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Video Gaming's Future Marked by Revenue Drops, New Hardware

TMCnet Feature

July 23, 2014

Video Gaming's Future Marked by Revenue Drops, New Hardware

By Steve Anderson
Contributing TMCnet Writer

To ask just about any PC or console gamer around, the video game market is experiencing a non-stop renaissance of new titles, new consoles, and a nigh-constant buying spree. But a new report from Juniper Research (News - Alert) suggests that the good times may be coming to a bit of restraint in the near future, with a bit of a drop projected by 2019.

The Juniper Research report, titled “PC & Console Games: Trends, Opportunities, and Vendor Strategies 2014 – 2019,” suggests that global revenues brought in from PC and console games of all flavors will actually drop somewhat, falling from $46.5 billion in 2014 to $41 billion by 2019, fueled mainly by, not surprisingly, a decline in console hardware sales, matched by an increase in the mobile platform market, which should yield something of a net decline in the market.

However, bolstering the market will be the continued support of software sales—which should account for better than 50 percent of the industry's revenues over the next five years—and the increased interest in cloud-based gaming. Juniper Research believes that, over the next five years, the cloud gaming market should hit over $1 billion in revenue, up from 2014's numbers, reaching $281 million. This huge increase should come due to a variety of factors, including the increasing popularity of services like PlayStation Now, Xbox Live and others, as well as the interest that operators are showing in using gaming to boost revenue. Additionally, Juniper Research expects further gains in the e-sports field, as platforms like Twitch continue to drive interest, and multiplayer online battle arena (MOBA) games like “League of Legends” continue to prove popular with PC gamers. Handheld gaming platforms, meanwhile, should continue to struggle, and will ultimately represent less than two percent of the total revenue in the sector just by 2018. Perhaps the most unexpected point in the study, though, suggests that the next generation of gaming may be ready to make an appearance around 2019.

Juniper Research's projects, for the most part, make sense enough; handheld gaming has long had troubles finding a market in the face of increased competition from mobile devices, much in the same way that point-and-shoot cameras and dedicated camcorder have to some degree. Though the idea that the next generation of consoles will show up around 2019 seems a bit early—it might have been better to figure somewhere around 2021 or so—there were some reports not so long ago that Nintendo might have been considering short-circuiting the process by bringing out the Wii U's successor a bit early. This is largely speculation, of course, but it could be that the next generation might arrive a bit sooner than some might expect on the surface. Additionally, if we start running the next generation from the Wii U's appearance, as opposed to the Xbox One and PlayStation 4's appearances, Juniper Research's figures may not be out of line. One point that may not have been noticed is the destabilizing effect of wearable technology in gaming; things like the Oculus Rift for home gamers and augmented reality for mobile gamers have serious potential to shake up markets and render projections invalid.

Only time will tell just how things all shake out, of course, but Juniper Research looks to have a good handle on the future, as it's likely to be. This means some interesting days to come for the gaming market, and days that may well change the face of gaming as we know it.

Edited by Adam Brandt

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