Global gaming market will generate revenues of US$175.8 billion in 2021, a slight year-on-year decline of -1.1%. By the end of the year, there will be 2.9 billion players worldwide, according to Newzoo’s “Global Games Market Report”. This marks the first time in Newzoo’s history that they forecast the games market to decline.
When contextualizing the games market in 2021, it is important to mention that 2020 was a unique growth year. Covid-19-related lockdown measures spurred enormous interest in gaming across all regions and platforms. Moreover, the fourth quarter release of the PlayStation 5 and Xbox Series X|S sealed a year of record-breaking growth. Newzoo now estimates that the games market generated $177.8 billion in 2020, up +23.1% year on year.
While the impact of the Covid-19 outbreak on engagement and spending in 2020 was positive, there is also a downside to the pandemic’s impact on the games market. The lockdowns in the first half of 2020 affected nearly everyone’s way of working, and gaming studios were no exception. Furthermore, the pandemic is continuing to disrupt global supply chains.
Newzoo now forecasts the PC games market to decline -2.8% year on year to $35.9 billion in 2021. Of that, $33.3 billion will be spent on downloaded/boxed games, and $2.6 billion will be spent on browser games. For console, Newzoo now forecasts the market to decline -8.9% to $49.2 billion, as the after-effects of Covid-19 will shape the console market this year.
On the other hand, delays in game releases are affecting development and publishing across the market. Still, the heavier impact is on games with high production values and large teams working together, typically the AAA market for console and—to a lesser extent—PC gaming. The lineup of games for next-generation consoles has been impacted by the pandemic and will continue to be disrupted for the rest of the year, with many releases already pushed to the second half of this year or even 2022.
The negative impact also affects hardware, as global shortages of chips mean a supply shortage for many consumer electronics, including next-generation consoles and components required for high-end PC gaming.
While it is expected that a lot of the increased engagement will stick, there will be a short-term return to the levels of engagement and spending of pre-2020, as people enjoy increased freedom and spend their disposable income on non-gaming social activities. Regarding the future, the games market will continue to grow in the following years, exceeding $200 billion at the end of 2023. By then, Newzoo forecasts the games market to grow with a +7.2% CAGR between 2019 and 2023 to $204.6 billion.