According to analyst firm Newzoo, games will generate over $160 billion next year. The market will grow 7.3% from 2019, but the growth continues to slow down after the explosive 2018.
Consoles, in particular, will have the slowest year since 2015, and the next-gen consoles will only start making an impact on the segment in 2021.
Mobile will traditionally outpace other segments and will grow +11.6% year-on-year. However, most of this growth will come from the emerging markets of the Middle East & North Africa, India, and Southeast Asia.
The company’s analysts also zoom in on several trends that will define 2020.
Subcriptions and cloud gaming
Newzoo is positive that subscription services like Xbox Games Pass, Apple Arcade, PlayStation Now, and Uplay+ will continue to multiply. Cloud gaming, on the other hand, will not grow as quickly despite the obvious synergy with the subscription model.
With Stadia having already launched and Microsoft rolling out xCloud next year, it’s pretty clear that the industry is serious about the cloud technology. However, for the time being, cloud gaming is restricted by infrastructure requirements, an uneven gaming experience compared to traditional gaming, and the fact there are no strong exclusives on the cloud platforms.
As it stand right now, cloud gaming simply adds too little value for gamers.
Tough year for publishers
As the gaming world departs from physical distribution, it’s becoming easier for developers to self-publish. In this context, publishers are transforming into investors and providers of expertise.
The rise of subscription services will force publishers to get creative about how they monetize. Publishers can either agree on an upfront payment from the platform, or get paid based on consumer play time/ consumers’ number of launches on the platform. Yet another option is to combine some or all of these.
But subscription services pose another danger for publishers. In their hunt for exclusives, subscription platforms will pay developers upfront directly, thus again undermining the role of any intermediary. Big publishers obviously have enough content to launch their own subscription platforms. Smaller companies, though, will have to distribute through third-party platforms. However, selling games via somebody else’s platform means not having the usage data on those games. Like keeping up engagement and spending wasn’t challenging already!
Newzoo goes as far as to admit that VR might actually hit the mainstream in 2020.
Sure, there is no shortage of VR hardware on the market, but AAA VR content has been regrettably missing. However, Valve’s Half-Life: Alyx might just change the game for the VR market. If the VR installment in the Half-Life franchise really takes off, other big developers might bring their IP to VR.