PC and console gaming revenue growth continues to stagnate and remain below pre-pandemic levels as players record fewer hours of playtime and have consolidated said playtime into a handful of older games that have been around for years, according to a report by research firm Newzoo.
Despite that, some growth opportunities still exist, such as emerging markets and cross-platform play. According to Newzoo's PC & Console Gaming Report 2024, PC and console gaming is expected to grow by US$14.1 billion from the end of 2023 to 2026, a compound annual growth rate (CAGR) of 2.7%, which is below the pre-pandemic rate of 7.2% from 2015 to 2021.
Along with the sluggish revenue growth estimates, players have been recording fewer hours of play, as average quarterly playtime has decreased by 26% from the first quarter of 2021 to the fourth quarter of 2023. This trend will likely continue as playtime was down another 10% in January 2024.
A crowded and consolidating market
The already stagnating revenue and playtime are increasingly consolidated in a handful of games. 66 titles accounted for 80% of playtime in 2023, a trend in line with the last two years. Among the 1400+ new games released in 2023, 90% of the playtime was spent on 48 titles, while 90% of revenue was generated by just 43 titles.
Furthermore, within this already very crowded market, players are showing a preference for older games rather than new titles.
According to Newzoo's report, in 2023, 61% of playtime was spent on games that came out 6 or more years ago, compared to 23% spent on games launched less than three years ago. 27% of all playtime in 2023 was spent on just five game titles: Fortnite, Roblox, League of Legends, Minecraft, and Grand Theft Auto V. The newest of the bunch, Fortnite, was launched more than six years ago in 2017, and the other four all have been around for more than a decade.
The longevity of these titles, coupled with their dominance in playtime data, indicates that they occupy a noticeable portion of hours that is not accessible to other games, further exacerbating the consolidation issue within the PC and console gaming market.
As a result, companies in the gaming sector have been undergoing cost-cutting measures in the past year. Industry giants like Sony, Riot Games (owned by Tencent), and Electronic Arts have laid off hundreds of employees to scale back operations.
In February 2024, Sony stated that it does not expect to release any new major franchise titles in the coming fiscal year. It has also downgraded the sales forecast of its PS5 console and is currently adjusting its gaming business.
Growth opportunities still exist
Despite the challenging conditions, Newzoo's report stated that it remains "cautiously optimistic" about the sector, highlighting that growth opportunities are still present. Some examples presented in the report include emerging markets and cross-platform play.
The report pointed out that player growth in emerging markets will significantly outpace established markets. It is estimated that from the end of 2023 to 2026, PC gaming in emerging markets will see a CAGR of 4.7%, significantly higher than the 0.2% in established markets. I
t's a similar story for console gaming, with a CAGR of 4.8% in emerging markets and 2.2% in established markets. The emerging markets here refer to Latin America, Africa, the Middle East, Central and Southern Asia, and Southeast Asia.
Another opportunity lies in cross-platform play and pay. The report shows that more and more players are willing to cross the platform boundaries of PC, console, and mobile gaming. In 2023, 47% of players play on more than two platforms, and those who play on multiple platforms tend to invest more time and money into gaming. This signals that expanding beyond just one platform can be a lucrative approach, one that was already taken by the widely popular Call of Duty series and has been quite successful.
