newzoofreeglobaltrendreport2012-2016-130909070136- (1)

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Newzoo Trend ReportSeptember 2013

Key Facts & Insights On the Global Games Market 2012-2016

The Global Games Market

Newzoo AuthorsBente de Heij, Data AnalystSander Bosman, Manager ResearchThijs Hagoort, CFO

Peter Warman, CEO 2013 Newzoo


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IntroductionNewzoo recently released the first edition of its annual Global GamesMarket Report, including the latest global figures for 2013 and its viewon global growth towards 2016 sliced in multiple ways to ensure thedata is actionable. This report contains high-level data and insights

from this 48-page report that ultimately is a result of 12 months ofmodeling using all data and research results available to Newzoo.

Highlights include:

Game revenues will grow at a compound annual growth rate (CAGR)of 6.7% to $86.1 billion by 2016;

The number of gamers worldwide will rise from 1.21 billion this yearto 1.55 billion;

Mobile gaming will grow at an average annual rate of 19% forsmartphones and 48% for tablets, grossing $13.9bn and $10.0bn in2016 respectively;

Combined, they will take a 27.8% share of the global market, up

almost ten percent points compared to this year;Primarily fuelled by a global CAGR of 10.4% for MMO games on PC,the computer screen will continue to lead other screens with amarket share of 35.8% totalling $30.9bn in 2016;

Nextgen consoles, free-to-play triple A titles and alternativedistribution of games to TV will help to consolidate revenuesthrough the TV screen at a global growth rate of 3.5%;

The Asia-Pacific region will strengthen its leading position with a37.9% market share by 2016 as emerging markets drive globalgrowth

Peter Warman, CEO at Newzoo: In prmake high-level projections for the globasingle region or segment a couple of yeadetail. Breaking down the global games

allowing our clients to slice and dice the data actionable is very complicated. Ourgrowth KPIs, helps in understanding whaor region, ultimately reflected in dollar figknowledge of the industry on a global ashands-on experience working with globadaily basis is of tremendous value in this

Thijs Hagoort , CFO at Newzoo adds:clear as possible about the underlying asGlobal Market Data Model we developedusing Key Market Indicators per segmentof players, the percentage of payers andpayer) to make bottom-up forecasts.

In terms of data sources, the Newzoo

Proprietary primary consumer reseinvolving over 50.000 consumers;

Extensive analysis of financial reporthat generated over $50 bn in reven

Analysis of third party research;

Transactional data.

Peter WarmanCEO Newzoo,

[email protected]+31 (0)20 6635816

linkedin.com/in/warman

2012-2016 GLOBALCOMPOUND ANNUAL

GROWTH RATE

SIZE OF GLOBALGAMES MARKET

IN 2016

Thijs HagoortCFO Newzoo,

[email protected]+31 (0)20 6635816

linkedin.com/in/thagoort


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Market estimates and growth rates

Global 2011 and 2012 Total Market Size Estimates

The table on the left shows publicly available estimates from research firms, illustrating the differences in base line assum

It may appear at first glance that the estimates are all in a ratband, especially for 2012, but it should be noted that the diff2011 are more significant, both in absolute amounts and in tyear-on-year implied historical growth rate;

In general the key difference between Newzoo and other estbeen on the valuation of digital game revenues in the years p

The implied 2012 annual growth rate of c. 5% for Newzoo reend US$ exchange rate, which is somewhat lower than the ugrowth rate in constant local currency.

Global Growth Rates Estimates

The table on the left shows the publicly available growth fore

same group of research firms, illustrating large differences inAs these are compound annual growth rates, the impact of afew percentage points per year becomes very material over three to five years;

NewzoosGlobal Data Model includes growth forecasts for insegments and regions, and in aggregate for the total industrybased on our analysis of key market developments and metrparticular the number of players and percentage of payers pand per region.

Global Growth Rates (%)

Global 2011 and 2012 Estimates (U$ Bn)

Note: Compound annual growth rates cover different periods: PwC (2012-16),IDC (2011-16), Gartner (2011-15), DFC (2012-17), Newzoo (2012-2016).

A look at the various worldwide figures being published


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Five Key Trends1 More Screens

Only five years ago, gamers played mainly on two screens: The TV and the PC. That number has since doubled giving room for moreultimately money spent on gaming. Gamers will still spread their budget across all screens putting pressure on individual game reve

2 Free GamesConsumers have gotten used to the idea of trying a game before they decide to spend money. The days of low quality free games havin-game spending business models have proven successful. Next stop: The TV screen...

3 Business Model Balancing ActNew Business models require continuous balancing between value for the consumer and profit for the developer and/or publisher. of the game should keep free gamers happy and provide room for spending by the whales. The launch of a game is just the start...

4 Games are ServicesAs monetization now takes place within the game at a moment the consumer chooses, publishers and developers are even more inckeep their gamer engaged as long as possible. Video content and eSports are increasingly becoming part of this strategy. Running gaservice requires a different organizational structure than selling (boxed) products. Traditional publishers are slowly catchingup.

5 Global Market PlaceThe games market is now, a truly global playground. Online connectivity in general and mobile devices specifically allow companies tolaunch games anywhere on the planet. To secure growth, emerging markets should be a part of any game companys strategy.

Driving change and growth in the global games marketplace


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Global Population vs Gamers

Future global growthwithin the industry willbe primarily driven by

emerging markets.This is illustrated bythe image on the right,showing that 14.9% ofthe worlds populationcurrently accounts foran astounding 73.6%of all gamingrevenues.

This population/revenue gap willshrink over the

coming years as theonline population andeconomies continueto grow withinemerging markets,leading to an increasein active and payinggamers.

Only 15% of the global population generates 74% of global game revenues

Key data points per region for the top 100 countries: Population, Online population, Gamer

2013 Newzoo


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Welcome to HollandWhy choose Holland as a gateway to Europe?

Holland has a strong and organized gaming sector, supported by an active governmentpolicy. The world-class Dutch education and research institutes deliver a workforce thatis innovative, creative, and highly multilingual. Also, Holland hosts one of the bestcommunication infrastructures in the world (both wired and wireless). On top of that,Holland has a strategic location in the internet exchange network for reaching both theEuropean and North-American markets.

Holland is an attractive destination for foreign investors for a variety of reasons:

Attractive tax climate Presence of major international gaming companies Some of the worlds best known studios are Dutch Advanced gaming education, research institutes and a strong creative industry Excellent ICT infrastructure: the most wired country in the world Skilled talent pool and a very attractive location for employees Strategic and central location in Europe Innovative software environment

Come & find out why companies like Electronic Arts, Nintendo, DeNA, Perfect World,Kixeye, Ubisoft, Microsoft and many others have already invested in Holland.


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Global Games Market 2012 - 2016

Global game revenueswill grow at acompound annualgrowth rate (CAGR) of6.7% to $86.1 billion by2016. The number ofgamers worldwide willrise from 1.21 billionthis year to 1.55 billion.

Fastest growingsegments are clearlysmartphones andtablets that areexpected to take 27.8%of the global gamesmarket in 2016.

The full report alsoplots projectionstowards 2016 usingdifferent ways ofsegmenting the market.

Underneath a healthy growth rate of 6.7%, major differences in growth potential are found


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Global Games Market Per Region | 2

Regional growth in game spending ishighest in Latin America and the

Asia-Pacific region: 11%. This growthwill push the Asia-Pacific market to$25.1 billion this year, making it thebiggest games market in the world.Despite the relatively large year-on-year increase, Latin America willremain a small market with revenuesof $3.0 billion. The North Americanmarket will total $22.8 billion (+2% y-o-y) followed by EMEA with $19.5billion (+4% y-o-y) .

The full report contains acomparable outlook towards 2016.

The Asia-Pacific region expands it leading position taking the largest share of the global ma


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Global Games Market Per Segment

Consoles remain to be the biggest revenuegenerating platform or market segment,

with $30.6 billion (-1% y-o-y) equal to 43%of global games revenues. This includes allDLC spend and business-to-consumersecond-hand trade. Traditional PC onsoleswill remain the highest revenue gaming(downloads and boxed) contracts to $6.0billion (-7% y-o-y), but this is offset by 14%year-on-year growth for MMO games,totaling $14.9 billion. Game revenuesgenerated by tablet and smartphones willgross 18% of the global games market,surpassing $12bn, which is roughly doublethe amount spent on games for handheldconsoles.

The full report contains a comparableoutlook towards 2016.

Consoles remain dominant but global growth comes from other segments


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Screen Segmentation Model

All types of games are movingtowards the cloud, relying on in-game sales for revenues and

becoming increasingly accessiblevia multiple screens. Traditionalmarket segmentation is based ondefinitions and terms that are in-creasingly difficult to maintain. Inaddition, the overlap between thetraditional segments is constantlygrowing and becoming increasinglydifficult to distinguish.

In 2012, Newzoo launched analternative way of segmenting thegames market The Screen Seg-

mentation Model. The startingpoint for the model is theconsumer and the four typicalscreens that they can use, witheach its own characteristics andappeal, depending on variousfactors such as time, place andbudget.

Traditional segmentation does not suffice to understand market change and growth

The full report also plots data fortwelve key countries on this model.


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Global Revenue Per Screen | 2013EWhen plotting the 2013 revenue estimates inthe Screen Segmentation model, the largestscreen is the Computer Screen thisencompasses boxed or downloaded PC games,

casual, social and MMO games generating39% of all revenues compared to 36% for the TVor Enter- tainment Screen. The Personal Screenor mobile phone, will show global growth of22% y-o-y and accounts for 12% of globalgames market revenues. Within the category ofFloating Screens, the shift from handheldconsoles to tablets is illustrated by theanticipated 78% growth for tablets and 21%decline in spending on handheld consolegames. Over time, global revenues are expectedto grow towards a more equal divide across thefour screens.

The full report contains a comparable outlooktowards 2016.

The PC continues to gross most money on a global scale, specifically fueled by MMO game

2013 Newzoo


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2013 Global Games Market Report

Includes projections 2012-201

Data perregion,

country,segment and

screen

48 pages ofglobal data &

insights

Order it online at www.globalgamesmarket.com for 1,490 ($1,950)

The essential 48-page reference report for anyone with an interest in the global games ma


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Contact us

NewzooWybe [email protected]+31 20 6635816

Newzoo.com website with free monthly rankings, insights and infographics

Newzoo subscriptions: Newzoo Data Explorer & Global AppStore Data

www.newzoo.com

Cross-analyzeover 200 topics

per country

Tablet & smartphonegame revenues &

downloads

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