Covid-19 accelerates global video gaming market to $170 billion

Stuck at home, people around the world have been spending a lot more time and money on video games according to a new Simon-Kucher & Partners report. The resultant boom in the gaming market might just be here to stay.

Together with market research institute Dynata, Simon-Kucher & Partners surveyed more than 13,000 consumers across 17 global markets, looking to understand gaming patterns. The results are promising for the global gaming industry, with an uptick across nearly all metrics.

Restrictions on travel, activity and public gatherings imposed in most countries forced many to stay at home during Covid-19, in some cases completely negating the social life of a consumer. For many, gaming has become a substitute for social interaction, as people crave competition and cooperation and use virtual worlds to meet these needs.

Hours spent on playing videogames have skyrocketed as a result. ‘Casual gamers’ are described by the researchers as individuals who play up to five hours of video games each week, while ‘gamers’ spend anywhere between 5 and 20 hours. Only those who dedicate more than 20 hours of their week to gaming fall within the ‘serious gamers’ category.

The report reveals that there was a 30% jump in the ‘gamer’ and ‘serious gamer’ brackets during the crisis, presumably as casual gamers increased their playing time. A significant share of these new gamers are expected to remain glued to their screen even after the crisis. In fact, the overall increase in the higher brackets from pre-crisis to post-crisis levels is expected to level out at 17% in months to come.

Gaming’s wallet

Partner at Simon-Kucher Nick Zarb said that the spike in gaming hours will almost certainly translate into more money spent. “Given the larger amount of time being dedicated to gaming, we expect consumers to be more willing to invest in their new pastime, either in small increments through microtransactions, or larger purchases such as when the new consoles are released later this year,” he said.

Indeed, gaming spend has already increased dramatically during Covid-19, jumping by nearly 40% when compared to pre-crisis levels. And spending is expected to remain high even after the crisis, with Simon Kucher predicting a 21% sustained jump in the future relative to spending before Covid-19.

There are some variations when it comes to individual markets and regions, which the report attributes to varying lockdown regulations. The US, for instance, has seen a relatively relaxed lockdown, leading to subdued growth in the North American gaming sector. In the Asia Pacific and Latin America, where lockdowns were enforced more strictly, the gaming market has had a stellar few months with 40%+ growth. The EMEA market saw a 34% increase in gaming spend.

So despite regional variations, spending on gaming across the world saw a large increase. While subdued, the North American gaming market still grew by 15%. Interestingly, spending on gaming also increased across nearly all age groups, ranging from 13 to 84 years old. According to media expert and partner at Simon-Kucher Lisa Jäger, this pan-demographic increase in spending makes gaming “one of the bright spots in an economy that has been drastically battered by the global pandemic.”

“Covid-19 has been an energizer for the gaming industry – quarantine policies exacerbated existing trends, accelerated structural changes, and massively increased the popularity of an already fast-growing industry. We expect several companies to outperform their 2020 forecasted earnings,” added Jäger.

The result is that the global gaming industry is expected to reach a value of $170 billion by the end of this year, exceeding previous forecasts by as much as 50%. Where the year-on-year increase was initially pegged at 9% to reach $160 billion, Simon-Kucher predicts that it will probably reach anywhere between 12% and 15% as a result of the crisis.

According to the report, much like other shifts in consumer behaviour, this boom is here to stay. “Our research shows that many of these trends will be permanent, with participants forming new habits and increasing the strength of existing ones, which will drive consistent, accelerated growth over the next several years. In short, Covid-19 has greatly accelerated the already fast-growing gaming market.”