The gaming segment of the entertainment industry is one which is often overlooked, but it is quickly turning into an incredibly profitable one which could be a pain for the telcos.
The Entertainment Retailers Association (ERA) has compiled the figures for the various segments across the last 12 months in the UK, and to say than digital is taking over would be the understatement of the year (albeit we’re only three days in).
Driven by the adoption of services such as Netflix and Amazon, as well as streaming games through mobile and PC devices, digital accounted for roughly 76% of entertainment sales value in 2018. Looking at the broader segments, digital generated 80.1% of games revenues, 72.3% of video and 71.3% of music.
“On a market level these figures are a stunning testament to the investment and innovation of digital services who have transformed the fortunes of an entertainment industry many had thought was doomed by the internet and piracy,” said ERA CEO Kim Bayley.
Starting with music, streaming subscription revenues accounted for £829.1 million, an increase of 37%, compared to the £383.2 million generated in physical sales and £122.6 million in downloads. For video, streaming revenues increased by 26% to £1.6 billion, while both the physical rental and purchase market unsurprisingly declined.
Looking at the gaming side of things, digital sales grew an impressive 12.5% to £3.8 billion, while the physical gaming market declining 11.4% to £1.8 billion. Gaming now accounts for just over 51% of the three segments in the entertainment world, doubling in revenues since 2007.
“The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment,” said Bayley. “Despite being the youngest of our three sectors, it is now by far the biggest.”
While this is a niche in the world of telecommunications, it is certainly one which is worth keeping an eye on. On the traditional gaming side, the content is becoming much larger and more immersive, with more of a focus on real-time online gaming against other players around the world. This in itself has the potential to cause stress to the network, but also grounds for irritated customers; buffering will not be accepted here.
The other growing sub-segment here is mobile gaming. The launch of Niantic’s Pokémon Go demonstrated the potential of mobile gaming when done correctly, and with data becoming cheaper every single day, more consumers will be encouraged to play these games on the go. Just to emphasise this point, research from Tappable last September claims 42% of gamers now consider smartphones to be their first choice for gaming, mostly down to the convenience of the devices.
Gaming is often an aspect of the connectivity ecosystem which is overlooked, but it is increasingly becoming more prominent in the lives of consumers. It is certainly an area which should be taken into consideration moving forward.