platform, as well as the long-term impact toward 2022, is included in the latest quarterly update of our Global Games Market Report subscription.

Console Revenue Growth Slowdown Impacts Western Markets Most

By all counts, 2018 was a record-breaking year for the console market (+26.6% growth year on year). This was due to several factors, including but not limited to:

The strength of battle royale trend (especially Fortnite)

Several generation-defining game releases

The continued success of the Nintendo Switch.

We anticipated that this success would spill over into the first half of 2019, even though we were aware that the imminent release of the next generation of consoles would result in a slowdown in spending toward the second half of 2019. As it turns out, revenue growth was already significantly lower than anticipated in H1 2019.

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Both Sony and Microsoft confirmed they were working on new consoles in the first half of 2019, which— as we expected—reduced spending on console games. Additionally, the natural decline of spending on battle royale games, such as Fortnite and PUBG, impacted console and PC game revenues.

What’s more, the console market is also in a transitional period. Subscription-based services such as Xbox Game Pass offer tremendous value for a fixed monthly fee, while the buzz surrounding exciting new ways to play, like Google Stadia and xCloud, may see console players spend on different platforms.

We believe the above innovations also affected the launches of several key titles during the first half of 2019, as players are less inclined to spend on a new game if their existing subscription offers a game of similar value.

In the first two quarters of 2018, console revenues reported by public companies grew +21% year on year and +24% year on year, respectively. During the same quarters in 2019, that growth slowed to +7% year on year and +4% year on year.

China Retains Its Position as the Largest Games Market

The downward revision also means that China retained its position as the world’s largest gaming market in 2019. Zooming in on regions, we revised our 2019 console revenue forecast for North America downward from $20.0 billion to $19.0 billion. As the largest console market globally, North America is strongly affected by these changes. Likewise, we revised our 2019 console revenue forecast for Western Europe downward from $15.6 billion to $14.5 billion. Japan is less affected by declining spend on console games than Western markets.

Although we revised our revenue forecast down in all major console markets, it’s important to stress that this decline is not a troubling sign for the market.

We already anticipated spend would decline in the second half of 2019 and throughout 2020 and to pick up again with the release of the next generation of consoles. This forecast has not changed—we still expect a boost in revenues from the last quarter of 2020 onward.

Mobile Game Publishers Eye Emerging Markets for Future Growth

As mentioned, we now forecast that the global mobile games market will grow by +9.7% to $68.2 billion in 2019—representing 46% of the global games market. It will grow with a healthy +11.2% three-year CAGR to $93.6 billion by 2022.

Spending on mobile games in countries such as Japan, South Korea, and North America has reached its peak, with these markets making up some of the highest average spend per paying gamer across all segments. Therefore, most of the revenue growth will come from emerging markets such as the Middle East, Latin America, India, and Southeast Asia, where increasing access to mobile Internet and affordable smartphones is leading to more mobile players.

However, spending on mobile games in these emerging markets does not yet come naturally compared to mature markets where gaming was popular long before the phenomenon of mobile gaming.

The downside to the popular free-to-play business model, which is used by most mobile games, is that new users become accustomed to playing for free. Therefore, it takes significant effort to convert these players into payers.

Spend on mobile games in these regions is not growing at the rate we previously forecast, particularly in India and Southeast Asia, which is why we slightly revised our outlook toward 2022.

Please note: Our revenue forecasts for key markets/segments are reviewed every quarter and updated if necessary. Find our newest key numbers in Newzoo’s Analytics Platform. Sign up for free here.

Newzoo’s Global Games Market Report: More than a Report

Interested in getting insights into specific regions or countries? Struggling to prioritize your global mobile strategy, optimize your app’s development, develop a realistic business plan, or increase your marketing ROI? Look no further than Newzoo’s Global Games Market Report.

The annual subscription service includes quarterly trend and forecasting updates, as well as access to an online dashboard with continuously updated gamer and game revenue forecasts by country and segment. The service is subscribed to by the majority of the world’s leading games, media, hardware, and entertainment companies. We also offer two similar services for the esports and mobile markets.