The Truth About Gaming in 2023 and What's Coming Next

The end of the year is a time for summaries. Our beloved gaming industry market has shown rapid growth in the number of players, highlighted several new trends, and earned a lot. Here's the most crucial information from this year's report.

In 2023, studios are earning more than predicted, and the market is growing in all directions. Experts continue to forecast a steady increase in revenue until 2026. The number of players is growing, with mobile gaming contributing the most to this statistic. But let's look at the specific figures.

In 2023, the global gaming market will generate $184.0 billion, corresponding to a growth of +0.6% annually. The number of players worldwide will reach 3.38 billion in 2023, an increase of 6.3% compared to last year. The mobile market accounts for the most significant part of this growth.

As games continue to penetrate the mass industry and younger audiences, the number of players will grow in all directions. Young players are becoming experienced, and children are actively getting involved in the industry from an early age. The number of paying audiences grew by +7.3% worldwide in 2023 to 1.47 billion users.

The PC market demonstrated significant revenue growth this year, with an increase of +3.9% in annual terms. The global gaming market will continue to generate annual revenue of $205.7 billion in 2026. The current generation of consoles is likely to be joined by a successor to the Nintendo Switch, which should further boost sales.

Growth in the Number of Players

In the post-COVID era, games have firmly established themselves in the mainstream. With each younger generation, involvement in gaming increases. The overall popularity of games is also boosted by cinema. For instance, the Super Mario Bros. Movie, The Last of Us, and many other game-related movies and TV shows in production will popularize the gaming sphere among non-gamers. As a result, the number of players worldwide will continue to grow. Looking into the future, we see that the average annual growth rate will slightly weaken but remain stable at +4.3%, reaching 3.79 billion people by 2026.

Regional Distribution

The Asia-Pacific region accounts for more than half of the world's gamers, thanks to markets in India and China and countries with high gaming activity (Japan, South Korea). The number of active players here in 2023 is 53%. Meanwhile, Europe and North America are home to 20% of players. The highest growth in the number of players in 2023 is observed in the Middle East and Africa (+12.3% annually) and Latin America (+6.1%).

This growth is unsurprising, as improvements in internet infrastructure and accessibility facilitate the popularization of games, the rise of the middle class, and the availability of games distributed on a freemium model.

In most regions, there is intense growth in gaming revenues. Revenues from games in North America grew by 1.7% ($50.6 billion) and in Europe by +0.8% ($33.6 billion). These two regions account for 46% of global gaming market revenues.

Growth in the Middle East, Africa, and Latin America was 4.7% and 3.8%, respectively. Although each market accounts for less than 5% of global gaming revenues, it will continue to show the most robust and highest growth.

The Asia-Pacific region generates 46% of revenues. However, the growth rate there has decreased by 0.8% annually. The slower growth is associated with a decline in China due to slow licensing issuance and the end of NetEase's collaboration with Activision-Blizzard.

Challenges in the Mobile Market

In 2023, revenue in the mobile market decreased for the first time in recent years, dropping by 1.6%. Mobile game developers faced challenges related to Apple and Google's privacy policies. Mobile developers and marketers were forced to adjust their strategies and seek new approaches. Nevertheless, old hits continue to guarantee stability. The mobile market remains the most significant in the gaming industry regarding consumer spending, accounting for just under half of all gaming market expenditures.

Consoles and PCs

Meanwhile, the console segment became the second largest, generating $53.2 billion in 2023 (29% of the market). Thanks to many successful projects this year, consoles are experiencing a growth of 1.9% annually. This is because many of the biggest games initially planned for 2020-2022 were launched this year, including Hogwarts Legacy, The Legend of Zelda: Tears of the Kingdom, and Final Fantasy XVI.

The PC gaming segment was the fastest-growing in 2023, increasing by 3.9% annually and reaching $40.4 billion. As usual, the PC platform generates many titles, attracting not only the mass gaming audience who prefer big-budget AAA projects but also fans of niche genres. All this leads to increased engagement and monetization of the segment.

Top Gaming Companies by Revenue

Tencent, the largest Chinese giant, remains at the top with more than $7.5 billion in revenues. Sony is in second place with $4.3 billion. Apple is third with $3.6 billion, followed closely by Microsoft ($3.1 billion). Rounding out the top five is another Chinese company - NetEase, with $2.7 billion.

Trends

Digital sales are increasing while physical sales are declining. This is partly due to the presence of digital-only consoles and the advantages of early access to digital copies.

Cloud gaming is an extremely fast-growing market. The number of paying users by the end of 2023 is expected to be around 43 million, projected to rise to approximately 80.4 million players by 2025.

Live service games. We can expect a further increase in live service game developers supporting new content over a long period. These products are rich in microtransactions and, in case of success, can bring high revenues to developers.

Artificial Intelligence. The current response of the game developer community to AI varies from optimism about accelerating the development process to pessimism filled with concerns about mass layoffs. Regardless, AI will undoubtedly have a significant impact on the industry.

Portable Consoles. Today, several manufacturers and platform owners are working on allowing players to take their consoles with them. Approaches vary and include dedicated devices for cloud gaming (Logitech G Cloud), local remote playback via Wi-Fi (Sony projects), and portable gaming PCs (Steam Deck and Asus ROG Ally).

VR and AR. During the quarantine, the popularity of virtual reality (VR) games significantly increased. After the isolation, VR faced challenges as people began engaging in real-world activities and spent less time and money in the new ecosystem. However, Apple has joined the trend by introducing its VR system, and Meta has increased budgets in this direction, so we can expect the sector to develop further.

Conclusion

As we reflect on the gaming industry's journey through 2023, it's evident that the landscape is evolving rapidly, driven by technological advancements and changing consumer behaviors. The industry has weathered the challenges of the post-COVID era and capitalized on new opportunities, leading to significant growth across various segments.

The rise in the number of gamers globally, mainly fueled by the mobile gaming sector, underscores the industry's expanding reach and influence. The integration of gaming with other forms of media, such as movies and TV shows, further broadens the audience and cements gaming's position in mainstream culture.

However, the industry also faces its share of challenges, particularly in the mobile gaming sector, where developers grapple with new privacy policies and market dynamics. Despite these hurdles, the resilience and innovation within the industry are evident, as seen in the steady growth of console and PC gaming segments.

Looking ahead, emerging trends like cloud gaming, games as a service, and the incorporation of AI in game development are set to redefine the gaming experience. The rise of portable consoles and the continued interest in VR and AR technologies indicate a future where gaming is more accessible, immersive, and integrated into our daily lives.