Video games
Summary348
354
Europe, Middle East, Africa (EMEA)
365
Asia Pacific
380
Fo
r
Pr
es
s
U
se
Latin America
o
n
ly
North America
392
Summary
Video games
se
o
n
ly
The video game market consists of consumer spending on new console
games (including handheld games), personal computer games, online
games, and wireless games as well as video game advertising. The
category excludes spending on the hardware used for playing the games.
Retail purchases of games are included in either the PC games or console
games category. The online game category includes microtransactions,
which are players’ purchases of accessories and additional game content
that enhance the gaming experience. Oftentimes, online games are first
purchased at retail and then played online. When these games are then
played online for a subscription fee, the subscription fee is counted in the
online game category.
Market size and
growth by component
The video game market in North America,
EMEA (Europe, Middle East, Africa), Asia
Pacific, and Latin America will expand from
$58.7 billion in 2011 to $83.0 billion in
2016, growing at a 7.2 percent compound
annual rate. Asia Pacific, with three of
the top four countries in the world, is the
largest region, at $24.3 billion in 2011,
and is projected to be the fastest-growing
region during the next five years, increasing
10.3 percent on a compound annual basis
to $39.7 billion in 2016. Online games and
wireless games, the fastest-growing enduser components of the video game market,
constitute a larger share of total spending
in Asia Pacific than in other regions and
consequently have a greater influence on
growth. EMEA, the second-largest region in
2011, with $18.0 billion, is projected to grow
by 4.8 percent compounded annually to
$22.8 billion. North America is projected
to increase from $15.1 billion in 2011
to $18.6 billion in 2016, growing by
4.3 percent on a compound annual basis.
Latin America is projected to grow to
$1.9 billion in 2016 from $1.3 billion in
2011, a 7.2 percent compound annual gain.
Global console games, the largest category,
at $27.5 billion in 2011, will expand at a
2.1 percent compound annual rate to
$30.5 billion in 2016. PC games will continue to decline, decreasing at a 1.9 percent
rate compounded annually to $3.1 billion
from $3.5 billion in 2011. Online games and
wireless games will be the fastest-growing
end-user categories, with compound annual
increases of 13.3 percent and 10.1 percent,
respectively. Online games will total
$31.4 billion in 2016, and wireless games,
$14.2 billion. As a result, online games will
replace console games as the largest gaming
category in 2016. Video game advertising
will increase from $2.2 billion in 2011 to
$3.7 billion in 2016, growing by 11.2 percent
on a compound annual rate.
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Market size and
growth by region
348
PwC | Global entertainment and media outlook: 2012–2016
Principal drivers
The shift to online and wireless games will
hurt the console game market in the near
term, although new games being marketed
for the current generation of consoles—the
Wii, the Xbox 360, and the PlayStation 3
(PS3)—with improved motion-sensory
technology, which changes the game-play
experience and brings in a wider range of
players, will limit declines. The Wii U is the
only next-generation console that has been
officially announced, though next-generation
consoles from the other manufacturers are
likely to be introduced over the forecast
period, spurring sales of games that take
advantage of the new technologies, although
a dip in sales is to be expected during the
generational transition period for static
consoles. The latest handheld devices—the
Nintendo 3DS and the PlayStation Vita,
which are primarily gaming consoles—will
also continue supporting the market for
console/handheld games.
Deteriorating retail sales of games are
hurting retail stores. If this pattern causes
some retailers to close, it would further
exacerbate the decline in the market for
console and PC games.
The market for PC games will continue
deteriorating as consumers turn their
attention to newer technologies. Piracy of
PC games, which is prevalent in certain
markets, has also hampered the growth of
the segment. The growth of the MMOGs,
which usually require retail purchase of a
PC game, continues to support the retail PC
game market.
Video game advertising is emerging as an
additional revenue stream. The growth
of social network games and free games
is driving an increase in video game
advertising.
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ly
The growth of smartphones and tablets,
such as the iPad, with improved graphic
capabilities, is enabling developers to
produce more-advanced wireless games
and will drive demand for those games.
Smartphones and tablets, aided by an
intuitive-touch interface, are fast becoming
the devices of choice for casual game players.
At the same time, new application stores that
make the purchase of games more userfriendly will increase the number of gamers
willing to purchase games. The growth of
advanced wireless networks, with their
faster speeds, will enable wireless games to
approach the quality of console games.
Global video game market by region (US$ millions)
North America
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
13,181
16,404
15,584
15,382
15,057
15,349
15,754
16,576
17,551
18,569
U
Region
se
o
Increased broadband penetration and,
with it, the growing digital distribution of
content will drive the growth of the online
market. The migration of many massively
multiplayer online games (MMOGs) from
their subscription models to a free-to-play
business model is increasing the number
of players worldwide. The growth of
microtransactions is providing a boom
for the industry. Casual games and social
network games are important components
of the online market, helping expand the
demographic base and stimulate spending.
Some developers are shifting their attention
from console games to concentrate more on
online games.
24.5
–5.0
–1.3
–2.1
1.9
2.6
5.2
5.9
5.8
4.3
17,796
17,445
17,736
18,008
18,586
19,261
20,275
21,460
22,760
23.5
18.0
–2.0
1.7
1.5
3.2
3.6
5.3
5.8
6.1
4.8
15,215
18,624
20,942
23,059
24,313
26,982
29,664
32,751
36,099
39,739
% Change
28.1
22.4
12.4
10.1
5.4
11.0
9.9
10.4
10.2
10.1
10.3
Latin America
966
1,198
1,230
1,282
1,345
1,432
1,527
1,641
1,768
1,908
% Change
29.8
24.0
2.7
4.2
4.9
6.5
6.6
7.5
7.7
7.9
7.2
54,022
55,201
57,459
58,723
62,349
66,206
71,243
76,878
82,976
21.5
2.2
4.1
2.2
6.2
6.2
7.6
7.9
7.9
7.2
Total
% Change
44,449
26.1
es
Pr
Asia Pacific
r
% Change
Fo
EMEA
s
26.6
15,087
% Change
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | Summary349
Global video game market by component (US$ millions)
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
26,964
32,006
30,106
28,946
27,493
27,106
26,861
27,703
28,899
30,477
28.4
18.7
–5.9
–3.9
–5.0
–1.4
–0.9
3.1
4.3
5.5
2.1
7,897
10,829
12,921
15,019
16,796
19,475
22,225
25,071
28,176
31,394
37.4
37.1
19.3
16.2
11.8
16.0
14.1
12.8
12.4
11.4
13.3
4,176
5,729
6,748
7,815
8,789
9,901
11,008
12,114
13,194
14,249
% Change
25.1
37.2
17.8
15.8
12.5
12.7
11.2
10.0
8.9
8.0
10.1
PC games
4,346
4,055
3,798
3,777
3,462
3,375
3,312
3,252
3,195
3,141
% Change
–3.1
–6.7
–6.3
–0.6
–8.3
–2.5
–1.9
–1.8
–1.8
–1.7
–1.9
43,383
52,619
53,573
55,557
56,540
59,857
63,406
68,140
73,464
79,261
% Change
25.5
21.3
1.8
3.7
1.8
5.9
5.9
7.5
7.8
7.9
7.0
Advertising
1,066
1,403
1,628
1,902
2,183
2,492
2,800
3,103
3,414
3,715
% Change
Wireless games
Total
31.6
16.0
16.8
14.8
14.2
12.4
10.8
10.0
8.8
11.2
54,022
55,201
57,459
58,723
62,349
66,206
71,243
76,878
82,976
26.1
21.5
2.2
4.1
2.2
6.2
6.2
7.6
7.9
7.9
7.2
% Change
Consoles
r
The current generation of consoles—
consisting of the Xbox 360 from Microsoft,
the Wii from Nintendo, and the PlayStation 3
from Sony—began to be introduced in 2005.
The consoles were available by 2007 in all
regions except Latin America and became
available in Latin America in 2009.
Microsoft Xbox 360
The Xbox 360 was the first of the current
generation of consoles to be introduced
when Microsoft launched the device prior
to the holiday season in November 2005 in
North America, Europe, and Japan.
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The Microsoft Xbox 360 has sold over
66 million units worldwide as of the end
of 2011 compared with about 50 million
by the end of 2010. In North America, the
Xbox 360 has a wide lead over the PS3,
while in EMEA, the PS3 has a slight lead.
By contrast, in Japan, the Xbox 360, which
appeals primarily to Western gamers, has
not performed well.
Fo
Background on the
global console/handheld
hardware market
Pr
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
U
55.2
44,449
% Change
s
Total end-user
spending
o
Online games
se
% Change
es
Console games
n
ly
2007
Component
In November 2010, Microsoft introduced
Kinect, which eliminates the need for a
controller by using a specially designed
camera that enables games to detect a
player’s motions and replicate them onscreen. Eighteen million Kinects were
shipped worldwide through the end of 2011
compared with 8 million a year earlier.
In December 2011, Xbox released voiceactivated search powered by Kinect and Bing.
In December 2011, the Xbox Live dashboard
was redesigned, giving offerings like Last.
fm and the Zune video rental service more
PwC | Global entertainment and media outlook: 2012–2016
prominent positioning to encourage the
perception that the 360 is an entertainment
device that also plays games. In fact, games
represent only 60 percent of activity on
the Xbox 360. Use of the console to watch
videos has skyrocketed with the inclusion
of Netflix.
In February 2012, Kinect for Windows
was introduced worldwide, enabling the
device to be used with PCs. The Windows
version works with a variety of applications,
enabling other companies to integrate it into
their programs. Microsoft is working with
many companies such as Toyota, American
Express, and Mattel on new applications
that use the device.
One of Microsoft’s strengths is Xbox Live,
a multiplayer gaming network, social
network, and media suite. The Xbox Live
Free, which has limited capabilities, such as
voice chat and some downloadable content,
is available at no cost. A paid subscription
and was named the biggest third-party Wii
game of all time, with 14 million units sold
worldwide. The Wii sold over 4 million units
in the US in 2011.
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The Wii, which was launched in November
2006, is marketed mainly as a game machine,
as opposed to the Sony and Microsoft
machines, which are being promoted as
media centers for home entertainment.
Nintendo has expanded the universe of game
players to include younger children, older
adults, and women. Wii is the most popular
console worldwide, having sold over
95 million units due to its wider appeal.
es
Nintendo Wii
se
o
There are rumors about the next Xbox
console that many have called the Xbox 720.
This device, which has not been announced
officially, is expected to integrate with the
Windows Phone. It is expected that the
device will include a much faster processor
and Blu-ray technology. The device is not
likely to be released before the end of 2013.
The Wii is the only one of the major consoles
that does not display in high-definition
format. Nintendo introduced the Wii
MotionPlus accessory in 2009, enhancing
the Wii’s controller’s motion detection
capabilities, but Sony and Microsoft
responded with their own motion-based
peripherals in 2010: Move and Kinect. The
Wii is not as technologically advanced as
its competitors. As a result, Nintendo was
the first of the three major manufacturers
to introduce its next-generation console,
the Wii U, at the Electronic Entertainment
Expo in June 2011 in Los Angeles. The new
console, which is expected to be launched
in major markets worldwide in time for
the holidays in 2012, will display 1080p
graphics and feature a 6.2-inch touch-screen
controller that interacts with the TV and
also functions as a monitor for continuous
use when the TV is turned off. More details
of the device are expected to be introduced
at this year’s expo and are rumored to
include the ability to act as an e-reader
capable of displaying books, magazines, and
strategy guides for the company’s games.
There will be an app store designed for
the device that will include apps for the
TV screen, with others designed for the
controller itself. The device is expected to
work with multiple sticklike Wii controllers
to enable multiplayer gaming. The app store
and the e-reader will provide new revenue
streams for the company. The Wii U is
expected to be only slightly technologically
superior to its current competitors.
Fo
r
The most popular titles for the Wii are
published by Nintendo. Nintendo does not
have as much support from third-party
publishers as do Microsoft and Sony, though
a number of publishers, such as Electronic
Arts, Ubisoft, and Capcom, continue to
release exclusive titles for the Wii.
The Wii, which originally sold for $250,
saw in 2009 its first price reduction when
the price lowered to $200 in the US and
included a bundle containing a copy of
Wii Sports. In May 2011, the company
introduced its second price cut, lowering
the price to $150 and bundling it with Mario
Kart Wii instead. The lower console price
helped boost device sales. Sales of some of
the popular Wii games also spurred console
sales. For example, more than a million
copies of Legend of Zelda: Skyward Sword
were sold between its November 2011
debut and the end of the year, helping spur
console sales. Similarly, despite launching
in 2010, Just Dance 2 continues to sell well
Sony has introduced a number of different
PS3 models since its introduction, with the
latest 160-gigabyte (GB) version replacing
the 120-GB version. In August 2011, Sony
lowered the price of the 160-GB and 320GB versions in the US to $249 and $299,
respectively, with similar price reductions
around the world. The price reductions
helped spur sales of the consoles in the
latter part of 2011. Sales of the PS3 have
grown each year since its launch. During
its 2010 fiscal year, Sony sold 14.3 million
PlayStation 3s worldwide and should hit
15 million by the end of its 2011 fiscal year
in March 2012.
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to the Xbox Live Gold service is required
for multiplayer gaming, accessing social
networks such as Facebook and Twitter,
and accessing content such as ESPN3.
Worldwide, Microsoft has 40 million
subscribers to its online services.
PlayStation 3
The PS3 was launched in November 2006
in the United States, Japan, Hong Kong,
Taiwan, Mexico, and Canada, and in March
2007 in EMEA, Australia, and Singapore,
with subsequent launches, including
launches in the rest of Latin America in
2009. Global sales total around 63 million
units worldwide. As with the Xbox 360,
The PS3 is being marketed as the most
advanced home entertainment center, with
a Blu-ray player and DVR capabilities as well
as an outstanding gaming console. The PS3
online environment is free to users and lets
game developers control their own environments. Additionally, other online content
such as movies can be downloaded. In 2010,
Sony introduced PlayStation Network Plus,
an optional paid upgrade that provides free
games, discounts, and other content. In
February 2012, Sony announced that the
PlayStation Network is being rebranded as
the Sony Entertainment Network.
In October 2010, Sony introduced the Move,
its new motion controller that is similar to
the Wii controller in that it is waved and can
be used in lieu of a sword, a baseball bat, or
many other devices. Unlike the Wii Remote,
the Move also makes use of the PlayStation
Eye camera to track the wand’s position with
greater fidelity and enable added gameplay features such as augmented reality.
In the US, the Move comes bundled with a
copy of Sports Champions or EyePet and the
PlayStation Eye camera. Sony shipped more
than 4 million units worldwide in the first
month. Sports Champions, which is similar
to Wii Sports, is a collection of sports that
show off the controller’s capabilities.
Sony has said there would be no
announcement at the 2012 Electronic
Entertainment Expo regarding a new
PlayStation console. The company said its
current console will have a life span of 10
years. That doesn’t mean a new console
Video games | Summary351
Fo
Nintendo introduced 3DS, the most anticipated new gaming device of the year,
in February 2011 in Japan, and in the
American and European markets in March
2011. The device enables users to play
games in stereoscopic 3-D without the need
for special glasses. Some of the games that
were available at launch were Capcom’s
Super Street Fighter IV: 3D Edition and
Nintendo’s Pilotwings Resort and Nintendogs
+ Cats. Additionally, since the new device
has backward compatibility, all games
that played on prior DS models also work.
Studios are planning to bring 3-D movies to
the device.
352
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sells for $249, and the third-generation (3G)
version sells for $299. Some of the titles that
were available on launch day were Sony’s
Uncharted: Golden Abyss, Square Enix’s
Army Corps of Hell, and Electronic Arts
Sports’ FIFA Soccer. The Vita has a memory
card for physical software as well as the
ability to download games and apps via
the PlayStation Network. Sales of the Vita
trailed off in Japan after the first week. It
remains to be seen how well the device will
sell worldwide.
Sony Ericsson introduced the Xperia PLAY
in 2011. It is an Android-based smartphone
that is part of the PlayStation Certified program, meaning that it can play PlayStation
suite games.
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The other major game console in the
sophisticated portable market is the Sony
PSP (PlayStation Portable), a handheld
game device equipped with a 4.3-inch LCD
screen that plays music and movies on a
proprietary minidisc called the universal
media disc, which can hold 1.8 GB of data.
The PSP was originally launched in Japan in
December 2004 and in other major markets
in 2005. Since then, a number of different
models were introduced, including a budget
model called the PSP-E1000, which was
launched in 2011.
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The DS has broadened the market, attracting women and older players with its Touch!
Generations brand of games, which includes
a number of games in the Nintendogs and
Brain Training franchises, both of which are
exclusive to the Nintendo DS. There are a
number of different DS models on the
market, including the DSi and the DSi Excel.
s
Combined with interest in the current
generation of consoles, the market for
portable game consoles continues to show
strength. The Nintendo DS (dual screen) is
the leading portable device on a worldwide
basis because of its simplicity, which has
broadened its appeal beyond hard-core
gamers. The DS has two screens, providing
players with two views of the action, touchscreen capabilities, wireless connectivity, and
a built-in microphone, which are innovative
features in handheld game consoles.
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Handheld devices
Initial sales of the 3DS were disappointing
as the result of a limited number of titles,
an incomplete online environment at the
time of launch, and poor battery life. At the
end of July 2011, Nintendo announced a
worldwide 3DS price cut that reduced prices
in Japan from ¥25,000 ($314) to ¥15,000
($188) and in the US from $250 to $180,
with comparable decreases worldwide,
and supplied free games to gamers who
purchased the device at full price. Sales of
the device jumped worldwide. The launch of
Mario Kart 7 and Super Mario 3D Land was
quite successful, as they were the first two
3DS titles to reach a million units sold in the
US and they were the two top-selling titles in
Japan in 2011. As a result, the 3DS became
the top-selling device in the world in 2011.
The 3DS sold more than 4 million devices
in the US and Japan in 2011, outpacing the
Wii in its first nine months of sales. Sales are
expected to remain strong in 2012 with the
release of several major titles, including Kid
Icarus: Uprising, Luigi’s Mansion 2, Professor
Layton and the Mask of Miracle, and Metal
Gear Solid: Snake Eater 3D.
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cannot be introduced before 2016; rather,
the PS3 will continue to sell for 10 years.
Similarly, the PlayStation 2 continues to
be supported and is still selling well, with
games like Madden NFL 12 and NBA 2K12
among the top games for the PS2 in some
territories. Many of Sony’s first-party games
have long shelf lives because they are not
annual titles like certain other hit games
such as the major sports titles.
Sony introduced the PSP Vita, the newest
in its line of handheld devices, in Japan in
December 2011 and launched it worldwide
in February 2012. The Vita is a touchinterface motion-sensitive handheld device
that is a successor to the PSP. The Vita has
high-definition capabilities and improved
graphics, providing a gaming experience
approaching that of the PS3. It has a fiveinch OLED (organic-light-emitting-diode)
screen running four times the resolution of
the PSP. It also has front and rear touch pads
and cameras. In the US, the Wi-Fi version
PwC | Global entertainment and media outlook: 2012–2016
The market for dedicated handheld
devices is facing growing competition
from the rapidly increasing capabilities
of smartphones and tablets. Though in
aggregate the dedicated devices have
advantages, such as the quality of the games
being superior to those on a smartphone
and having a controller-type feel to them, a
shrinking number of people are willing to
pay the relatively high prices for the games
when they can purchase much cheaper
games for their smartphones.
In general, the overall gaming experience is
being enhanced by the linking of different
gaming platforms. For example, Xbox Live
allows PC gamers to interact with Xbox
gamers. Additionally, technology advances
are enabling smartphones to act as
controllers for some of the consoles.
Social gaming
Social gaming on sites like Facebook,
Myspace, and Google+ is growing exponentially. Social games are free, widely
available, load in a few seconds, and require
only a few minutes at a time to play. They
use a business model called freemium,
whereby the games are provided free, with
the developers gaining revenues through
microtransactions as well as advertising.
The games grow virally because users can
invite all of their contacts to join them in
playing the game.
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OnLive is available on all Internet-connected
smart TVs running the Google TV platform;
Gaikai comes installed on a number of new
LG TVs.
In the near term, cloud-based services continue to face competition from companies
that are already established in the digital
distribution of games, such as Direct2Drive
and Shockwave. They are trying to sell their
products to a market whose consumers
are already equipped with the required
technology. Additionally, since the pricing
is not that much different from the current
pricing of the download companies, there’s
little incentive to switch to cloud gaming.
Since multiplayer gaming is becoming a
more important segment of the market,
these companies must develop strategies that
minimize the latency of playing games on a
remote server. The business model for the
cloud gaming companies has a better chance
for success in the future, when consumers
are faced with the choice of buying the
next generation of new consoles or playing
games from the cloud. Cloud computing
will have an impact on many segments of
the market, including having a negative
effect on the retail sales of console games
and PC games while having a positive effect
on the subscription-based online game
segment. Since cloud users save game data
and history in the cloud, this will make the
service stickier. Cloud services also will have
a positive impact on advertising because ads
can be easily updated in the cloud.
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In December 2010, OnLive introduced a
game system that includes a MicroConsole
TV adapter, a free game, and a wireless
controller that can be connected to a TV via
Ethernet or Wi-Fi. In this way, games can be
played on a television without the need for
an expensive game console system. OnLive
expanded to the UK in September 2011.
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In June 2010, OnLive introduced a
gaming-on-demand service based on cloud
computing in the US. At its launch, OnLive
had 10 games in its inventory and now has
more than 200 games available. Instead
of offering games for purchase online and
letting them download to a computer, the
on-demand service maintains the processing
of the games on its servers and enables users
to play the games via cloud computing.
This levels the playing field for all players
regardless of the computer they’re playing on,
and as a result, gamers using computers with
low-end processing capabilities experience
the games in the same way as those using
high-end machines, because the actual game
processing is taking place on the OnLive
servers and not on the gamers’ hardware.
Games are treated as a service, with the
business model being either a subscription
or a rental that targets nontraditional
demographics, a growing trend in the
market. The service will not replace a highend PC or console for core gamers, but it will
add more casual gamers to the market.
es
Cloud computing
Gaikai launched a similar cloud-based
game service in February 2011. Currently,
EA, Capcom, and Ubisoft have signed
agreements to supply many of their titles,
and Gaikai is negotiating with other
publishers to join the service. Players can try
the games for free on any connected device
and then purchase the games, which are
streamed to a PC or tablet.
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The service is being supported by major
publishers like Take Two, Electronic Arts (EA),
THQ, and Ubisoft to reach people who do
not normally buy games. Other advantages
of the service are that it will cut down
on piracy because the games are never
actually downloaded and it enables the
game developers to more easily update their
games. By contrast, game download services
like Valve’s Steam and EA’s Origin provide
digital distribution of a game but require
gamers to have powerful computers and
significant hard disk drive capacity to save
the games as well as the time to download
them. These two companies are the major
digital distribution platforms, though Valve’s
Steam is still much more established. Cloudcomputing models will contribute to overall
growth in online games. OnLive introduced
an all-you-can-play flat-fee subscription
service called PlayPack plan, which allows
unlimited access to the majority of its older
games. It is similar to the Netflix streaming
service for movies. OnLive was initially
available for PCs and Macs.
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Zynga, the major game developer on
Facebook, is credited with introducing the
first social game, Zynga Poker, in July 2007.
Zynga’s Farmville, which was launched on
Facebook in June 2009, was the fastestgrowing game of all time, with more than
84 million monthly users at its peak. Since
then, CityVille, another game from Zynga,
which launched in December 2010, hit
88.4 million players within a month of its
release and has since reached more than
100 million visitors. It was the first time
that Zynga launched a game worldwide
simultaneously that is localized for specific
regions. In November 2010, Zynga acquired
Newtoy Inc., developer of Words With
Friends, a very popular game online as well
as on mobile devices. Since then, Zynga has
developed other games in the With Friends
series, including Hanging With Friends and
Scramble With Friends.
In December 2011, OnLive introduced an
app for Apple and Android phones, enabling
them to run full versions of games. The
app works with Wi-Fi-enabled phones and
those that use fourth generation (4G). The
games cost more than mobile games but are
more advanced than typical mobile games.
Since the games are based in the cloud,
gamers can begin playing on a PC, switch
to a mobile device, and then switch back
to the PC.
Video games | Summary353
North America
• The growing number of people playing games on social
networks and the increased number of microtransactions
are driving the online game market.
• Smartphones and tablets, which are becoming the
preferred devices for casual gamers, are boosting the
wireless game market.
• The physical PC game market will continue to deteriorate
as digital distribution of games increases and gamers seek
alternative platforms.
• Online games are expected to increase from $2.6 billion in
2011 to $3.9 billion in 2016, growing by 9.0 percent on a
compound annual basis.
• Wireless games will increase by 7.1 percent on a
compound annual basis from $1.1 billion in 2011 to
$1.6 billion in 2016.
se
• Advertising will grow as more advertisers realize the
gaming industry’s potential to reach specific audiences.
• Console/handheld games will continue to be the dominant segment of the market, though growing at only a
1.9 percent compound annual rate to $10.6 billion in 2016
from $9.7 billion in 2011.
n
ly
• Growth of the online market as well as the migration of
some players to cheaper games on mobile devices will cut
into the console/handheld game market.
• Consumer spending on games will grow at a 3.6 percent
compound annual rate to $16.6 billion from $13.9 billion
in 2011, while advertising will increase from $1.2 billion
in 2011 to $2.0 billion, an 11.2 percent increase compounded annually.
o
The outlook in brief
Overview
2007
2008
Console/handheld
games
9,445
11,988
Online games
1,747
2011p
2012
2013
2014
2015
2016
10,863
10,237
9,672
9,474
9,339
9,666
10,105
10,625
1,993
2,136
2,319
2,559
2,842
3,150
3,419
3,693
3,932
861
937
1,024
1,115
1,203
1,287
1,370
1,474
1,574
788
751
767
534
502
485
468
451
434
12,589
15,630
14,687
14,347
13,880
14,021
14,261
14,923
15,723
16,565
592
774
897
1,035
1,177
1,328
1,493
1,653
1,828
2,004
13,181
16,404
15,584
15,382
15,057
15,349
15,754
16,576
17,551
18,569
Wireless games
462
PC games
935
Total end-user
spending
Advertising
Total
2009
r
2010
Fo
North America
Pr
Video game market by component† (US$ millions)
es
s
• The overall video game market is projected to grow by
4.3 percent compounded annually to $18.6 billion in 2016
from $15.1 billion in 2011.
U
• The PC game market will decrease to $434 million in
2016 from $534 million in 2011, a 4.1 percent compound
annual decline.
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Download a PDF version of each segment. Visit the online Outlook
at www.pwc.com/outlook
354
PwC | Global entertainment and media outlook: 2012–2016
Video game market growth by component (%)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Console/handheld
games
35.0
26.9
–9.4
–5.8
–5.5
–2.0
–1.4
3.5
4.5
5.1
1.9
Online games
23.3
14.1
7.2
8.6
10.3
11.1
10.8
8.5
8.0
6.5
9.0
Wireless games
–18.9
86.4
8.8
9.3
8.9
7.9
7.0
6.4
7.6
6.8
7.1
PC games
–13.3
–15.7
–4.7
2.1
–30.4
–6.0
–3.4
–3.5
–3.6
–3.8
–4.1
Total end-user
spending
25.1
24.2
–6.0
–2.3
–3.3
1.0
Advertising
67.2
30.7
15.9
15.4
13.7
12.8
Total
26.6
24.5
–5.0
–1.3
–2.1
1.9
ly
North America
4.6
5.4
5.4
3.6
12.4
10.7
10.6
9.6
11.2
5.2
5.9
5.8
4.3
n
1.7
o
2.6
• The Canadian video game market will increase by
5.3 percent on a compound annual basis, reaching
$2.2 billion in 2016 from $1.7 billion in 2011.
Canada
Total
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
13,885
13,700
13,344
13,572
13,902
14,618
15,469
16,352
4.1
1,684
1,699
1,682
1,713
1,777
1,852
1,958
2,082
2,217
5.3
16,404
15,584
15,382
15,057
15,349
15,754
16,576
17,551
18,569
4.3
2008
11,823
14,720
1,358
13,181
2009
Pr
United States
2010
2007
r
North America
es
Video game market by country† (US$ millions)
s
U
• The video game market in the United States is expected to
grow from $13.3 billion in 2011 to $16.4 billion in 2016, a
4.1 percent compound annual increase.
se
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Fo
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Console/handheld game market
• The console/handheld game market experienced its
third straight year of declines, decreasing by 5.5 percent
following a 5.8 percent decline in 2010. In particular, sales
in December were much weaker than in December of the
prior year. The declines are attributable to the aging of the
current generation of consoles as well as the migration of
gamers to other platforms.
• Activision Blizzard’s Call of Duty: Modern Warfare 3
was the top-selling game in 2011. It became the biggest
entertainment launch in history, hitting $400 million
in the US and the UK on its first day of sales. The record
had previously belonged to the prior installment in the
franchise—Call of Duty: Black Ops—which grossed
$360 million on its first day in 2010. Call of Duty: Modern
Warfare 3 went on to gross $1 billion in its first 16 days
after its November 8 launch, one day quicker than Avatar,
the James Cameron movie, which was the highestgrossing film of all time. Call of Duty: Modern Warfare 3 is
available on all three consoles and on the PC. The Call of
Duty franchise includes five of the top-selling games of all
time in the US.
• Just Dance 3, which is available for all three of the major
consoles, was the second-best-selling game in 2011, while
its predecessor, Just Dance 2, the eighth-best-selling game
in 2011, is a Wii exclusive.
Video games | North America
355
• Skylanders: Spyro’s Adventure was a hit kids’ game that
gained extra revenues through the sale of figures that
could be transported and played with multiple consoles,
thereby enabling children to take them to their friends’
houses and play with them regardless of the console they
were using.
o
• Super Mario 3D Land and Mario Kart 7 were the fastestselling portable games in 2011 and the first 3DS titles to
top 1 million in unit sales.
• Two factors that are helping make Canada a major
game-developing center are (1) the large pool of talent
as a result of many colleges with game development
departments and (2) government policies that support
the industry through tax credits and incentives. Provincial
governments in Canada are revamping their tax credit
systems to attract game developers. Ubisoft, for example,
is making a significant investment in Ontario because
of an attractive tax package. These incentives make it
cheaper and easier to develop games in Canada than in
the United States and Europe. The Canada Media Fund,
which traditionally supported television production, now
requires funded projects to have interactive components.
This is driving all content creators to develop video games
or interactive Web sites.
n
ly
• Gears of War 3, which is exclusive to the Xbox 360, was the
only other exclusive game among the top 10 in 2011. Two
other top games—Madden NFL 12 and Call of Duty: Black
Ops—are available for all three consoles. Call of Duty:
Black Ops is also available on the DS—among the top 10,
the only title available for that device.
U
se
• The console/handheld game market declined in 2011 by
5.5 percent, reflecting the aging of the current generation
of consoles. The launch of Mario Kart 7 and Super
Mario 3D for the 3DS buoyed the market for handheld
games. There is a migration to more-casual and mobile
gaming, which is hurting the console game market. We
anticipate modest declines in 2012 and 2013 followed by
a turnaround in 2014, when it is expected that all three
next-generation consoles will be on the market. Until
then, new games developed to take advantage of the
motion controllers of the PS3 and Xbox 360 as well as
new games for the 3DS, PSP Vita, and Wii U should have
a positive effect on the market, minimizing the decline.
Even with the new consoles, due to competition from
digital platforms we do not expect the console/handheld
game market to show the large increases of the past.
Pr
es
s
• A number of highly anticipated games are scheduled for
launch in 2012, including BioShock Infinite, the follow-up
to the outstanding 2007 first-person shooter BioShock;
Grand Theft Auto V, the latest in the hit series; and Mass
Effect 3, the third of the sci-fi trilogy that started in 2007.
All of these games will be available on the PS3 and the
Xbox 360. The Last Guardian will be one of the exclusive
PS3 titles to debut in 2012, while Halo 4 will likely be a
major exclusive title for the Xbox 360.
Fo
r
• Sony launched Uncharted: Golden Abyss for the PS Vita
in February 2012. Resident Evil: Revelations is the mostanticipated game for the 3DS. It plays just like the console
version, allowing fans of Resident Evil 4 to have an
equivalent experience on a portable device.
• Although it has not been announced officially, Activision
is anticipated to continue its pattern of launching major
titles at the end of the year to take advantage of holiday
sales, with the introduction of Call of Duty: Black Ops 2 as
the next installment of the hit series.
• Canada passed the UK to become the third-largest
developer of video games in the world, surpassed only by
the US and Japan. Canada is the home of a number of top
video game developers, including Ubisoft in Montreal,
which developed Tom Clancy’s Splinter Cell series of
games; BioWare in Alberta; and Electronics Arts in
Burnaby, British Colombia, which developed FIFA Soccer,
one of the most popular games in the world. Around 20
percent of the top-selling games in North America are
developed in Canada.
356
PwC | Global entertainment and media outlook: 2012–2016
• The console/handheld game market in the United States
is expected to grow by 1.9 percent on a compound annual
basis from $8.8 billion in 2011 to $9.7 billion in 2016.
• A similar pattern is expected for the Canadian console/
handheld game market, with revenues increasing 1.9 percent on a compound annual basis from $842 million in
2011 to $925 million in 2016.
• Overall spending in North America will increase from
$9.7 billion in 2011 to $10.6 billion in 2016, a 1.9 percent
compound annual increase.
Console/handheld game market† (US$ millions)
North America
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
United States
8,714
10,997
9,900
9,350
8,830
8,650
8,525
8,825
9,225
9,700
1.9
731
991
963
887
842
824
814
841
880
925
1.9
9,445
11,988
10,863
10,237
9,672
9,474
9,339
9,666
10,105
10,625
1.9
Canada
Total
ly
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
es
o
se
s
U
• The PC platform was traditionally the only means to
play games online and is still the dominant platform,
far surpassing the Xbox 360, which is in second place.
Consoles are becoming more-important platforms because
each of the consoles in the current generation of consoles
supports online gaming. Their online marketplaces—
Xbox Live, PlayStation Network (newly rebranded as Sony
Entertainment Network), and Nintendo Wii Shop—enable
gamers to purchase games, and they allow competition
against other players anywhere via the Internet.
• In June 2011, Electronic Arts launched Origin, formerly
the EA Store, as a competitor to Steam. Origin is a digital
distribution system that enables users to purchase games
on the Internet and download them to their PCs or mobile
devices. Additionally, Origin has a number of other
features, including (1) the saving of games in the cloud,
thereby enabling them to be played on different devices,
and (2) social features such as networking with friends.
Origin currently offers more than 100 titles in its portfolio
of games from a number of different publishers, far fewer
than the Steam platform, which has around 1,500 titles.
n
Online games
Pr
• Sony’s PlayStation Network, which launched in 2006, is a
free environment that provides online gaming as well as a
means of downloading video and game content.
Fo
r
• Sony’s PlayStation Plus subscription service for the PS3
went live in 2010 at a cost of $50 annually. Under the
plan, users get free access to a selection of games that are
normally available for sale from the PlayStation Network.
• Similarly, Microsoft has two online services: First, the
Xbox Live Silver, recently renamed Xbox Live Free,
provides users with free access so they can download
a limited number of game demos and movie trailers.
Second is a gold membership, which costs $60 annually
and which is required for online gaming or access to other
services like Facebook. The company has said it has
40 million registered users worldwide.
• Valve’s Steam service is the dominant company in the
market for legally downloading games to the PC. In late
2011, the company achieved a record 5 million concurrent
users. Steam has over 1,800 games available to download
to its 40 million registered users worldwide. In June 2011,
Steam introduced free-to-play games, including Sega’s
Spiral Knights and Perfect World’s Forsaken Worlds and
has expanded its library to around 20 games, with more
to be added in 2012.
• The Mac App Store launched in January 2011 with over
a thousand programs and has made software (including
games) available in a familiar marketplace for iOS users.
There are now around 9,000 apps in the store, with games
representing the largest category. Many popular games are
in the store, including Angry Birds and Plants vs. Zombies.
That should help grow the market for Mac games, because
in the past, retail game stores rarely stocked them—in favor
of games for the PC and consoles instead.
• Massively multiplayer online games are played by
thousands of people simultaneously around the world.
MMOGs are virtual worlds inhabited by supernatural
beings, such as aliens or wizards that continue evolving.
Most MMOGs are played on PCs, with additional content
being delivered over broadband connections. World of
Warcraft (WoW), which was launched in November 2004,
is by far the most popular MMOG. The game, which had
12 million subscribers at its peak, has seen its subscriber
count decline to around 10 million. After buying the
game, subscribers pay a monthly subscription fee of $15
to continue playing online. World of Warcraft: Mists of
Pandaria, the latest expansion pack for WoW, is scheduled
to launch in 2012 and is expected to buoy demand for
the game.
Video games | North America
357
n
ly
o
s
• Another major MMOG title is the free-to-play League of
Legends, published by Riot Games, which has 30 million
registered players worldwide.
• The major game developers are beginning to realize the
potential of social games. Electronic Arts, which acquired
Playfish in November 2009 and PopCap in July 2011,
recently released a number of social games on Facebook,
including Sims Social, which reached 30 million users
in its first month. Similarly, Disney entered the social
game market by acquiring second-leading social game
developer Playdom.
U
• By contrast, many other MMOGs—such as EverQuest II,
Age of Conan, and DC Universe Online—have switched from
the traditional business model to a free-to-play model,
with microtransactions generating the revenues for the
publisher. After the switch, the number of players for
these games increased dramatically, as did the number of
microtransactions. Not all MMOGs that switch from the
subscription model become successful as free games, as
evidenced by the demise of LEGO Universe in January 2012,
which failed to achieve enough revenues after switching.
• Games on social networks, such as Facebook, have grown
exponentially. Zynga, the major game developer on
Facebook, has had a number of major games. Its CityVille
game became the biggest Facebook game of all time,
reaching 100 million users and surpassing the record held
by FarmVille, another Zynga game. The games are free
to play and generate revenues from microtransactions
and advertising. These games are also played by women
and by people in older age-groups, thereby opening
up opportunities for advertisers and other commercial
partners. Most of the social games are played on PCs and,
to a lesser extent, on smartphones and tablets. Words With
Friends, originally developed by Newtoy Inc., which is now
part of Zynga, has proved very popular on mobile devices.
Zynga continues to develop new games in the series,
including Scramble With Friends.
se
• A major new MMOG with a similar business model—Star
Wars: The Old Republic, was developed by EA’s BioWare
and launched on December 20, 2011, reaching 1 million
subscribers by the end of the month. Players who bought
the game are entitled to 30 days of free online service
before they have to pay the $15 monthly fee. It remains
to be seen how successful the game will be and if the
subscription model still has staying power.
Pr
es
• A number of new MMOGs are scheduled to launch in 2012,
including Guild Wars 2, developed by ArenaNet; Sony’s
Planetside 2; and BioWare’s Warhammer Online: Wrath of
Heroes. None of these will use the traditional subscription
business model but instead will be free to play, with
microtransactions providing the revenue stream.
Fo
r
• Electronic Arts introduced a line of free-to-play online
games, including Battlefield Heroes and Need for Speed
World, that have reached 25 million players worldwide.
• Microtransactions enable gamers to buy items that give
them an advantage in the game or enhance the gaming
experience. Combined with the free-to-play business
model, microtransactions let gamers control the amount
they spend on games rather than paying a monthly
subscription fee.
• Many game developers are adding downloadable digital
content for their games so as to enhance the gaming
experience and as an additional source of revenues.
Activision launched Call of Duty Elite, an online service, on
the same day it launched Call of Duty: Modern Warfare 3. The
online service, which has more than 7 million subscribers,
provides access to additional downloadable content.
358
PwC | Global entertainment and media outlook: 2012–2016
• Casual games—such as puzzles, cards, and arcade games
that do not require extended periods of time to learn and
to play—have attracted a wider demographic audience,
including women and older adults. In fact, the majority of
online gamers in the United States are women. A number
of online sites—such as Yahoo! Games, MSN’s Zone, and
Electronic Arts’ Pogo.com—provide some free games,
with most of their revenues coming from advertising.
Some of the popular casual games are Bejeweled, Tetris,
Solitaire, and Luxor. The games can be played online or
downloaded. There are a number of different business
models, including free, advertising-supported games; pay
per game; and subscription-based games.
• The online game market in North America grew by
10.6 percent in 2011. Growth has been driven by an
increase in broadband subscribers, by transition to the
current generation of consoles, and by the growth of social
games. There are more subscription services entering
the market as well as more companies providing digital
distribution. The online game market will grow from
$2.6 billion in 2011 to $3.9 billion in 2016, increasing
at a 9.0 percent compound annual rate.
• An expanding microtransaction market will also fuel online
game spending in North America during the next five years.
The online game market in the United States is expected to
increase from $2.1 billion in 2011 to $3.2 billion in 2016—
a 9.0 percent compound annual growth rate—while the
Canadian online game market will increase at a slightly
slower, 8.7 percent compound annual rate to $728 million
in 2016 from $480 million in 2011.
Online game market† (US$ millions)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
United States
1,399
1,605
1,722
1,879
2,079
2,316
2,574
2,797
3,020
3,204
9.0
348
388
414
440
480
526
1,747
1,993
2,136
2,319
2,559
2,842
Total
576
622
673
728
8.7
3,150
3,419
3,693
3,932
9.0
n
Canada
ly
North America
Wireless games
• Apple’s introduction of the iPhone and the App Store
revolutionized the wireless game market. The App Store
improves the buying experience dramatically over
carriers’ decks, has better descriptions, and offers free
trials. The number of games on the App Store increased
from around 5,000 in October 2008 to over 75,000 by the
end of 2011. And a number of other online services such
as the Android Market have been established that compete
with the carriers’ decks to provide content.
Pr
es
s
U
• Wireless games are games played on mobile phones and
other wireless devices. Almost all new wireless phones
are now Internet enabled, facilitating the ability to
download games. The increasing sophistication of the
new handsets will make for a more enjoyable gaming
experience. As people upgrade their existing handsets for
newer models, the number of game-capable handsets will
increase dramatically.
se
o
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Fo
r
• Historically, mobile games were simplistic due to the
graphic limitation of the handsets. As a result, the most
popular mobile games were single-player board games,
word games, and puzzles, although that trend is changing
as AAA titles are being released for these devices. These
casual games help widen the demographics of wireless
game players. In fact, more than half of wireless gamers
are women who enjoy playing casual games such as
Tetris and Bejeweled, two of the most-often-downloaded
wireless games.
• Originally, many handsets were embedded with games
as a differentiator to drive sales of individual phones.
Those games provided enjoyment for the users but did not
provide any additional revenue for the operators. With
the expansion of Internet-connected phones, operators
saw the potential for additional revenues by users’ downloading of games at a modest fee. However, the carriers’
download platforms were often not consumer friendly.
• The sophistication of games for the iPhone and iPod Touch
has caused many gamers to substitute these devices for
their DS and PSP handheld devices.
• In 2010, Apple introduced the iPad, a tablet computer
that runs all of the iPhone applications, including the
games. With its enhanced graphic capabilities and its
large touch screen, the iPad is becoming the platform of
choice for many gamers. The introduction of the iPad 2,
with the advanced A5 processor chip, which renders
graphics much faster than the previous model did,
further establishes the iPad 2 as a device on which to play
games like Infinity Blade 2 and Real Racing 2, which have
graphics that rival those of console games. The newest
version, the iPad 3, with a higher-resolution screen, was
introduced in 2012.
• The Android mobile device market has skyrocketed
because of lower prices relative to the iPhones. These
phones provide another platform for gamers.
Video games | North America
359
• Although casual games continue to dominate the market,
more-advanced games that take advantage of the
sophistication of the newer smartphones are also being
developed. Even wireless versions of MMOGs are being
developed for gamers on the go. These games will become
more prevalent as the number of technically advanced
handsets proliferates.
Electronic Arts’ major position resulted from its purchase of
Jamdat in 2006. Jamdat had been the largest mobile game
developer in the world. EA Mobile continues acquiring
smaller studios to enhance its position as the industry
leader. In 2010, it acquired Chillingo, a leading publisher
of iOS games, including the iOS version of Angry Birds. In
2011, EA acquired Australian game developer Firemint,
developer of Flight Control, Real Racing, and SpyMouse. In
2011, EA launched a mobile version of its popular Facebook
social game Sims FreePlay for Apple devices.
• There are a growing number of mobile games, both because
of the rising penetration by smartphones and because the
games are significantly cheaper than console games. Mobile
gaming provides an enjoyable experience for short periods
of time, as when waiting for a bus or train.
n
ly
• Zynga, the online game developer famous for its games
on Facebook such as CityVille, is developing a series
of games for mobile devices to expand its user base. It
recently introduced its Scramble With Friends word game
to join Words With Friends and Hanging With Friends in the
wireless segment.
se
o
• The business model for mobile games is moving from the
pay to download to the freemium model whereby the
games are downloaded for free, with microtransactions
and advertising providing the necessary revenues. In
fact, it’s estimated that in-game purchases will outpace
download fees in the near future. Angry Birds was a
hugely successful game as a paid download but has now
garnered more fans as a free download.
U
• The wireless game market is expected to continue growing
as the penetration by smartphones and tablets expands.
More people will be playing games, including casual
games, social games, and more-advanced multiplayer
games. The market will also grow as more gamers get
accustomed to making microtransactions in order to
enhance their gaming experience.
es
s
• Social network games are finding their way to mobile
phones, with microtransactions and advertising providing
the requisite revenue streams.
• The wireless game market in North America rose 8.9 percent in 2011. During the next five years, the market will
expand at a 7.1 percent compound annual rate from
$1.1 billion in 2011 to $1.6 billion in 2016.
Pr
• In December 2011, Microsoft introduced an Xbox Live
app for Windows phones and Apple devices that enables
users to track and compare their achievements and
send messages to Xbox Live friends. Microsoft is also
developing apps that will enable users to play Xbox Live
games on their devices.
Fo
r
• The wireless game market in the United States is expected
to grow by a 7.1 percent compound annual rate, reaching
$1.4 billion in 2016, up from $990 million in 2011, while
the Canadian market will increase from $125 million
in 2011 to $181 million in 2016, a 7.7 percent annual
growth rate.
• Electronic Arts Mobile, the world’s leading mobile game
developer, is headquartered in California, with a major
studio in Canada, and is best known for turning big-name
titles like Monopoly, Scrabble, and Tetris into mobile games.
Wireless game market† (US$ millions)
North America
United States
Canada
Total
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
384
767
833
911
990
1,066
1,138
1,211
1,304
1,393
7.1
78
94
104
113
125
137
149
159
170
181
7.7
462
861
937
1,024
1,115
1,203
1,287
1,370
1,474
1,574
7.1
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
360
PwC | Global entertainment and media outlook: 2012–2016
PC games
• World of Warcraft: Cataclysm, the third expansion pack
for the MMOG, sold 3.3 million copies worldwide on its
first day of availability—December 7, 2010—making it
the fastest-selling PC game of all time. It beat the previous
record holder, World of Warcraft: Wrath of the Lich King,
the second expansion pack, which sold 2.8 million copies
the first day. Despite losing subscribers recently, World
of Warcraft is still quite popular around the world, and
expectations are that the next expansion pack, World of
Warcraft: Mists of Pandaria, scheduled to debut in 2012,
will help spur PC game sales.
o
n
• Star Wars: The Old Republic, a major new MMOG, launched
in late December 2011, quickly rose up the sales charts
to become one of the most popular PC games of the year.
Another new major MMOG was League of Legends.
se
• Steam is the major player in the PC game download market,
with around 70 percent of the market. Direct2Drive,
EA.com, Blizzard.com, and Big Fish Games are among
the other download services. PC game downloads are not
included in PC gaming spending and effectively compete
with PC games.
es
s
U
• Retail sales of PC games have been deteriorating for a
number of reasons: Developers are producing fewer PC
games because of the fear of piracy. Consumers have been
migrating from PC games to those played on the current
generation of consoles. Retailers do not make the same
effort to market PC games, often relegating them to the
backs of their stores. And the move to digital distribution
of games makes downloading them directly to the PC an
easier alternative to purchasing games at retail.
ly
• The PC game market declined in 2011, returning to its
normal pattern of deterioration. This follows a one-year
aberration, when the sale of boxed PC games increased for
the first time in recent years as revenues got boosted by
large sales of World of Warcraft: Cataclysm and StarCraft II.
With just a few exceptions, the retail market for PC games
has been in decline for a number of years because the
rise of the consoles has shifted the market away from
the PC. It must be noted that this section deals only with
retail sales of PC games and does not include digital
distribution of PC games, subscriptions to online games,
or microtransactions that take place in online games.
Those revenue streams are growing in importance and are
included in the online game category.
Fo
r
Pr
• Despite recent sales declines, PC games do have a solid fan
base. PCs give gamers a superior method to play certain
game genres such as strategy games and MMOGs, because
a keyboard and mouse provide better means of interacting
with the games than a console controller does. PC games
also provide superior graphics. The most-advanced games
are often PC based because the open platform, with no
certification necessary, as is required with console games,
facilitates more-efficient development of games.
• PCs are offering better graphics than the aging consoles
are. The high-end graphics processing unit (GPU) from
NVIDIA is selling well as hard-core gamers upgrade their
computers to play games like Battlefield 3 and Elder Scrolls
V: Skyrim.
• The growth of MMOGs is aiding the retail PC game market
because most MMOGs require retail purchase of the game,
after which the gamer can play the game online.
• In addition to World of Warcraft, the other major franchise
that continues to support PC game sales comprises the
various Sims games. Sims 3, launched in June 2009,
continues to be a major-selling PC game franchise. The
Sims 3 Showtime expansion pack was released in 2012.
• The new PC games expected in 2012 include Guild Wars 2
and StarCraft II: Heart of the Swarm.
• We expect the number of games sold to show modest
decreases throughout the forecast period but not be offset
by modest price increases. North American spending on
PC games will decline from $534 million in 2011 to
$434 million in 2016, decreasing at a compound annual
rate of 4.1 percent.
• The US PC game market will decline by 4.2 percent
compounded annually from $470 million in 2011 to
$380 million in 2016, while the Canadian market will
decline from $64 million to $54 million, a 3.3 percent
compound annual rate.
Filter advertising and consumer spending data across segments.
Visit the online Outlook at www.pwc.com/outlook
Video games | North America
361
PC game market† (US$ millions)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
United States
826
701
680
700
470
440
425
410
395
380
–4.2
Canada
109
87
71
67
64
62
60
58
56
54
–3.3
Total
935
788
751
767
534
502
485
468
451
434
–4.1
North America
o
se
s
• Advertisers are turning to video games to reach specific
demographic groups that are becoming more elusive. The
prime example is males 18 to 34 years of age, who are
spending relatively less time watching television and more
time with interactive games. The video game platform
provides a unique level of engagement that is missing
in other advertising media. People are less likely to be
multitasking when they play games as compared with
when they are watching television.
• Advergaming is the practice of using a video game to
promote a product or a service. Such video games are
often played for free on corporate Web sites. Many broadcast and cable networks promote their programs through
the use of advergames. Some of the popular advergames
are Ace Assault II and LEGO Harry Potter, both of them
sponsored by LEGO; Mobile 1 Track Challenge, sponsored
by ExxonMobil; and Kart Fighter, sponsored by Red Bull.
The US Army designed a game called America’s Army to
promote recruitment.
U
Advertising
n
ly
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
• Advertisers can reward gamers for looking at ads by
providing gamers with additional game content for free.
This procedure is often used in social and mobile games.
In this way, the ads do not interfere with the game but,
rather, are means for gamers to receive additional content
that they would normally pay for.
es
Fo
r
Pr
• Initially, all ads were static, such as billboards that
appeared in the backgrounds of sporting events or product placements in which a character is shown with a
branded product. Such ads were placed in the games at
the time the games were developed, and they could not
be changed. The ads often appeared in sports games and
other contemporary environments where they added a
measure of authenticity to the games.
• With the advent of online gaming, a more-advanced type
of advertising became possible. Advertisers can now
place ads that can be changed dynamically through the
Internet. For example, a billboard promoting a movie
can be updated as new films get released. In this way, the
advertising will always be fresh. Additionally, advertising
can be targeted geographically, with different messages
hitting different geographic areas. The messages can be
programmed for delivery at specific times of day. Since
online games are attached to the Internet, it’s also possible
to track both the number of times a gamer is exposed
to ads and the amount of time that ads appear on the
screen. And the placement of the ads can vary by the
user’s experience. For example, if a player does not spend
enough time on the ad, it can be made to reappear later in
the game.
362
PwC | Global entertainment and media outlook: 2012–2016
• A major growth area is advertising that appears around
games on social networks. For example, Facebook often
places ads in the borders around social games.
• In 2006, Microsoft entered the game advertising market
by acquiring Massive Inc., a pioneer in the in-game
advertising industry. Massive had deals with Electronic
Arts, THQ, and Activision to insert ads in a number of
their games. Advertisers that wanted to place ads in Xbox
360 games had to go through Massive. In October 2010,
Microsoft announced it was closing down its Massive
subsidiary and would deploy its technology into its firstparty ad business. Xbox Live thus became Microsoft’s sole
advertising platform.
• Microsoft had been placing ads in its Xbox 360 games
for several years, while Sony began permitting in-game
advertising in the middle of 2008. Nintendo still does not
permit in-game advertising in any of its games.
• Sony is taking a different approach to its in-game advertising by opening up its platform to allow independent
ad companies to broker deals with third-party game
publishers. IGA Worldwide and Double Fusion, two
companies that also developed the technology to insert
dynamic ads in games, have partnered with Sony to place
dynamic ads in PS3 games. IGA signed exclusive deals
with Activision and Electronic Arts to deliver in-game ads
for the PS3, while Double Fusion signed deals to insert
dynamic ads on the PS3 for NBA 2K12 and NHL 2K12.
Pr
es
ly
n
o
s
U
• Double Fusion, a leading independent in-game advertising
network, acquired the assets of rival NeoEdge Networks
in December 2011, which focused on in-game ads in social
and mobile games. These ads are often placed when a
round of play ends rather than within the game itself.
Double Fusion—whose clients include McDonald’s,
Dr. Pepper, State Farm Insurance, and Toyota and which
has placed ads in games developed by Ubisoft and THQ,
among others—is thus likely to concentrate more on social
and mobile games.
• Advertising is appropriate only in sports games and other
games set in contemporary times where it enhances the
gaming experience by making the environment more
realistic, because it would be hard to imagine a baseball
stadium without billboards. In those cases, gamers
respond favorably to the ads, and studies have shown
that they have favorable perceptions of the advertised
products and are more likely to buy them. By contrast, ads
would not be appropriate in games set in medieval times
or fantasy worlds, and Blizzard has said ads would never
appear in World of Warcraft games. Similarly, studies
found that ads are less effective in violent games because
such games require a higher level of concentration,
drawing players’ attention, and players are averse to ads
that draw their attention away from the actual game
playing. Ads in violent games must therefore be less
obtrusive so gamers can absorb them without distraction;
otherwise, the ads could have a negative impact.
se
• The dynamic in-game advertising segment of the market
has not grown as quickly as expected, as evidenced by
the closings of Microsoft’s Massive subsidiary and the
downsizing of employees at IGA Worldwide, a leader in
this market segment. Instead of in-game advertising in
major gaming titles, advertisers are focusing more on
casual and mobile games.
• Display ads, advergames, and advertising on Web-based
game portals are the major advertising segments.
Fo
r
• Greystripe, the world’s leading independent mobile
advertising network, is bringing ad-funded games to
the iOS and Android platforms. Previously, Greystripe
concentrated its efforts on making games available to
consumers directly on its own Web site Gamejump.com.
Angry Birds, which was a huge hit as a paid download
on the App Store, has gained even more fans as an adsupported game on the Android platform.
• Product placement is an effective means of advertising
in video games. Having a character interact with a
product, such as drinking Red Bull to stay alert, drives
the message home.
• Microsoft introduced a new suite of advertising tools in
2011 called NUads (natural user-interface ads) for its
motion-sensing Kinect devices. NUads enable gamers
to use voice and motion commands to access additional
product information and maps of local establishments
selling the products. By simply saying “Xbox more,” a
gamer can get an e-mail with more information about the
advertised product.
Video games | North America
363
• The United States is the largest market in the world for
video game advertising, with revenues of $975 million in
2011 that will grow to $1.7 billion in 2016. The Canadian
market, being closely associated with that of the United
States, is a relatively strong market for advertising, with
revenues of $202 million in 2011 that will grow to
$329 million in 2016.
n
ly
• Video game advertising is still only a small segment of
the video game market, with North American revenues
estimated at $1.2 billion in 2011. Game publishers are
using advertising revenues to supplement revenues from
game sales, which are decreasing in the retail market.
We expect this market to expand, fueled by the growth of
social and mobile games. By 2016, video game advertising
will total $2.0 billion, growing by 11.2 percent at a
compound annual rate.
Video game advertising market† (US$ millions)
Canada
Total
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
500
650
750
860
975
1,100
1,240
1,375
1,525
1,675
11.4
92
124
147
175
202
228
253
278
303
329
10.2
592
774
897
1,035
1,177
1,493
1,653
1,828
2,004
11.2
s
es
Pr
r
Fo
364
1,328
U
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
PwC | Global entertainment and media outlook: 2012–2016
o
United States
2007
se
North America
Europe, Middle East, Africa (EMEA)
The outlook in brief
• Consumer spending on video games will grow by
4.6 percent on a compound annual basis from $17.4 billion
in 2011 to $21.8 billion in 2016.
• The console/handheld market is being hurt by the shift to
online and mobile gaming.
• Video game advertising is expected to grow by 10.2 percent
on a compound annual basis from $613 million in 2011 to
$994 million in 2016.
• The online game market is being driven by increased
broadband penetration, the growth of social online
gaming, and increased digital distribution of content.
• Console/handheld games will continue to be the largest
segment of the market, increasing by 1.9 percent compounded annually from $9.5 billion in 2011 to $10.5 billion
in 2016.
ly
• The wireless market is being driven by the explosion of
smartphones and tablets that enable an enhanced gaming
experience.
• Retail PC game sales will continue to deteriorate as digital
distribution expands, which is also hurting retail stores.
n
• Online games, driven by both casual games and MMOGs,
will increase by 11.3 percent compounded annually to
$6.8 billion in 2016 from $4.0 billion in 2011.
• PC game sales will dip from $2.2 billion to $2.1 billion, a
1.7 percent compound annual decrease.
es
s
U
• The overall video game market is anticipated to increase
from $18.0 billion in 2011 to $22.8 billion in 2016,
growing at a compound annual rate of 4.8 percent.
• Wireless games will increase to $2.4 billion by 2016,
up from $1.6 billion in 2011, an 8.4 percent compound
annual increase.
se
Overview
o
• Video game advertising is being driven by the increase in
free social network games.
Video game market by component† (US$ millions)
2007
2008
Console/handheld
games
9,212
Online games
1,976
PC games
Total end-user
spending
Advertising
Total
2010
2011p
2012
2013
2014
2015
2016
11,180
10,328
9,883
9,534
9,374
9,252
9,520
9,914
10,453
2,510
3,021
3,569
4,002
4,550
5,140
5,689
6,274
6,832
1,197
1,342
1,467
1,614
1,764
1,927
2,084
2,252
2,421
2,653
2,520
2,312
2,298
2,245
2,197
2,162
2,127
2,090
2,060
14,789
17,407
17,003
17,217
17,395
17,885
18,481
19,420
20,530
21,766
298
389
442
519
613
701
780
855
930
994
15,087
17,796
17,445
17,736
18,008
18,586
19,261
20,275
21,460
22,760
r
948
Fo
Wireless games
2009
Pr
EMEA
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Access data and digital functionality across your organization.
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Video games | EMEA
365
Video game market growth by component (%)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Console/handheld
games
29.4
21.4
–7.6
–4.3
–3.5
–1.7
–1.3
2.9
4.1
5.4
1.9
Online games
31.3
27.0
20.4
18.1
12.1
13.7
13.0
10.7
10.3
8.9
11.3
Wireless games
26.9
26.3
12.1
9.3
10.0
9.3
9.2
8.1
8.1
7.5
8.4
0.4
–5.0
–8.3
–0.6
–2.3
–2.1
–1.6
–1.6
–1.7
–1.4
–1.7
Total end-user
spending
23.1
17.7
–2.3
1.3
1.0
2.8
Advertising
46.1
30.5
13.6
17.4
18.1
Total
23.5
18.0
–2.0
1.7
1.5
3.3
5.1
5.7
6.0
4.6
14.4
11.3
9.6
8.8
6.9
10.2
3.2
3.6
5.3
5.8
6.1
4.8
o
PC games
n
ly
EMEA
U
• France, the second-largest video game market in EMEA,
at $3.4 billion in 2011, is the home of Vivendi (majority
owner of Activision Blizzard) and Ubisoft Entertainment,
two of the top five video game publishers in the world.
Additionally, France has two of the primary producers of
mobile games: Gameloft and Zenops. The French government provides significant tax benefits for the development
of games—same as it does for the film industry—and
many international game developers have established
studios in France. The video game market in France is
expected to grow 3.6 percent on a compound annual basis
to $4.0 billion in 2016.
Fo
r
Pr
es
s
• At $3.8 billion in 2011, the United Kingdom is the largest
video game market in EMEA. The United Kingdom is
an important game-developing center that includes
development of such major games as Batman: Arkham
City, Little Big Planet, and the Grand Theft Auto series.
The UK also has specialist expertise, such as a strong
visual effects industry, which is important in the final
production of games. In the United Kingdom, the industry
is concerned that other countries—especially France,
Canada, and Singapore—are luring game developers
away by providing tax incentives, and therefore the
UK’s video game industry has asked the government for
similar incentives. In March 2010, the British government
announced plans to include in its annual budget certain
tax breaks for the gaming industry. However, later in the
year, after the elections, the new government changed
course and did not include the tax breaks. It appears that
game publishers are moving some of their development
studios to Canada, which provides more-beneficial tax
incentives and now claims to have surpassed the UK as
the third-largest game development market. From 2008
to 2010, the British game industry’s workforce declined
by 9 percent, while that of Canada increased by one-third.
The UK game market decreased 1.5 percent in 2011, its
third consecutive decline—after many years of significant
growth—because of the migration of players to other
platforms. The UK is expected to maintain its dominance
in EMEA, growing 4.4 percent on a compound annual
basis to $4.7 billion in 2016.
se
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
366
PwC | Global entertainment and media outlook: 2012–2016
• Germany has the third-largest video game market in EMEA,
at $2.8 billion in 2011. Germany’s game market is unique in
comparison to the other major markets in that its PC game
market is relatively strong compared with the console game
market because of the relatively low levels of penetration
by console hardware. Germany has strict laws regarding
violence in video games. In fact, Germany has its own
voluntary industry board called the USK, which reviews
and rates games, while most other European countries
follow the Pan-European Game Information ratings system.
Germany has about 10,000 people working in the game
industry at large international publishers such as Sony,
Ubisoft, and Electronic Arts as well as at local companies
like Bigfoot and Gameforge. Germany is at the forefront of
the development of free-to-play online games, the fastestgrowing segment of the online market. The German market
will expand to $3.3 billion in 2016, a 3.5 percent compound
annual increase.
• Italy also has a significant video game industry, with
revenues of $1.4 billion in 2011. Italy has a number of
small game developers, many of which are subsidiaries of
larger, foreign companies. The games developed locally
are often football (soccer) related. The local market
has been hampered by piracy, and the government has
promised to try to combat the problem because Italy
has the highest rate of pirated games in Europe. Italian
spending on video games is expected to grow to
$1.9 billion in 2016, increasing at a 6.2 percent compound annual rate.
• The UK is the biggest market in the region, with revenues
totaling $2.2 billion in 2011. Console/handheld game
sales declined 6.9 percent in 2011 following larger
declines in 2009 and 2010. The UK is the home of a
number of major game developers, including Rockstar
North, Rocksteady Studios, Media Molecule, Lionhead
Studios, Codemasters, FreeStyleGames (a subsidiary of
Activision Blizzard), and Blitz Games Studios.
es
ly
s
U
se
o
n
• Spain has the fifth-largest video game market in EMEA,
at $1.2 billion in 2011. By 2016, the Spanish video game
market will total $1.5 billion, a 4.6 percent compound
annual increase.
• Russia is by far the largest market in Central and
Eastern Europe, with revenues of $1.4 billion in 2011.
Additionally, Russia is projected to exhibit the highest
growth rate of any country in EMEA, increasing at
an annual rate of 11.0 percent compounded annually
through 2016 to reach $2.3 billion. Similar to Germany,
the PC game is relatively strong in Russia. In fact, outside
Germany, Russia is Steam’s largest-growing territory in
EMEA. Free-to-play MMOGs are very popular in Russia.
• Activision Blizzard’s Call of Duty: Modern Warfare 3 was
the top-selling game in the UK in 2011, grossing a recordbreaking £83 million ($133 million) in its first week. It
was the third year in a row that a Call of Duty title was the
top-selling game in the UK. Some of the other best-selling
titles across all platforms in the UK in 2011 were FIFA 12
and Battlefield 3. Those three titles were among the top
sellers on both the PS3 and the Xbox 360. By contrast,
the top sellers on the Wii were Zumba Fitness, Just Dance
3, and Just Dance 2. Revenues in the UK are expected to
reach $2.3 billion in 2016, a 1.4 percent compound annual
growth rate from 2011.
Pr
Console/handheld game market
Fo
r
• The console/handheld game market decreased by
3.5 percent to $9.5 billion in 2011, due partially to the
aging of the current generation of consoles.
• The market is expected to exhibit modest declines in
2012 and 2013 before returning to positive growth in
2014, as many new games will be developed for the next
generation of consoles, which are expected to hit the
market in the latter part of the forecast period. We do
not expect the high growth rates that occurred when the
current generation of consoles debuted, because there is
increased competition from other gaming platforms.
• France is the second major market in the region, with
revenues of $2.0 billion in 2011 that are expected to
increase to $2.1 billion in 2016, a 1.3 percent increase
compounded annually.
• Germany is the third-largest market, with revenues of
$1.6 billion. Germany has a strict ratings system that
limits sales of violent games and holds down the console
market. The console market in Germany is relatively
small compared with the country’s PC market, owing to a
lower penetration by consoles. Germany is the only major
market where more people play games on PCs rather than
on stationary consoles. The market is expected to grow
to $1.8 billion in 2016, a 2.3 percent compound annual
increase from 2011.
• Call of Duty: Modern Warfare 3 was the most popular title
in Europe in 2011, as it was in the US and worldwide.
The game broke several worldwide records, including
reaching the billion-dollar level in 16 days, one day faster
than Avatar, the James Cameron movie that became the
biggest-grossing film of all time.
Video games | EMEA
367
Video game market by country† (US$ millions)
2007
EMEA
Western Europe
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
63
75
77
81
81
84
87
92
97
103
4.9
Belgium
302
380
360
355
346
340
335
346
359
377
1.7
Denmark
173
202
196
199
201
206
212
221
230
240
3.6
Finland
130
145
167
182
182
179
182
188
198
206
2.5
France
2,869
3,412
3,386
3,416
3,352
3,395
3,455
3,602
3,793
3,999
3.6
Germany
n
ly
Austria
2,631
2,592
2,659
2,757
2,803
2,847
2,959
3,110
3,281
3.5
45
54
55
60
60
65
65
67
73
75
4.6
Ireland
387
470
462
482
488
503
522
549
580
612
4.6
1,112
1,326
1,291
1,371
1,428
1,497
1,580
1,686
1,801
1,926
6.2
Netherlands
658
789
801
801
809
Norway
184
217
193
190
190
Portugal
39
49
47
51
1,304
1,445
1,304
1,212
Sweden
325
384
353
367
Switzerland
363
441
451
3,580
4,304
3,974
13,814
16,324
15,709
United Kingdom
Western Europe total
Central and Eastern Europe 20
255
Poland
Romania
11
84
22
se
58
62
64
67
67
3.7
1,223
1,247
1,288
1,363
1,442
1,529
4.6
377
389
403
421
446
476
4.8
929
982
4.0
195
201
211
220
233
4.2
s
U
888
482
500
521
543
571
607
643
5.2
3,812
3,755
3,844
3,973
4,171
4,399
4,659
4.4
15,720
15,805
16,157
16,605
17,399
18,351
19,408
4.2
98
112
122
131
141
151
162
174
7.4
r
Hungary
82
23
25
25
27
29
30
32
33
5.7
323
334
350
363
375
389
403
419
437
3.8
16
22
23
25
26
28
29
28
29
3.0
Fo
Czech Republic
56
es
Spain
850
831
Pr
Italy
o
2,280
Greece
Russia
685
759
967
1,207
1,357
1,544
1,728
1,905
2,092
2,285
11.0
Turkey
39
47
49
50
55
58
63
65
68
71
5.2
1,092
1,251
1,493
1,767
1,947
2,161
2,378
2,583
2,801
3,029
9.2
Central and Eastern
Europe total
Middle East/Africa
Israel
59
72
73
76
80
85
89
94
99
103
5.2
Middle East/North
Africa (MENA)‡
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
South Africa
122
149
170
173
176
183
189
199
209
220
4.6
Middle East/
Africa total
181
221
243
249
256
268
278
293
308
323
4.8
15,087
17,796
17,445
17,736
18,008
18,586
19,261
20,275
21,460
22,760
4.8
EMEA total
†At average 2011 exchange rates.
‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
368
PwC | Global entertainment and media outlook: 2012–2016
Console/handheld game market† (US$ millions)
2007
EMEA
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Western Europe
35
40
36
36
33
32
31
32
33
35
1.2
Belgium
225
299
280
271
259
249
242
250
260
273
1.1
Denmark
112
133
121
118
115
113
111
114
118
123
1.4
Finland
83
97
121
129
125
121
118
121
125
131
0.9
France
1,881
2,295
2,191
2,156
2,017
1,962
1,913
1,962
2,045
2,149
1.3
Germany
1,565
ly
Austria
1,572
1,600
1,550
1,590
1,579
1,614
1,683
1,781
2.3
22
28
26
26
24
24
22
22
24
25
0.8
Ireland
227
278
250
250
237
228
223
230
239
252
1.2
Italy
687
857
807
843
842
835
828
856
897
953
2.5
Netherlands
316
409
381
344
Norway
120
143
119
110
Portugal
21
25
22
22
Spain
885
957
783
Sweden
217
252
241
Switzerland
194
236
United Kingdom
2,524
3,055
Western Europe total
8,807
10,676
37
o
306
320
337
1.3
104
102
101
103
106
111
1.3
U
se
298
21
21
21
22
22
22
0.9
680
647
627
612
626
643
675
0.9
242
240
237
235
240
251
264
1.9
es
s
306
232
228
223
219
223
230
241
1.1
2,600
2,326
2,165
2,109
2,077
2,133
2,213
2,326
1.4
9,808
9,335
8,963
8,768
8,616
8,854
9,209
9,698
1.6
46
54
58
61
64
67
71
75
5.3
11
12
12
13
13
13
14
14
3.1
149
163
177
188
198
209
220
233
248
5.7
4
7
8
9
10
10
11
12
12
13
5.4
Russia
109
136
123
129
138
159
175
186
201
222
10.0
Turkey
22
26
24
25
26
27
29
30
31
33
4.9
300
370
375
406
432
468
501
528
562
605
7.0
Poland
Romania
Central and Eastern
Europe total
Fo
12
118
Hungary
10
40
r
Czech Republic
316
230
Pr
Central and Eastern Europe n
1,258
Greece
Middle East/Africa
Israel
33
39
36
35
34
34
33
34
35
37
1.7
Middle East/North
Africa (MENA)‡
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
South Africa
72
95
109
107
105
104
102
104
108
113
1.5
Middle East/
Africa total
105
134
145
142
139
138
135
138
143
150
1.5
9,212
11,180
10,328
9,883
9,534
9,374
9,252
9,520
9,914
10,453
1.9
EMEA total
†At average 2011 exchange rates.
‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | EMEA
369
Pr
n
ly
es
s
• The online game market is composed of several segments.
Massively multiplayer online games are usually role-playing
games that take place in fantasy or medieval worlds and
can be played over long periods of time. After purchasing
copies of the game at retail stores, players often pay
monthly fees to participate, sometimes making additional
purchases to buy online equipment and accessories. The
microtransactions associated with MMOGs are major
drivers of online gaming revenue growth. Currently, these
games are played primarily on PCs. World of Warcraft is the
leading MMOG in EMEA and is expected to maintain its
lead with its new expansion pack—World of Warcraft: Mists
of Pandaria—scheduled for release in 2012.
• OnLive and Gaikai are two cloud-based gaming services
that let players play traditional disk-based PC games on
entry-level computers, because the processing takes place
on the companies’ servers. With cloud gaming, there’s no
need to download the games or own the physical media.
OnLive has also developed a low-cost console, enabling
games to be played on a television. In September 2011,
OnLive expanded to the UK, making it the first overseas
expansion since launching the service in the US in June
2010. Gaikai has partnered with Eurogamer, a leading
consumer game site, to become its first media affiliate in
Europe, enabling gamers to stream Gaikai-powered games
across Europe in local languages.
o
• Digital distribution of content is emerging as an important
segment of the market. In addition to full games, players
can also download additional game content to enhance
their playing experience.
se
• The PC platform has traditionally been the only means of
playing games online and is still the dominant platform
for online games, far surpassing the Xbox 360, which
is in second place. The major console manufacturers—
Sony, Microsoft, and Nintendo—have introduced online
marketplaces (PlayStation Network, Xbox Live, and
Nintendo Wii Shop) that enable gamers to purchase games
and other content and that facilitate competition against
other players anywhere in the world via the Internet.
• Another segment of the online market consists of casual
gamers who go to a Web site and play strategy games
or puzzle games—often at no charge—with advertising
supplying the requisite revenues. Casual game sites like
RealGames.com, King.com, and PopCap.com reach twothirds of European gaming households. These casual
game sites expand the demographics of gamers. For
example, in France the majority of gamers using online
game portals are women. In Germany, GMX.net is a major
game portal for casual games. In general, game portals are
usually language specific.
U
Online games
Fo
r
• As in many other regions, the free-to-play business model
is taking hold in EMEA, with microtransactions supplying
the requisite revenues. Many popular MMOGs, including
EverQuest II, recently switched to the free-to-play model
and have experienced growth in number of users
and spending.
• Rapid growth in social gaming is also driving spending on
microtransactions. Many social games are free, but gamers
buy virtual goods to give them an edge or otherwise
improve the gaming experience.
370
PwC | Global entertainment and media outlook: 2012–2016
• The increased penetration of broadband households is a
major driver of online games because the faster speeds
make for a more enjoyable experience. The number of
broadband subscribers in EMEA surpassed the 100-million
mark in 2006, grew to over 170 million in 2011, and is
expected to exceed 240 million by 2016, providing a
strong impetus for the online market.
• Online game revenues rose by 12.1 percent in 2011 to
$4.0 billion. We expect online games during the next five
years to increase by 11.3 percent compounded annually to
$6.8 billion in 2016.
• The UK, the largest market in EMEA, at $802 million
in 2011, will increase at a compound annual rate of
10.1 percent to $1.3 billion in 2016. World of Warcraft is
the most popular MMOG in the UK, as it is in most other
countries in Europe.
• Italy had the fifth-largest online game market, at $364 million in 2011, and is expected to show the largest increase
of any country in Western Europe, growing at a compound
annual rate of 13.4 percent to reach $682 million in 2016,
making it the third-largest market in that year. The large
increase is due to strong growth in numbers of broadband
subscribers (the highest gain in Western Europe) combined
with higher penetration of online gamers.
• Russia is second, at $736 million, and is expected to show
the sharpest increase in EMEA, growing by 16.1 percent
compounded annually to $1.6 billion in 2016. The downloading of PC games is quite popular in Russia, as is the
downloading of free-to-play MMOGs. In Russia, Facebook
does not have a dominant position; instead, local social
networks, such as VKontakte, are very important.
n
o
se
Pr
es
s
U
• Germany is the home of Bigpoint and Gameforge, two
rising players in the hybrid free-to-play/pay online market,
a segment led on a worldwide basis by Zynga. Online
revenues are projected to grow to $675 million in 2016,
increasing by 10.1 percent on a compound annual basis
from $417 million in 2011.
• The Netherlands has one of the most active online markets
in Europe, with revenues of $334 million in 2011 due to its
high broadband penetration, which surpassed 80 percent.
Both MMOGs and casual games are very popular in the
Netherlands and are driving overall spending. Netherlandsbased Spil Games is a global leader in online casual games,
with numerous game sites in 19 languages around the
world and over 4,000 games in its portfolio. A number
of other Dutch companies are developing online game
portals, including Zylom, which delivers casual games to
12 European countries and YoudaGames, which has over
2,000 games on its portal. Online revenues are projected to
reach $452 million in 2016, a 6.2 percent compound annual
increase from their 2011 level.
ly
• France is next, with revenues of $554 million in 2011,
which will grow by 10.3 percent annually to reach
$904 million in 2016. In January 2012, Bouygues Telecom
and Playcast Media partnered to launch a new cloud
gaming service called Bbox games. Bouygues is the first
French telecom company to bring high-profile game
franchises directly to gamers’ TVs with an easy-to-use
interface. Playcast is currently providing a similar service
in Portugal and Spain.
Fo
r
View data in your local currency. Visit the online Outlook at
www.pwc.com/outlook
Video games | EMEA
371
Online game market† (US$ millions)
2007
EMEA
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
8
11
14
14
15
17
18
19
21
22
8.0
Belgium
11
15
17
19
22
24
25
26
29
31
7.1
Denmark
20
24
28
31
33
37
42
44
46
48
7.8
Finland
8
11
13
15
17
18
21
22
24
25
8.0
France
301
398
462
509
554
620
697
762
835
904
10.3
Germany
511
559
620
675
10.1
14
15
17
18
10.4
121
129
138
146
8.5
498
563
626
682
13.4
358
378
401
422
452
6.2
40
45
49
52
56
9.2
10
11
11
11
13
13
5.4
246
267
295
327
362
390
9.7
64
71
78
85
92
100
9.3
309
291
371
417
465
7
8
10
11
11
13
Ireland
54
71
81
89
97
109
Italy
220
259
282
317
364
423
Netherlands
209
243
282
309
334
Norway
19
26
30
33
36
Portugal
4
7
7
8
146
186
214
227
Sweden
32
46
53
57
Switzerland
87
113
129
446
581
674
1,829
2,308
2,587
Western Europe total
Central and Eastern Europe Hungary
3
Poland
7
Romania
NA
14
3
s
162
183
206
224
246
265
10.3
741
802
898
1,007
1,103
1,203
1,299
10.1
2,896
3,184
3,554
3,967
4,339
4,746
5,126
10.0
17
20
23
26
29
32
35
39
11.1
r
18
4
5
5
6
7
8
9
10
14.9
10
11
12
13
15
16
18
20
23
12.1
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
Fo
Czech Republic
es
United Kingdom
145
Pr
Spain
U
257
Greece
o
Austria
n
ly
2009
se
Western Europe
2008
Russia
102
151
372
601
736
900
1,064
1,227
1,391
1,555
16.1
Turkey
6
8
10
10
11
13
14
15
16
17
9.1
136
186
414
648
788
960
1,130
1,300
1,471
1,644
15.8
8
10
12
14
16
18
20
22
24
25
9.3
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
South Africa
3
6
8
11
14
18
23
28
33
37
21.5
Middle East/
Africa total
11
16
20
25
30
36
43
50
57
62
15.6
1,976
2,510
3,021
3,569
4,002
4,550
5,140
5,689
6,274
6,832
11.3
Central and Eastern
Europe total
Middle East/Africa
Israel
Middle East/North
Africa (MENA)‡
EMEA total
†At average 2011 exchange rates.
‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
372
PwC | Global entertainment and media outlook: 2012–2016
Wireless games
• The business model for wireless games is changing.
Originally, the market consisted of onetime payments
for the downloading of games. A growing number of
games are being offered for free, with microtransactions
and advertising providing the requisite revenues for
publishers. Angry Birds, a hugely successful game
worldwide as a paid download, gained even more
followers as a free, advertiser-supported game. By
providing games for free, publishers are able to expand
the number of players and reap their revenues from the
microtransactions. Additionally, exposing people to the
wireless gaming experience increases the likelihood of
these gamers’ also downloading paid games.
ly
• EMEA has a large wireless telephone subscriber base, and
high-speed wireless data technology is also advanced in
much of the region. Western Europe is at the forefront
in the deployment of 3G/4G LTE (Long-Term-Evolution)
technology, which provides wireless high-speed Internet
access comparable to the high-speed access provided
by wired digital subscriber lines. MMOGs are being
developed for the wireless market to take advantage of the
speed of the advanced wireless networks.
se
o
• There are a growing number of mobile gamers, both
because of the rising penetration by smartphones and
because the games are significantly cheaper to develop
and hence cost much less than console games. Mobile
gaming provides an enjoyable experience for short periods
of time, as when waiting for a train or bus.
U
• Initially, the only games people could play were those
embedded in their phones. Currently, Internet-connected
phones enable additional games to be downloaded either
for free or for a modest fee.
n
• Casual games continue to dominate the market because
they’re quick to learn and easy to play. The most popular
mobile games are single-player board games, puzzles, and
word games. These casual games widen wireless games’
demographic reach.
r
Pr
es
s
• With emergence of the app stores, such as for Apple
and Android devices, the market for wireless games has
exploded. App stores have thousands of games available
for download. Additionally, app stores improve the
buying experience dramatically over the carriers’ decks by
offering better descriptions, user reviews, and free trials.
Additionally, new forms of payment, such as the iTunes
Account, are facilitating the purchase of games.
Fo
• Introduction of the iPad in 2010 and its newer version, the
iPad 2, with its faster A5 processor, is driving the market
because of its large screen, superior graphics, and familiar
ecosystem. In addition to the iPads are many Android
tablets, such as the Samsung Galaxy Tab 10.1 and the
Sony Tablet S, which are providing a wonderful gaming
experience. And smartphones and tablets have become
substitutes for traditional portable devices like the DS
and PSP.
• In addition to casual games, more-sophisticated games
are being developed for the wireless market. In fact, there
are cloud gaming companies that are delivering consolequality games to wireless devices. Of course, these games
are much more expensive than typical wireless games
that cost as little as 99 cents. Development costs of these
games are accelerating, causing pressure in a market that
values low-cost games.
• Wireless penetration in much of EMEA is at a saturation
point, with penetration above 100 percent in many
countries. As a result, future growth will come not from
more wireless subscribers but, rather, from a higher
percentage of subscribers who play games and pay to play
those games. We expect the newer phones and the moreadvanced networks to facilitate that growth.
• We expect the market for wireless games to continue
growing with the increased penetration by smartphones
and tablets. Additionally, the growing variety of games
being developed to take advantage of the features of the
new devices will spur the market. The wireless market in
EMEA is expected to increase 8.4 percent on a compound
annual basis from $1.6 billion in 2011 to $2.4 billion
in 2016.
• The UK is the largest market for wireless gaming in EMEA.
Almost half of the UK’s 8 million mobile gamers pay for
games. As in most other countries, puzzle games, arcade
games, and strategy games are the most-popular types of
mobile games in the UK. Wireless game revenues were
$330 million in 2011 and are projected to increase to
$504 million in 2016, an 8.8 percent compound
annual increase.
Video games | EMEA
373
n
ly
• Italy has one of the highest numbers of wireless subscribers of any country in Europe. Its wireless game market
was $136 million in 2011 and will increase by 7.6 percent
compounded annually to $196 million in 2016. In 2011,
Italy launched a mobile payment system to make the
purchasing of wireless games easier.
U
se
• France, with two of the top mobile game publishers,
Gameloft and Zenops, was the third-largest market in
the region, with revenues totaling $234 million. Revenues
are expected to increase by 8.4 percent annually to
$351 million. Games for iPhones and iPads are driving the
revenues for Gameloft, as they are for many of the major
publishers. Adictiz, a French company that makes games
for smartphones and Facebook, developed Paf le Chien,
which is available on both platforms and was the most
downloaded game in France in 2011, garnering over
3 million downloads between the two platforms.
• Wireless game revenues in Germany were relatively low
in 2011, at $51 million. However, as a result of starting
from a very low base, Germany is expected to show the
largest percentage increase in the region, growing by
16.4 percent on a compound annual basis to reach
$109 million in 2016.
o
• Wireless game revenues in Spain were $262 million in
2011 and are expected to grow 8.6 percent annually to
reach $396 million by 2016. Mobile gamers in Spain are
spending more per capita on microtransactions than are
mobile gamers in many other Western countries.
Fo
r
Pr
es
s
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374
PwC | Global entertainment and media outlook: 2012–2016
Wireless game market† (US$ millions)
2007
EMEA
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Western Europe
8
11
13
14
14
15
17
18
19
21
8.4
Belgium
11
14
17
18
19
22
24
25
26
28
8.1
Denmark
14
17
18
20
22
24
26
29
31
33
8.4
Finland
6
7
8
10
11
13
14
15
17
18
10.4
France
134
171
192
211
234
256
278
301
326
351
8.4
67
ly
Austria
46
58
47
51
58
79
96
109
16.4
6
7
7
8
10
11
11
11
11
11
1.9
Ireland
58
74
83
93
103
113
124
135
146
157
8.8
102
114
113
127
136
150
163
174
185
196
7.6
Netherlands
39
51
60
67
Norway
14
18
20
22
Portugal
6
7
8
10
154
198
221
Sweden
26
32
38
Switzerland
25
33
United Kingdom
191
244
Western Europe total
830
1,044
Central and Eastern Europe 11
o
88
92
96
5.1
25
27
29
31
33
36
7.6
U
se
83
11
11
13
13
13
13
3.4
237
262
285
313
341
369
396
8.6
43
46
52
58
64
69
76
10.6
s
79
35
39
43
45
48
52
55
59
6.5
273
302
330
361
395
428
465
504
8.8
1,164
1,268
1,392
1,522
1,663
1,804
1,953
2,104
8.6
17
20
23
26
29
32
35
38
10.6
3
3
3
3
3
3
3
3
0.0
10
12
14
16
17
19
20
22
24
8.4
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
Russia
66
85
97
108
119
130
141
150
160
170
7.4
Turkey
5
7
8
8
10
10
11
11
11
11
1.9
93
119
137
153
171
186
203
216
231
246
7.5
8
12
14
16
18
20
22
23
24
25
6.8
Middle East/North
Africa (MENA)‡
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
South Africa
17
22
27
30
33
36
39
41
44
46
6.9
Middle East/
Africa total
25
34
41
46
51
56
61
64
68
71
6.8
948
1,197
1,342
1,467
1,614
1,764
1,927
2,084
2,252
2,421
8.4
Poland
Romania
Central and Eastern
Europe total
Fo
3
8
Hungary
3
14
r
Czech Republic
75
es
Spain
Pr
Italy
n
36
Greece
Germany
Middle East/Africa
Israel
EMEA total
†At average 2011 exchange rates.
‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | EMEA
375
n
ly
• The PC game market in the UK was down slightly in 2011,
falling below the $300-million level for the first time to
$294 million, and is expected to decline 2.1 percent on a
compound annual basis to $265 million by 2016. Football
Manager 2012 and Football Manager 2011 were the two
top-selling PC games in 2011, followed by Elder Scrolls V:
Skyrim and Sims 3.
Pr
es
s
• MMOGs are providing a positive influence on the market
because many of them require retail purchase of games
before they can be played online. For example, World of
Warcraft, with its various expansion packs, has provided
a boost for the retail PC market. The next expansion pack,
WoW: Mists of Pandaria, is scheduled to be launched in
2012. The new MMOG Star Wars: The Old Republic was the
top-selling PC game in the world in 2011.
• France is expected to maintain its position as the secondleading market, with revenues decreasing to $410 million
in 2016, a modest, 1.3 percent decrease on an annual basis
from the $438 million registered in 2011.
o
• Revenues for PC games decreased 2.3 percent in 2011
to $2.2 billion. The market for boxed PC games has been
in decline in recent years, as more attention has been
focused on console games. Additionally, the digital
distribution of PC games by companies like Valve has
been cutting into the retail market for PC games. Retailers
have been providing less shelf space for PC games, often
relegating them to the backs of their stores. The pattern
of modest decline is expected to continue, with revenues
projected to decrease to $2.1 billion in 2016, a 1.7 percent
compound annual decrease.
se
• PC game revenues reflect the retail sales of packaged PC
games and do not include online distribution of game
content or subscription fees to play PC games online, both
of which are covered in the “Online Games” section.
• Germany had the largest PC game market in EMEA, at
$609 million, in 2011. Germany’s strong PC game market
is directly correlated with the fact that the country has
a relatively weak console market. In fact, unlike in most
other countries, more people in Germany play games on
PCs than they do on stationary consoles. Nevertheless,
the console market is expanding in Germany, and the
PC market has declined in three of the past four years.
We expect that trend to continue and project spending
to decline to $563 million in 2016, a 1.6 percent decline
compounded annually.
U
PC games
r
• In addition to the MMOGs, the PC game market continues
to be maintained by the various Sims games, including
The Sims 3, which was launched in 2009 but continues to
sell well.
Fo
• PCs represent the preferred platform for hard-core gamers
because a keyboard and mouse provide a better interface
for complex commands than console controllers do.
Additionally, high-end computers with graphics cards
from companies like NVIDIA provide a visual experience
superior to that provided by the consoles.
• The PC game market also benefits from more-casual gamers
who do not want to purchase expensive game consoles and
are satisfied using their computers to play games.
• On one hand, many console games are also developed
for the PC in order to broaden the number of possible
customers. On the other hand, some games such as those
in the StarCraft series are made exclusively for the PC
in order to take advantage of the platform’s superior
processing power and mouse-and-keyboard interface.
376
PwC | Global entertainment and media outlook: 2012–2016
• In Italy, the PC game market is relatively small both
because PC penetration in Italy lags behind that in many
other European countries and because there are high
levels of PC game piracy in Italy. PC game revenues were
$53 million and are expected to decrease by 4.5 percent
annually to $42 million. The increase in PC penetration
will partially offset the long-term trend of declining PC
game sales.
• Russia exhibits the strongest PC game market in Central
and Eastern Europe, with revenues of $355 million in
2011. In fact, the Russian market is the third largest
in EMEA, surpassed only by Germany and France.
Nonetheless, we expect the Russian PC market to exhibit
a pattern similar to that of the rest of the countries in
EMEA, decreasing 1.8 percent on an annual basis to
$324 million in 2016 and reflecting the impact of
competition from other platforms.
PC game market† (US$ millions)
2007
EMEA
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Western Europe
6
6
6
6
6
6
6
6
6
6
0.0
Belgium
49
45
38
36
33
31
29
28
26
26
–4.7
Denmark
22
22
22
22
22
22
22
22
22
22
0.0
Finland
29
24
19
21
21
19
19
19
19
19
–2.0
France
497
474
459
448
438
433
428
423
417
410
–1.3
Germany
593
ly
Austria
641
575
616
609
601
583
573
563
–1.6
4
4
4
4
4
4
4
4
4
4
0.0
Ireland
42
40
40
40
40
40
40
40
40
40
0.0
Italy
88
77
67
56
53
51
49
46
43
42
–4.5
Netherlands
79
67
56
53
Norway
25
23
16
16
Portugal
4
4
4
4
115
97
79
Sweden
41
41
7
Switzerland
45
42
345
329
2,073
1,936
Western Europe total
Central and Eastern Europe 10
o
45
43
–3.4
15
15
14
14
14
14
–1.4
U
se
47
4
4
4
4
4
4
0.0
61
60
58
57
56
54
53
–2.5
7
7
7
7
7
7
7
0.0
s
49
41
39
38
36
35
35
35
–2.1
313
310
294
282
277
274
269
265
–2.1
1,743
1,741
1,696
1,661
1,634
1,608
1,578
1,553
–1.7
10
10
10
10
10
10
10
10
0.0
2
2
2
2
2
2
2
2
0.0
148
142
139
137
135
134
132
130
128
–1.3
7
9
13
13
14
14
15
15
14
14
0.0
Russia
404
381
368
361
355
344
336
329
327
324
–1.8
Turkey
4
4
4
4
4
4
4
4
4
4
0.0
545
554
539
529
522
509
501
492
487
482
–1.6
6
6
6
6
6
6
6
6
6
6
0.0
Middle East/North
Africa (MENA)‡
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
—
South Africa
29
24
24
22
21
21
21
21
19
19
–2.0
Middle East/
Africa total
35
30
30
28
27
27
27
27
25
25
–1.5
2,653
2,520
2,312
2,298
2,245
2,197
2,162
2,127
2,090
2,060
–1.7
Poland
Romania
Central and Eastern
Europe total
Fo
2
118
Hungary
2
10
r
Czech Republic
50
es
United Kingdom
51
38
Pr
Spain
n
682
Greece
Middle East/Africa
Israel
EMEA total
†At average 2011 exchange rates.
‡Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | EMEA
377
Advertising
• The growth of free social games is being driven partially
by banner ads that appear around the games. Similar
banner ads also appear on casual-game Web sites.
n
ly
• As the number of video game players continues increasing,
advertisers are turning to games as a means of reaching
specific demographic groups that are becoming more
elusive. In particular, young adult males are spending less
time watching television and more time playing games.
Video games offer a unique level of engagement that is
missing in other advertising media. Consumers are less
likely to be multitasking while playing games than when
they’re watching television or listening to the radio.
• Studies have found that gamers like advertising because
it gives the games a more realistic feel. In fact, gamers
generally develop more-favorable attitudes toward the
products in games. Positive feelings are associated with
products that are integrated into the game play, while
negative feelings are often associated with ads that
interfere with the gaming experience.
o
se
• Currently, display ads and advergames are the most
prevalent. Dynamic in-game advertising has not grown as
quickly as expected.
es
s
• Initially, video game advertising consisted primarily of
static ads that were hard coded in games when the games
were developed. The ads could include billboards that
appeared in the background of sporting events or could
be product placements within the game. Such ads had a
few shortcomings: they had to be planned well in advance
during the development of the game; once inserted, they
could not be changed; and the advertiser had no measure
of how often the ads were seen.
• Advergaming is the practice of using a video game to
promote brands, products, or organizations. These games
are often played for free on corporate Web sites. Many
different advertisers are experimenting with games to
get their messages across. Some of the most-popular
advergames in 2012 are Ace Assault II and LEGO Harry
Potter, developed by LEGO to promote its toys; Kart Fighter,
sponsored by Red Bull; and Mobil 1 Track Challenge,
sponsored by ExxonMobil.
U
• There are a number of different segments that make up
the video game advertising market: static ads, dynamic
ads, advertising on game portals, advertising around
games on social networks, and advergaming.
Fo
r
Pr
• With the advent of online gaming, a more-advanced type
of advertising became possible. Advertisers can now
place ads that can be changed dynamically through the
Internet. For example, a billboard promoting a movie
could be updated as new movies hit the box office, thereby
providing the games with a current feel. Additionally,
advertising can be geographically targeted, with online
players in the UK seeing a different ad from players in
Germany. The placements of these ads get planned while
the games are being developed, but the actual ads can
be changed via the Internet. Since the online games are
attached to the Internet, it’s possible to track the number
of times a gamer is exposed to the ads and the amount of
time that ads appear on the screen.
• In-game advertising is appropriate only in sports games or
other games that are set in the contemporary real world;
ads would not be appropriate in games set in medieval
times or fantasy worlds. In those cases, advertisers can
reward players with extra levels of play or with additional
content by viewing ads before a game begins.
378
PwC | Global entertainment and media outlook: 2012–2016
• The growth of social gaming in particular is a driving
force for video game advertising. We project video game
advertising revenues to grow cumulatively by more than
60 percent over the next five years, reaching $994 million
in 2016, up from $613 million in 2011, a 10.2 percent
compound annual increase. Advertising is still only a small
portion of the overall video game market.
• The UK accounts for more than a quarter of the EMEA video
game advertising market, with revenues of $164 million in
2011, followed by France with $109 million and Germany
with $90 million.
Video game advertising market† (US$ millions)
2007
EMEA
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Western Europe
6
7
8
11
13
14
15
17
18
19
7.9
Belgium
6
7
8
11
13
14
15
17
18
19
7.9
Denmark
5
6
7
8
9
10
11
12
13
14
9.2
Finland
4
6
6
7
8
8
10
11
13
13
10.2
France
56
74
82
92
109
124
139
154
170
185
11.2
Germany
111
ly
Austria
63
68
75
90
100
124
138
153
11.2
6
7
8
11
11
13
14
15
17
17
9.1
Ireland
6
7
8
10
11
13
14
15
17
17
9.1
Italy
15
19
22
28
33
38
42
47
50
53
9.9
Netherlands
15
19
22
28
Norway
6
7
8
9
Portugal
4
6
6
7
Spain
4
7
7
Sweden
9
13
14
Switzerland
12
17
United Kingdom
74
95
275
360
o
50
54
10.4
10
11
12
14
15
16
9.9
U
se
46
10
11
13
14
15
15
8.4
7
8
10
11
13
14
15
13.4
18
22
25
25
27
29
7.7
19
25
28
32
34
37
41
43
9.0
114
133
164
194
217
233
249
265
10.1
407
480
570
652
725
794
865
927
10.2
8
8
8
8
9
10
11
12
8.4
3
3
3
3
4
4
4
4
5.9
6
6
8
9
10
11
13
14
14
9.2
‡
‡
1
1
1
2
2
2
2
2
14.9
Russia
4
6
7
8
9
11
12
13
13
14
9.2
Turkey
2
2
3
3
4
4
5
5
6
6
8.4
18
22
28
31
34
38
43
47
50
52
8.9
4
5
5
5
6
7
8
9
10
10
10.8
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
South Africa
1
2
2
3
3
4
4
5
5
5
10.8
Middle East/
Africa total
5
7
7
8
9
11
12
14
15
15
10.8
298
389
442
519
613
701
780
855
930
994
10.2
Romania
Central and Eastern
Europe total
Fo
2
4
Hungary
Poland
2
6
42
s
6
r
Czech Republic
38
es
Central and Eastern Europe 33
20
Pr
Western Europe total
n
47
Greece
Middle East/Africa
Israel
Middle East/North
Africa (MENA)††
EMEA total
†At average 2011 exchange rates. ‡Less than US$500,000.
††Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, and the United Arab Emirates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | EMEA
379
Asia Pacific
The outlook in brief
• Advertising will increase from $355 million in 2011
to $649 million in 2016, growing by 12.8 percent
compounded annually.
• The console/handheld market will benefit from the next
generation of consoles.
• Console/handheld games will grow to $8.7 billion in
2016, increasing by 2.5 percent on a compound annual
basis from $7.7 billion in 2011.
• Growth of microtransactions and increased broadband
penetration will drive the online market.
• Growth in smartphones and tablet penetration is spurring
the wireless market.
n
ly
• The PC game market will continue to decline due to
competition from the other sectors.
• Online games became the largest category in 2010,
surpassing console/handheld games, and will reach
$20.4 billion by 2016, a 15.1 percent compound annual
increase from $10.1 billion in 2011.
• PC games will decline by 2.3 percent compounded
annually to $486 million in 2016 from $545 million
in 2011.
2007
2008
Console/handheld
games
7,742
Online games
4,150
Wireless games
2,519
Total end-user
spending
Advertising
Total
2010
2011p
2012
2013
2014
2015
2016
8,136
8,256
8,188
7,673
7,639
7,648
7,875
8,212
8,691
6,282
7,698
9,043
10,121
11,944
13,777
15,786
18,015
20,418
3,361
4,119
4,929
5,619
6,446
7,244
8,046
8,782
9,495
628
607
581
545
533
519
506
497
486
15,054
18,407
20,680
22,741
23,958
26,562
29,188
32,213
35,506
39,090
161
217
262
318
355
420
476
538
593
649
15,215
18,624
20,942
23,059
24,313
26,982
29,664
32,751
36,099
39,739
643
Fo
PC games
2009
r
Asia Pacific
Pr
Video game market by component† (US$ millions)
es
s
• End-user spending on video games will total $39.1 billion
in 2016, growing 10.3 percent on a compound annual
basis from $24.0 billion in 2011.
o
• The video game market will grow from $24.3 billion in
2011 to $39.7 billion in 2016, increasing at a 10.3 percent
compound annual rate.
se
Overview
• Wireless games will grow at an 11.1 percent compound
annual rate to $9.5 billion in 2016 from $5.6 billion in
2011. Wireless games will surpass console/handheld
games as the second-largest game category in 2014 and
will widen their lead through 2016.
U
• Advertising on social network games and other online
games is driving the market for video game advertising.
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
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380
PwC | Global entertainment and media outlook: 2012–2016
Video game market growth by component (%)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Console/handheld
games
20.0
5.1
1.5
–0.8
–6.3
–0.4
0.1
3.0
4.3
5.8
2.5
Online games
47.1
51.4
22.5
17.5
11.9
18.0
15.3
14.6
14.1
13.3
15.1
Wireless games
37.1
33.4
22.6
19.7
14.0
14.7
12.4
11.1
9.1
8.1
11.1
PC games
–1.8
–2.3
–3.3
–4.3
–6.2
–2.2
–2.6
–2.5
–1.8
–2.2
–2.3
Total end-user
spending
28.0
22.3
12.3
10.0
5.4
10.9
Advertising
37.6
34.8
20.7
21.4
11.6
18.3
Total
28.1
22.4
12.4
10.1
5.4
11.0
ly
Asia Pacific
10.4
10.2
10.1
10.3
13.3
13.0
10.2
9.4
12.8
10.4
10.2
10.1
10.3
n
9.9
o
9.9
• Online games dominate the PRC market, accounting for
85 percent of spending. The PRC has by far the largest
online video game market in the world, constituting
35 percent of total global online game spending and
58 percent of the online market in Asia Pacific. The
online market is thriving in large part because it effectively eliminates piracy, which is a major problem in
the PRC. Online games are not downloaded but are
stored on a server. Some games are played for free, with
microtransactions generating revenues, while with other
games, users must pay in advance to access the server in
order to play.
Pr
es
s
U
• Japan, at $6.9 billion, is the largest video game market
in Asia Pacific and the second-largest video game market
in the world, after the United States. It is the home of
two of the three major console manufacturers, Sony and
Nintendo, making the console/handheld game segment
more important than in other countries in the region.
Japan accounted for 45 percent of the console game
market in Asia Pacific and 29 percent of total video game
spending in Asia Pacific in 2011.
se
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Fo
r
• Japan was devastated in March 2011 by the earthquake
and tsunami, which caused extensive loss of life and major
damage to its economy. It is estimated that the natural
disaster cost the gaming industry up to $100 million
because of delayed launch dates of many titles because
of the emotional mood of the country, which led to less
money being spent on entertainment. In addition to
the impact of the natural disaster, Japan experienced a
significant decline in its console/handheld game market,
leading to an overall decline of 4.7 percent in the video
game market in 2011. We expect the market to turn
around and continue growing through 2016, reaching
$8.9 billion in 2016, a 5.1 percent compound annual
increase from 2011.
• The People’s Republic of China (PRC) overtook South
Korea in 2009 to become the second-largest market in
Asia Pacific and the third-largest market in the world.
It widened the gap by increasing 13.2 percent in 2011
to $6.9 billion based on the growth of its online game
market, reflecting huge markets for MMOGs as well as
casual and social network online games. The pattern is
continuing, with the PRC overtaking Japan in 2012 as the
leading video game market in the region.
• Continued broadband growth and growth in the number
of users will propel the market. The console game market
is very small in the PRC because with the exceptions of the
Nintendo Game Boy and the Nintendo DS, the country has
banned consoles for the past decade, and therefore the
only consoles in the country are imported illegally. Overall
spending will increase at a 17.6 percent compound annual
rate to $15.5 billion in 2016.
• South Korea is the third-largest market in Asia Pacific and
the fourth largest in the world, at $5.8 billion in 2011.
Wireless games represent the dominant category in
South Korea, and it is the largest wireless market in the
region, reflecting the high rate of mobile phone Internet
access. Additionally, the high broadband penetration
level helps explain its large online market. We expect the
market to grow to $8.3 billion in 2016, up 7.7 percent
compounded annually.
Video games | Asia Pacific
381
• Australia at $1.7 billion is the only other country in Asia
Pacific above $1 billion. By contrast with the PRC and
South Korea, console games constitute the dominant
category—54 percent of spending. The widespread usage
of consoles also aids the online market because most
consoles are connected to the Internet. The Australian
game industry is expected to increase at a 7.3 percent
compound annual rate to $2.4 billion in 2016.
wireless games make up the dominant game category
because they do not require the purchase of expensive
hardware. Spending on legitimate games is also very low
because of piracy. The overall game market is still quite
small given the size of the population—only $240 million
in 2011. That figure is projected to increase to $644 million
by 2016.
• The game development industry in the Philippines is
expected to exhibit significant growth driven by strong
demand for mobile, tablet, and flash games in both local
and foreign markets.
n
ly
• We expect India to be the fastest-growing country during
the next five years, with a projected 21.8 percent compound
annual increase. Since the country is relatively poor,
2008
2009
2010
2011p
Australia
1,111
1,566
1,688
1,670
1,716
China
2,110
3,916
5,038
6,076
6,878
224
254
278
300
322
60
86
118
181
240
280
329
364
396
6,601
6,667
6,979
156
177
193
New Zealand
82
95
Pakistan
71
80
Philippines
118
138
Singapore
165
191
Malaysia
South Korea
3,507
s
es
Japan
429
2013
2014
2015
2016
2012–16
CAGR
1,819
1,935
2,100
2,263
2,437
7.3
8,383
9,889
11,554
13,445
15,482
17.6
346
367
387
412
439
6.4
309
374
449
539
644
21.8
463
492
521
557
601
7.0
7,270
6,931
7,175
7,503
7,988
8,412
8,903
5.1
207
220
238
254
271
288
304
6.7
Pr
Indonesia
105
109
110
116
125
131
138
149
6.3
87
95
101
110
116
124
133
142
7.1
151
164
178
192
205
220
236
252
7.2
212
229
250
273
295
317
342
368
8.0
4,244
4,753
5,287
5,763
6,274
6,731
7,215
7,759
8,343
7.7
549
605
660
713
773
825
879
933
989
6.8
r
India
Fo
Hong Kong
2012
se
2007
U
Asia Pacific
o
Video game market by country† (US$ millions)
Taiwan
464
Thailand
224
281
314
352
391
434
470
505
545
582
8.3
Vietnam
42
51
57
63
71
77
83
90
97
104
7.9
15,215
18,624
20,942
23,059
24,313
26,982
29,664
32,751
36,099
39,739
10.3
Total
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
382
PwC | Global entertainment and media outlook: 2012–2016
Console/handheld game market
• We expect further declines in Japan in 2012 and 2013
due to the aging of the consoles and migration to other
platforms before a turnaround in 2013 through the
remainder of the forecast period, when games for the new
consoles are expected to reach the market. Overall, we
project a modest, 1.1 percent compound annual increase
to $3.6 billion in 2016.
• South Korea is the second-largest console/handheld game
market in the region, at $2.1 billion, up 2.2 percent from
2010. Japan and South Korea together constituted almost
three-quarters of the console/handheld game market in
2011. Government investment in the industry should help
local development of games, which in turn should lead to
new titles that will stimulate the market. South Korea will
have faster growth during the next five years, averaging
3.6 percent compounded annually to $2.5 billion in 2016
as games for the new consoles gain market traction.
n
o
se
• In Australia, console/handheld games declined for the
second year in a row, decreasing by 6.7 percent to
$929 million. After years of debate, it seems that Australia
is inching closer to establishing an R18+ classification
rating for interactive entertainment. An in-principle
agreement was reached between the federal and state
governments in July 2011, but final implementation has
not been completed yet. The previous maximum age
classification was MA15+, which prevented some games
from being distributed in the country. Support for the
classification comes both from adults who want the right
to play games that appeal to them and from parents who
want clear guidelines for their children. Australia is the
only major country without an adult classification for
games. We expect the market to turn around in 2014,
reaching $991 million by 2016, a 1.3 percent compound
annual growth rate from 2011.
es
s
U
• Mario Kart 7 was the top-selling game in Japan in 2011,
selling 1.1 million copies. It was followed by Super Mario
3D with 1.0 million copies. Those two games, which were
launched in the last two months of the year, helped drive
sales of the 3DS, which became the top-selling device in
Japan, selling 4.1 million units in 2011. The two titles are
wildly popular worldwide, whereas the Monster Hunter
series, which is very popular in Japan, has not achieved
the same success in the West. Monster Hunter Portable 3rd,
which launched in December 2010 and sold 1.0 million
units in 2011, for a total of 4.5 million units since its launch,
helped drive sales of the PSP, which sold 2.0 million units
in 2011. Another in the popular Monster Hunter series,
Monster Hunter 3G for the 3DS was the fourth-top-selling
title in 2011. In Japan, the market is driven by updated
versions of popular games that continue to entice gamers.
ly
• The console/handheld market is dominated by Japan,
which controlled 45 percent of the market in 2011. The
13.4 percent decline in Japan in 2011 more than offset
increases in most other countries, resulting in an overall
decline of 6.3 percent in the region.
Pr
• It remains to be seen how well games for the PSP Vita will
fare in the market, because sales of the handheld device
dropped sharply after its launch in December.
Fo
r
• Overall, it was a weak year for console/handheld games in
Japan because of the lack of high-demand titles, with only
three titles reaching the million-unit level. By contrast, in
2010, seven titles reached that level, including top sellers
Pokémon Black Version and Pokémon White Version, which
sold 4.7 million copies, and Monster Hunter Portable 3rd,
which sold 3.2 million copies. Activision Blizzard’s Call of
Duty: Modern Warfare 3, the most popular game in Europe
and the US, was not among the top 10 games in Japan.
• The top 10 titles included three Wii-exclusive titles: Minna
no Rhythm Tengoku, Wii Party, and Wii Sports Resort as
well as one PS3 exclusive, Tales of Xillia. There were no
exclusive Xbox 360 titles among the best-selling titles—
further evidence of the poor reception the console has
received in Japan.
• In general, we expect the aging of the current generation of
consoles to continue having a negative effect on the market.
When the next-generation Sony and Microsoft static consoles are introduced (expected in the latter part of the
forecast period), we project a modest growth in sales. The
growth will not mirror the huge expansion that resulted
when the current consoles were introduced, because there
are many competing platforms for gamers. Spending is
projected to expand at a 2.5 percent compound annual rate
during the next five years from $7.7 billion in 2011 to
$8.7 billion in 2016.
Video games | Asia Pacific
383
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
664
1,031
1,098
996
929
910
893
914
945
991
1.3
81
95
99
102
106
111
115
119
124
131
4.3
114
128
133
137
140
145
150
155
162
172
4.2
14
15
17
26
38
50
64
81
102
128
27.5
139
160
166
171
176
181
187
193
206
224
4.9
4,524
4,167
4,092
3,984
3,450
3,338
3,262
3,338
3,450
3,639
1.1
Malaysia
80
88
92
95
98
102
107
112
118
124
4.8
New Zealand
43
45
48
46
44
43
42
43
44
47
1.3
Pakistan
36
40
41
43
44
46
48
50
52
55
4.6
Philippines
61
68
70
72
74
77
80
84
88
93
4.7
Singapore
76
84
87
89
92
95
99
102
107
113
4.2
1,595
1,850
1,934
2,035
2,080
2,125
2,171
2,238
2,351
2,487
3.6
243
279
290
300
306
315
325
337
349
366
3.6
Thailand
52
63
65
67
69
73
76
79
83
88
5.0
Vietnam
20
23
24
25
27
28
29
30
31
33
4.1
7,742
8,136
8,256
7,639
7,648
7,875
8,212
8,691
2.5
India
Indonesia
Japan
South Korea
Taiwan
Total
7,673
Online games
r
Pr
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
8,188
o
Hong Kong
s
China
es
Australia
n
ly
2008
Asia Pacific
U
2007
se
Console/handheld game market† (US$ millions)
Fo
• Traditionally, the PC platform was the only means to play
games online and is still the dominant platform. Each of the
consoles in the current generation of consoles has features
to entice online users, including online marketplaces:
Xbox Live, PlayStation Store, and Nintendo Wii Shop.
They enable gamers to purchase games, and they allow
competition against other players anywhere via the
Internet. The games that these sites sell are mostly small
games or expansion packs because a major game could
require up to 50 GB of data to be downloaded.
• Digital distribution of content is emerging as an important
segment of the market. Many game developers are adding
downloadable digital content to their games so as to
enhance the gaming experience and as an additional source
of revenues. In addition, developers of static consoles are
using digital content as a means of driving Day One sales
versus secondhand sales.
384
PwC | Global entertainment and media outlook: 2012–2016
• Asia Pacific is the dominant market for online gaming,
constituting over 60 percent of the global total. The freeto-play business model with microtransactions is quite
popular in the region. In fact, microtransactions constitute
a higher proportion of the online market in Asia Pacific
than in any other region.
• To combat piracy in the PRC, major game developers,
including Tencent and Shanda Games, introduced games
that could be played online for free, with revenues
generated through the purchase of additional game
elements, such as clothing for one’s avatars, additional
weapons, or additional game levels that enhance the
gaming experience.
• MMOGs are games played by thousands of players worldwide simultaneously. These games are very popular in
Asia Pacific and in particular in the PRC and South Korea.
Unlike the situation with gamers in the US and other
Western countries, who pay a monthly subscription fee
to play World of Warcraft—the most popular MMOG in
the world, with 10 million players—in the PRC, players
purchase prepaid cards and pay as they play the game.
Activision Blizzard announced in October 2011 that it had
struck a deal with Thailand-based AsiaSoft to distribute
several of its games, including WoW, in Southeast Asia,
including Thailand, Malaysia, and Singapore.
ly
n
se
o
• Japan is the home of the second-largest number of
broadband households in the region, with 35.0 million
homes in 2011 providing a potential source for online
gaming. Since piracy is not as much a factor in Japan as
it is in the PRC, the retail market for games is very strong
there. Conversely, the online market is relatively weak.
The online market is projected to increase 7.9 percent on
a compound annual basis to reach $2.2 billion in 2016, up
from $1.5 billion in 2011.
s
U
• Although MMOGs get the most publicity, it’s actually
casual games such as puzzles, cards, and arcade games
that attract the greatest numbers of players. These games
are simple to learn and do not require extended periods
of time to learn and to play. Casual games have expanded
the demographic audience of the gaming industry to
include more women and older adults. Many of the casual
games are played for free, with banner ads around the
games supplying the requisite revenues.
• South Korea has the second-highest broadband penetration in the region, approaching 100 percent in 2011
and surpassed only by Singapore. This helps explain
the popularity of online games, with spending totaling
$1.7 billion in 2011—more than in Japan, whose
population is more than double that of South Korea.
South Korea has a very strong online-game publishing
industry, and many games are exported to surrounding
countries. The government helps support the industry
by funding the research and development of games. We
expect South Korea to maintain its position as secondleading market in the region, growing by 9.5 percent
annually to reach $2.7 billion in 2016.
Pr
es
• Social network games are emerging as a huge market for
publishers. These free-to-play games have grown exponentially over the past few years, with microtransactions
serving as the source of revenues.
Fo
r
• Online games represented the second-fastest-growing
component of the video game market in 2011, with an
11.9 percent increase to $10.1 billion. The PRC is the
dominant market, at $5.9 billion in 2011, of which over
50 percent came from the country’s own game developers,
followed by South Korea at $1.7 billion and Japan at
$1.5 billion. Together those three countries account for
nearly 90 percent of the market in Asia Pacific.
• Spending in the PRC rose by 12.8 percent in 2011. Growth
was fueled by rising broadband penetration and a surging
user base. The leading online companies include Tencent,
Shanda, Perfect World, Giant Interactive, Sohu, NetEase,
and The9.
• In the PRC, social network games are very popular on
Qzone, Renren, and Kaixin, among others. Facebook is
currently blocked by the government. These and most other
online games are played on PCs. We expect 75 million new
broadband households in the PRC during the next five
years, which should significantly expand the user base.
We project spending to reach $13.7 billion by 2016, an
18.5 percent compound annual increase from 2011.
• Australia is the next-largest market, with revenues of
$316 million in 2011. We project the online market
to grow by 17.5 percent on a compound annual basis,
reaching $707 million by 2016 and spurred by continued
growth in broadband households, with penetration
reaching 86 percent in 2016. The online distribution of
games and additional content is growing in Australia,
with established online distribution systems for PC game
services such as Steam, Direct2Drive, and GameTree
Online. Limiting factors, such as relatively high broadband
prices, download limits, and relatively expensive storage
costs are being addressed gradually. Social gaming is
growing on popular sites like Facebook, with such popular
games as Happy Aquarium and Pet Society attracting a
growing number of players.
• The online market will be driven by further growth in
the broadband market, which we project will rise by a
cumulative 58 percent during the next five years. We
project spending to increase to $20.4 billion by 2016, a
15.1 percent compound annual gain. Online games will
continue to be the fastest-growing category. Its share of
total end-user spending will increase to 51 percent in 2016
from 42 percent in 2011.
Video games | Asia Pacific
385
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
163
193
218
263
316
381
459
551
634
707
17.5
1,638
3,299
4,296
5,198
5,861
7,209
8,557
10,063
11,794
13,669
18.5
44
51
58
65
72
79
86
92
99
106
8.0
6
8
21
28
36
45
56
66
75
85
18.7
62
72
81
91
100
109
119
128
138
147
8.0
909
1,078
1,227
1,379
1,493
1,631
1,769
1,907
2,045
2,183
7.9
34
39
44
48
52
57
61
66
70
74
7.3
3
5
6
6
6
6
8
9
10
11
12.9
Pakistan
17
19
21
24
26
29
31
34
37
40
9.0
Philippines
27
31
35
39
43
47
52
56
61
66
8.9
Singapore
41
48
55
60
68
76
85
95
105
115
11.1
South Korea
997
1,186
1,353
1,525
1,695
1,884
2,065
2,252
2,442
2,668
9.5
Taiwan
102
121
137
153
169
187
204
221
237
256
8.7
Thailand
98
121
134
151
169
188
207
226
246
267
9.6
Vietnam
9
11
12
13
15
16
18
20
22
24
9.9
4,150
6,282
7,698
11,944
13,777
15,786
18,015
20,418
15.1
India
Indonesia
Japan
Malaysia
New Zealand
Total
10,121
Wireless games
r
Pr
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
9,043
o
Hong Kong
s
China
es
Australia
n
ly
2008
Asia Pacific
U
2007
se
Online game market† (US$ millions)
Fo
• Mobile games are played on mobile phones or other mobile
devices. Almost all new mobile phones are now Internet
enabled, enhancing the downloading potential for games.
The increasing sophistication of new handsets will make
for a more enjoyable experience. As people upgrade their
existing handsets for newer models, the number of gamecapable handsets will increase dramatically.
• Most mobile games are very simple because the graphic
capabilities of many handsets are limited. As a result,
the most-popular games are single-player board games,
puzzles, and word games. These casual games widen
mobile games’ demographic reach. In fact, more than half
of mobile game players are women who enjoy playing
casual games such as Tetris and Bejeweled, two of the
most-often-downloaded mobile games.
386
PwC | Global entertainment and media outlook: 2012–2016
• Although casual games continue to dominate the market,
more-advanced games that take advantage of the
sophistication of the newer smartphones are also being
developed. There are even versions of MMOGs being
developed for gamers on the move.
• Initially, many handsets were embedded with games as a
differentiator to drive sales of individual phones. Those
games provided enjoyment for users but did not provide
any additional revenue for operators. With the expansion
of Internet-connected phones, operators have recognized
the potential additional revenues from the downloading
of games at a modest fee. However, the carriers’ download
platforms usually were not user-friendly.
• A number of third-party Web sites, such as Jamster, have
been established to facilitate the downloading of games.
They offer games from a variety of publishers and provide a
more-user-friendly environment. For game developers who
cannot get on carriers’ decks, these Web sites also provide
an opportunity to sell their games to consumers. We would
expect the number of games downloaded to increase as
consumers find these Web sites more user-friendly.
• Japanese company Capcom, which created the hit
Resident Evil series, is focusing some of its attention on
developing social network games for wireless devices.
Capcom’s Smurfs’ Village, a free-to-download game,
has been downloaded millions of times to iPhones and
Android devices, with microtransactions providing the
revenues.
• We expect the wireless game market in Japan to increase
to $2.5 billion by 2016, a 10.7 percent compound annual
increase, while in South Korea it will grow to $3.1 billion,
a 10.1 percent compound annual rate.
n
o
se
Pr
es
s
• The wireless market is exploding because of the growth of
casual games with mass appeal like Angry Birds that are
easy to learn and easy to play. Additionally, the growth of
social networks with mobile games is driving the industry.
The business model is migrating from downloading for
a fee to free games, with microtransactions providing
the revenues.
Fo
r
• A number of mobile social networking sites like DeNA,
GREE, Mobage, and mixi provide users an opportunity
to play games on the go.
• Asia Pacific is by far the dominant region in the wireless
game market, constituting 64 percent of global spending
in 2011. The region has more wireless subscribers than the
rest of the world combined, creating a huge potential for
wireless games.
• South Korea at $1.9 billion and Japan at $1.5 billion are
the leading markets, together generating 59 percent of the
total wireless game market in Asia Pacific.
• DeNA and GREE are major Japanese mobile social
network companies that distribute hundreds of games,
all of which are free, with microtransactions providing
the revenues.
• The PRC and India are becoming major wireless game
markets because of their large wireless subscriber bases
and expanding 3G markets. There were 950 million
wireless telephone subscribers in the PRC in 2011, and
850 million in India.
• The mobile gaming market in India, though growing
fast, is still in its nascent stage, as compared with other
countries. India has one of the largest mobile consumer
bases in the world, and the percentage of people
downloading games is expected to grow dramatically. In
India, the wireless game segment of the market dominates
the video game industry because mobile phones are
widespread, whereas few consumers have consoles or
PCs. The wireless market, which was $145 million in 2011,
is expected to show the largest increase in the region,
growing at a compound annual rate of 22.2 percent to
reach $395 million in 2016.
U
• Introduction of the iPad tablet, which plays all of the
iPhone games, has caused many gamers to substitute
these devices for their DS and PSP devices.
ly
• Apple’s introduction of the iPhone and the App Store
revolutionized the wireless game market. The App Store,
with thousands of games available for download—which
dramatically improves the buying experience over the
carriers’ decks—has better descriptions and offers free
trials. A number of other online services, such as the
Android Market, have been established that compete with
the carriers’ decks to provide content.
• The9, an online game developer in the PRC, is developing
its wireless segment by introducing and localizing
OpenFeint, a huge mobile social gaming platform for
iPhone and Android devices. We project the wireless
game market in the PRC to reach $1.5 billion in 2016
from $852 million in 2011, a 12.7 percent compound
annual increase.
• Australia also has a significant wireless market, at
$358 million in 2011, fourth largest in Asia Pacific.
We expect the wireless market in Australia to grow at
an 11.2 percent compound annual rate to $609 million
in 2016.
• We expect the wireless video game market in the Asia
Pacific region to increase to $9.5 billion in 2016 from
$5.6 billion in 2011, an 11.1 percent compound
annual increase.
Video games | Asia Pacific
387
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Australia
157
202
247
301
358
413
464
512
557
609
11.2
China
368
494
607
728
852
992
1,131
1,270
1,410
1,549
12.7
Hong Kong
42
53
64
75
86
98
106
114
124
133
9.1
India
32
53
64
109
145
190
228
273
329
395
22.2
Indonesia
62
80
98
115
133
152
165
178
190
206
9.1
714
957
1,177
1,399
1,506
1,694
1,945
2,196
2,359
2,509
10.7
Malaysia
33
42
48
55
62
71
78
85
92
98
9.6
New Zealand
26
34
40
47
51
59
67
73
78
85
10.8
Pakistan
14
17
21
24
27
31
33
36
39
42
9.2
Philippines
24
32
39
46
54
60
65
71
77
83
9.0
Singapore
33
44
54
64
74
86
95
104
114
123
10.7
847
1,132
1,389
1,646
1,899
2,171
2,397
2,623
2,858
3,075
10.1
Taiwan
98
128
156
184
213
246
270
294
319
338
9.7
Thailand
58
78
96
113
132
152
166
179
194
205
9.2
Vietnam
11
15
19
23
27
31
34
38
42
45
10.8
2,519
3,361
4,119
6,446
7,244
8,046
8,782
9,495
11.1
Total
4,929
5,619
PC games
r
o
Pr
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
s
South Korea
es
Japan
n
ly
2008
Asia Pacific
U
2007
se
Wireless game market† (US$ millions)
Fo
• The retail PC market is being hampered by high piracy
rates in many countries. There is virtually no legal retail
PC industry in the PRC, India, or Indonesia because of
piracy, which enables illegal copies of games to be sold for
a small fraction of what legal copies would sell for.
• In Western countries, the growth of MMOGs is buoying
the PC market by requiring retail purchase of games
before the games can be played online. In the PRC, this
business model has been replaced by the downloading of
games for free, with microtransactions and fee for play
providing the revenues.
• Japan is by far the major PC market in the region,
constituting more than half of overall revenues in 2011.
The PC market has declined in each of the past four years.
There was a 10 percent decrease in 2011, reflecting the
388
PwC | Global entertainment and media outlook: 2012–2016
poor overall software market. We expect the declines to
moderate during the remainder of the forecast period.
We project the retail PC game market to decline from
$294 million in 2011 to $246 million in 2016, decreasing
at a 3.5 percent compound annual rate of decline.
• Australia is the only other country in the region with
significant PC game revenues: $96 million in 2011. We
anticipate that the PC market in Australia will be relatively
flat, decreasing by a modest, 1.1 percent on a compound
annual basis through 2016, declining to $91 million.
• Due to a high piracy rate, the PC game market in India is
tiny, at $17 million in 2011, despite the huge population
base. The government is trying to crack down on piracy,
which will lead to a moderate increase in the market,
though far from its potential. We expect the PC market
will reach $28 million by 2016.
• The long-term retail market for PC games will continue
to decline as console games attract more attention from
gamers and developers. Increased digital distribution of
PC games will also have a negative effect on retail sales
of PC games. While they have a smaller base, there will
continue to be a market for PC games because they are
cheaper to produce, resulting in a lower average price
compared with console games. Additionally, PC games
will be popular with players who buy sophisticated
gaming computers that can outperform even the newest
consoles. And they will continue serving as the portal
to the world of MMOGs. Because of the portability that
enables people to take a game to a friend’s house to play,
some people will continue purchasing PC games at retail
rather than downloading them.
n
ly
• The PC market is also being negatively affected by
alternative gaming platforms, such as mobile devices that
are gaining more adherents. As a result, the forecast for
the PC game market is expected to be one of continuing
declines. We project the PC game market to total
$486 million in 2016, down 2.3 percent on a compound
annual basis from the $545 million registered in 2011.
India
Indonesia
Japan
Malaysia
New Zealand
Pakistan
119
131
115
97
7
5
5
5
22
20
20
20
7
9
13
14
13
13
359
336
8
7
10
11
3
3
14
2012
2013
2014
2015
2016
2012–16
CAGR
96
95
94
93
92
91
–1.1
5
5
5
5
5
5
0.0
20
19
19
19
19
19
–1.0
15
17
19
21
23
26
28
10.5
13
13
12
12
12
12
–1.6
13
331
326
294
286
276
266
256
246
–3.5
7
7
6
6
6
6
6
6
0.0
11
10
9
8
8
6
6
6
–7.8
3
3
2
2
2
2
2
2
0.0
5
5
5
5
5
5
5
5
5
0.0
14
14
14
14
14
13
13
13
13
–1.5
42
40
36
32
30
28
26
24
23
22
–6.0
17
16
16
15
15
14
14
14
14
14
–1.4
Thailand
14
16
16
17
17
17
16
16
16
15
–2.5
Vietnam
2
2
2
2
2
2
2
2
2
2
0.0
643
628
607
581
545
533
519
506
497
486
–2.3
South Korea
Taiwan
Total
r
5
Singapore
Fo
Philippines
2011p
se
2010
U
Hong Kong
2009
s
China
2008
es
Australia
2007
Pr
Asia Pacific
o
PC game market† (US$ millions)
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Access additional territory-level commentary. Visit the online
Outlook at www.pwc.com/outlook
Video games | Asia Pacific
389
• Video game advertising gives advertisers the opportunity to
reach a demographic audience that has become elusive from
traditional media. Young adults are spending relatively more
time playing games rather than watching television.
• Video game advertising is composed of both static and
dynamic in-game advertising, banner ads on game Web sites
and around social network games, and advergaming. Static
advertising, which is hard coded into games at the time the
games are developed and which cannot be changed later,
was the first type of advertising. Static ads were placed in
games to give the games a more realistic feeling such as
banners at the finish line in an auto racing game.
• Advergames are games that are developed to promote
brands, products, or organizations. The games are often
provided for free on corporate Web sites and are usually
simple ones that promote the products in a fun way. Some
of the most-popular advergames in the Asian market in
2012 were Zombies Ate My Phone, sponsored by Phones
4 U; Kart Fighter, sponsored by Red Bull; and UrbAN
THRILL, sponsored by Reckitt Benckiser.
• Japan has the largest video game advertising market in
Asia Pacific, at $188 million in 2011. Advertising in Japan
slowed dramatically in 2011 as a result of the economic
impact of the earthquake. We expect advertising to
rebound and to remain strong during the remainder of
the forecast period, increasing to $326 million in 2016,
an 11.6 percent increase on a compound annual basis
from 2011.
• South Korea, with its significant online game market, had
the second-largest video game advertising market in 2011,
at $59 million, a total we expect will grow to $91 million
by 2016, a 9.1 percent compound annual increase.
Pr
es
s
• The explosive growth of social network gaming and the
migration of many MMOGs from a subscription business
model to a free-to-play model have encouraged the gaming community to embrace advertising as an additional
revenue stream. Gamers are enticed to watch ads by being
offered additional game play or other rewards.
U
se
o
• The emergence of the Internet has enabled dynamic
advertising, which enables ads to be changed online
to reflect changes in the market such as promoting the
newest films. Online gaming provides advertisers with
feedback on how often and for how long ads are seen.
• An advantage of video game advertising is that players
are actively participating in the game and are actively
engaging with the advertising.
n
ly
Advertising
Fo
r
• Sports games and games set in contemporary times
benefit from ads because the ads give the games a more
realistic feeling. Ads would not be appropriate in games
set in historical times or fantasy worlds. For games that
are not appropriate for in-game advertising, players are
rewarded with extra levels and aftermarket add-ons for
watching ads before the games begin.
• Studies have shown that gamers actually appreciate ingame advertising if it does not interfere with game play
and provides a more realistic game environment. Gamers
develop a positive attitude toward the advertised products
and buy more of them. Conversely, if the advertised
products are obtrusive and interfere with the gaming
experience, gamers adopt negative attitudes toward those
products. Therefore, it’s very important to place ads in a
manner that does not interfere with game play.
• Display ads, advergames, and advertising on Web-based
game portals are the major advertising segments. Dynamic
in-game advertising has not grown as quickly as many
had anticipated.
390
PwC | Global entertainment and media outlook: 2012–2016
• The PRC is projected to exhibit the largest increase of any
country in the region, owing to the PRC’s online market
growth rate, which is also expected to be the largest of
any country in the region. The PRC is projected to surpass
South Korea as the second-largest market in the region in
2013, with the gap widening through 2016. Revenues are
expected to grow from $54 million in 2011 to $128 million
in 2016. Focus Media and Bihu Technology dominate the
in-game advertising market in the PRC.
• Gamers in Australia are continuing to spend more time
playing online games, thereby enhancing the reach of video
game advertising. We expect video game advertising in
Australia to increase to $39 million in 2016 from $17 million
in 2011, an 18.1 percent compound annual increase.
• We expect total video game advertising in Asia Pacific
to increase from $355 million in 2011 to $649 million in
2016, a 12.8 percent compound annual increase.
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
8
9
10
13
17
20
25
30
35
39
18.1
16
23
31
43
54
66
81
97
112
128
18.8
Hong Kong
2
2
3
3
4
5
6
7
8
9
17.6
India
1
1
3
3
4
5
5
6
7
8
14.9
Indonesia
3
4
6
6
7
8
9
10
11
12
11.4
95
129
152
182
188
226
251
281
302
326
11.6
Malaysia
1
1
2
2
2
2
2
2
2
2
0.0
New Zealand
‡
‡
‡
‡
‡
‡
‡
‡
‡
1.0
Pakistan
1
1
1
1
2
n
‡
2
2
2
3
3
8.4
Philippines
1
2
2
2
2
3
3
4
5
5
20.1
Singapore
1
1
2
2
2
2
3
3
3
4
14.9
26
36
41
49
59
66
72
78
85
91
9.1
Taiwan
4
5
6
8
10
11
12
13
14
15
8.4
Thailand
2
3
3
4
4
4
5
5
6
7
11.8
Vietnam
‡
‡
‡
‡
‡
‡
‡
‡
‡
‡
1.0
161
217
355
420
476
538
593
649
12.8
South Korea
Total
262
318
o
Japan
se
China
s
Australia
es
Asia Pacific
ly
2007
U
Video game advertising market† (US$ millions)
Fo
r
Pr
†At average 2011 exchange rates.
‡Less than US$500,000.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Video games | Asia Pacific
391
Latin America
The outlook in brief
• End-user spending will grow to $1.8 billion in 2016,
increasing at a 7.1 percent compound annual rate.
• High piracy rates and expensive consoles will limit the
console game market.
• Console/handheld games will grow by 2.9 percent
compounded annually from $614 million in 2011 to
$708 million in 2016.
• The PC game market will be limited by piracy and the
increased digital distribution of games.
• Increased penetration by smartphones as well as
improvements to wireless networks will drive the wireless
game market.
• The wireless game market will increase from $441 million
in 2011 to $759 million in 2016, growing at 11.5 percent
on a compound annual basis.
n
ly
• The online market is being driven by the increase in
broadband penetration, the growth of social network
games, and increased digital distribution of games.
• The PC game market is expected to reach $161 million in
2016 from $138 million in 2011, a 3.1 percent compound
annual increase.
• The online game market will reach $212 million in 2016
from $114 million in 2011, growing by 13.2 percent on a
compound annual basis.
Overview
• Advertising is expected to grow at a 12.3 percent compound
annual rate from $38 million to $68 million in 2016.
se
o
• Video game advertising is growing as a result of the
increase in the online game market.
565
702
24
44
Wireless games
247
310
PC games
115
Total end-user
spending
951
Online games
Advertising
Total
s
2010
2011p
2012
2013
2014
2015
2016
659
638
614
619
622
642
668
708
66
88
114
139
158
177
194
212
350
395
441
488
550
614
686
759
119
128
131
138
143
146
151
157
161
1,175
1,203
1,252
1,307
1,389
1,476
1,584
1,705
1,840
15
23
27
30
38
43
51
57
63
68
966
1,198
1,230
1,282
1,345
1,432
1,527
1,641
1,768
1,908
Fo
Console/handheld
games
2009
Pr
2008
r
2007
Latin America
es
Video game market by component† (US$ millions)
U
• The overall video game market in Latin America is
projected to grow by 7.2 percent compounded annually
from $1.3 billion in 2011 to $1.9 billion in 2016.
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Export your own data selections to Excel and PDF. Visit the online
Outlook at www.pwc.com/outlook
392
PwC | Global entertainment and media outlook: 2012–2016
Video game market growth by component (%)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Console/handheld
games
29.9
24.2
–6.1
–3.2
–3.8
0.8
0.5
3.2
4.0
6.0
2.9
500.0
83.3
50.0
33.3
29.5
21.9
13.7
12.0
9.6
9.3
13.2
34.2
25.5
12.9
12.9
11.6
10.7
12.7
11.6
11.7
10.6
11.5
5.5
3.5
7.6
2.3
5.3
3.6
2.1
3.4
4.0
2.5
3.1
Total end-user
spending
29.9
23.6
2.4
4.1
4.4
6.3
6.3
7.3
7.6
7.9
7.1
Advertising
25.0
53.3
17.4
11.1
26.7
13.2
18.6
11.8
10.5
7.9
12.3
Total
29.8
24.0
2.7
4.2
4.9
6.5
7.5
7.7
7.9
7.2
PC games
n
Wireless games
6.6
o
Online games
ly
Latin America
• Brazil has very high taxes on video games, causing
consoles and games to cost up to three times what they
cost in the US. This helps explain why the video game
market is much stronger in Mexico, a significantly smaller
country. The high tax rate in Brazil also contributes to
piracy, which further dampens investment in the industry.
The government is beginning to offer support so as to
promote development of the gaming industry.
es
s
U
• A small but growing number of companies are developing
games in Latin America. For example, QB9 is one of around
65 video game companies in Argentina. The company has
introduced a popular online children’s game called Mundo
Gaturro, which has a million registered users.
se
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
r
Pr
• Latin American game developers are gaining the attention
of international game companies. Chilean game developer
Atakama Labs was acquired by Japanese online services
company DeNA, and Argentina’s Three Melons was
acquired by social games company Playdom, now part
of Disney.
Fo
• A number of countries, including Argentina and Brazil, are
realizing the growing value of the gaming industry and
have started providing some small government incentives
to help the industry develop.
• Mexico has the largest video game market of the region, at
$636 million in 2011, 47 percent of the total, with Brazil
next, at $420 million, 31 percent of the market. Of the
countries in Latin America, the Mexican game industry
is closest to that of the US in that the console/handheld
segment is the dominant segment of the market. Sony
introduced its consoles in Mexico before it did in other
countries in the region, in part accounting for Mexico’s
dominant position. By contrast, online and mobile games
dominate in the other countries in Latin America.
• Brazil has the potential to be the largest market for video
games, a position held by Mexico. A plan is being evaluated to reduce the tax burden on games in Brazil, but it
has been under evaluation since 2006. Game developers
in Brazil include Tectoy, Hoplon Infotainment, and
Continuum Entertainment.
• The Brazilian game market has been limited by its inability
to monetize its large number of players—especially
because of a lack of credit cards. That’s beginning to
change with the expansion of prepaid gaming cards that
are purchased for cash at retail outlets.
Video games | Latin America
393
Video game market by country† (US$ millions)
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
63
78
80
82
87
94
100
107
115
123
7.2
Brazil
289
360
374
391
420
457
495
541
587
640
8.8
Chile
71
88
90
92
95
103
110
119
126
135
7.3
Colombia
60
72
72
74
77
82
87
92
96
103
6.0
460
572
587
616
636
664
701
747
806
867
6.4
23
28
27
27
30
32
34
35
38
40
5.9
966
1,198
1,230
1,282
1,345
1,432
1,527
1,641
1,768
1,908
7.2
Argentina
Mexico
Venezuela
Total
se
o
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
n
ly
2007
Latin America
Console/handheld game market
than the same games sold in the US. This helps explain
the high rate of illegally acquired games. Xbox games do
relatively better than PS3 games in Mexico because the
Xbox console is relatively cheaper.
s
U
• Gamers in Latin America are at a disadvantage relative to
players in the rest of the world in that console games arrive
in Latin America later than in most other regions and are
typically priced much higher than in other regions.
es
• Sony is beginning to focus more on the Latin American market by localizing its key titles for the Latin American market.
• The retail market for console games is hampered by
piracy as well as a strong market in used games. Legally
purchased retail boxed console games constitute only a
small minority of the console/handheld game market.
Pr
• For the forecast period as a whole, we expect spending
to grow at a 2.9 percent compound annual rate to
$708 million in 2016 from $614 million in 2011.
• Mexico will continue to be the largest market in the region
despite growing only 1.8 percent on a compound annual
basis from $298 million in 2011 to $326 million in 2016.
Fo
r
• The growth of the console/handheld game market in
Mexico is being hurt by the relatively high cost of games in
Mexico, which are often 30 to 50 percent more expensive
Console/handheld game market† (US$ millions)
2007
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
37
46
43
41
39
40
41
42
44
47
3.8
Brazil
165
204
192
185
184
189
193
201
210
225
4.1
Chile
43
52
48
45
42
43
44
46
48
51
4.0
Colombia
37
45
40
38
37
38
38
39
39
41
2.1
269
338
321
315
298
294
290
298
310
326
1.8
14
17
15
14
14
15
16
16
17
18
5.2
565
702
659
638
614
619
622
642
668
708
2.9
Latin America
Argentina
Mexico
Venezuela
Total
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
394
PwC | Global entertainment and media outlook: 2012–2016
PC game market
• Growing penetration by PCs and an expanding broadband
market will widen the potential base for PC games,
including games purchased to play online.
• Piracy, which is estimated to be as high as 90 percent in
some countries, is the major factor hindering growth of
the retail PC game market. Despite that fact, Latin America
is the only region where the PC game market continues
to expand because of lack of a strong competing console
market. In 2011, spending on PC games rose by 5.3 percent.
• On balance, we expect the PC game market to continue
expanding but at slower rates than during the past five years.
ly
• We project the PC game market to grow 3.1 percent
compounded annually from $138 million in 2011 to
$161 million in 2016.
PC game market† (US$ millions)
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
8
8
8
8
9
9
9
9
10
10
2.1
Brazil
33
34
37
38
41
43
44
46
48
50
4.0
Chile
8
8
9
9
Colombia
7
7
8
8
56
59
63
65
3
3
3
115
119
128
Total
o
se
9
10
10
10
2.1
9
9
9
9
9
2.4
U
Venezuela
9
8
68
70
72
74
77
79
3.0
3
3
3
3
3
3
3
0.0
131
138
143
146
151
157
161
3.1
s
Mexico
9
es
Argentina
n
2007
Latin America
Pr
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
r
Wireless games
Fo
• Wireless games have high potential in Latin America.
Wireless penetration averaged around 100 percent in 2011
compared with 34 percent for broadband, and wireless
carriers are upgrading their networks to 3G.
• The mobile game environment will continue to become
more and more enjoyable as wireless markets expand in
much of Latin America both in terms of coverage and with
the deployment of 3G networks.
• A number of major mobile game developers, such as
Glu Mobile and Gameloft, are gaining traction in Latin
America, helping further expand the market.
• Spending on wireless games rose by 11.6 percent in 2011
to $441 million. We expect similar increases during the
next five years, averaging 11.5 percent compounded
annually to $759 million in 2016.
• Mobile games, with their free-to-play business models,
are growing in Brazil, with microtransactions generating
the requisite revenues. Angry Birds was a major hit on the
iPhone, but the game has generated even more players
since its adoption of a free-to-play model on GetJar and
the Android Market.
Video games | Latin America
395
Wireless game market† (US$ millions)
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Argentina
16
20
22
25
29
33
36
40
44
48
10.6
Brazil
77
98
113
129
144
162
183
207
231
255
12.1
Chile
17
22
24
27
30
34
38
42
46
51
11.2
Colombia
14
17
20
22
24
26
29
32
35
38
9.6
117
147
164
185
205
223
254
282
318
354
11.5
6
6
7
7
9
10
10
11
12
13
7.6
247
310
350
395
441
488
550
614
686
759
11.5
Mexico
Venezuela
Total
se
o
†At average 2011 exchange rates.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
n
ly
2007
Latin America
Online games
U
s
• The online game market has been hampered by low broadband penetration and fewer consoles that are connected
to the Internet. Online spending totaled only $114 million
in 2011, just 8.7 percent of end-user spending on video
games. In North America and EMEA, online games constituted 18.4 percent and 22.5 percent, respectively, of
total end-user spending on video games; in Asia Pacific,
the online share was 41.9 percent.
enables users to purchase virtual goods using a personal
identification number they purchase from retail stores.
Mentez publishes Playdom games in Latin America and
also has a number of its own games on Orkut.
Pr
es
• The digital distribution of games through systems like
Steam is quite popular in Latin America.
Fo
r
• Historically, the Latin American market has had the lowest broadband penetration rate, which has stymied the
growth of the online game market. However, broadband
penetration in Latin America is expected to show tremendous growth over the next five years, which is expected to
have a strong impact on the online game market.
• Social network Orkut, which is similar to Facebook and
is operated by Google, is quite popular in Brazil. In fact,
around 60 percent of Orkut’s worldwide users are located
in Brazil. Games on Orkut are attracting a growing number
of Brazilians. Google’s Orkut had been the most popular
social network in Brazil. However, the number of Facebook
users tripled in 2011, surpassing Orkut for the first time.
• Latin America does not monetize online games well
because of the lack of credit cards. Leading online gaming
company Zynga is partnering with leading Brazilian
social game publisher Mentez to sell prepaid social game
cards at numerous locations in Brazil and Mexico and
is planning to sell the cards in other Latin American
countries. Mentez operates a Paymentez network that
396
PwC | Global entertainment and media outlook: 2012–2016
• Browser-based MMOGs and social games are becoming
increasingly popular in Latin America.
• In many countries, especially Argentina, a large number of
male youth visit locutorios, the Latin American versions of
Internet cafés, to play games. Most often these are freeto-play games, with microtransactions and advertising
providing the revenues. Since most gamers play at public
Internet cafés, there is very little downloading of games.
• Brazil is the fastest-growing online game market in Latin
America, owing to the explosion of social network games,
with microtransactions accounting for the bulk of the
revenues. Additionally, Brazil is the home of numerous
Internet cafés where many gamers play MMOGs. The
growing penetration of broadband households is increasing the number of gamers who play games at home. The
online game market is expected to grow 16.0 percent on
a compound annual basis from $40 million in 2011 to
$84 million in 2016.
• Government intervention has limited the growth of online
games. In Brazil, for example, several popular online
games like Counter-Strike, Bully, and EverQuest have been
banned because of their impact on youth.
• The online game market is relatively weak in Mexico compared with the country’s console game market. The market
will grow with increased broadband penetration. Revenues
are projected to reach $83 million in 2016, up from $48 million in 2011, an 11.6 percent compound increase.
By 2016, two-thirds of households in Latin America will
have broadband connections compared with 34 percent
in 2011 and only 13 percent as recently as 2007.
• These developments will support substantial growth in
online gaming. We project the online game market will
rise to $212 million by 2016, growing at a 13.2 percent
compound annual rate. The online game market is thus
expected to show the largest increase of any segment of
the video game market.
ly
• The broadband household universe in Latin America also
is expanding. During the past three years, the number
of broadband households almost doubled, and during
the next five years, we expect it will more than double.
2014
2015
2016
2012–16
CAGR
9
10
12
12
13
13.2
40
49
58
67
75
84
16.0
11
14
15
16
17
18
10.4
5
6
8
8
9
10
14.9
37
48
58
64
71
77
83
11.6
2
3
3
3
3
4
4
5.9
88
114
139
158
177
194
212
13.2
2008
2009
2010
2011p
1
3
5
6
7
Brazil
10
17
24
30
Chile
2
4
7
9
Colombia
1
2
3
4
10
17
26
‡
1
1
24
44
66
Venezuela
Total
U
s
Mexico
es
Argentina
2012
se
2007
Latin America
n
2013
o
Online game market† (US$ millions)
Advertising
r
Pr
†At average 2011 exchange rates.
‡Less than US$500,000.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
Fo
• Video game advertising has been limited in Latin America
due to the relatively small size of the video game industry.
• In-game advertising has been limited by slow growth of
the console game market.
• In the future, growth of the online and mobile game
segments—associated primarily with the rise of casual
games on those platforms—will drive the video game
advertising market. Additionally, advertising is a significant
portion of revenues for social network games, which are
growing dramatically.
• We project video game advertising to increase from
$38 million in 2011 to $68 million in 2016, a 12.3 percent
compound annual increase.
Video games | Latin America
397
Video game advertising market† (US$ millions)
2008
2009
2010
2011p
2012
2013
2014
2015
2016
2012–16
CAGR
Argentina
1
1
2
2
3
3
4
4
5
5
10.8
Brazil
4
7
8
9
11
14
17
20
23
26
18.8
Chile
1
2
2
2
3
3
4
5
5
5
10.8
Colombia
1
1
1
2
3
3
3
4
4
5
10.8
Mexico
8
11
13
14
17
19
21
22
24
25
8.0
Venezuela
‡
1
1
1
1
1
2
2
2
2
14.9
15
23
27
30
38
43
51
57
63
68
12.3
Total
U
se
o
†At average 2011 exchange rates.
‡Less than US$500,000.
Sources: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates
n
ly
2007
Latin America
Fo
r
Pr
es
s
Filter digital and nondigital spending data. Visit the online Outlook
at www.pwc.com/outlook
398
PwC | Global entertainment and media outlook: 2012–2016