A little over a week ago it began to circulate this chart, a representation through areas of the development of the videogame industry from its inception to today. The data was processed by the site Visual capitalist, and divide the value of the entire world of video games by type of support, therefore arcade, PC, console, mobile, portable console, VR and Cloud.
The graph is as interesting from a historical point of view as from that of a simple analysis of the current market. In fact, if we want to understand the choices of the companies on which our entertainment depends, we need to be able to get out of our bubble and look at the bigger picture. Why it's not the complaints on Twitter that dictate the choices of the boards, it's the money.
This first article therefore speaks only of the present, in a second part I will analyze the entire graph starting from the birth of the first video game.
Let's start with the last ones, with the areas that are no longer there, or barely there, in that graph. Portable consoles and Arcades can now be considered pieces of archeology. They no longer represent a substantial part of the market and this explains the choices, recent or less recent, of the two companies that symbolize this type of media: Nintendo and Sega.
Starting from the first, when the Switch debuted in 2017, some turned up their noses at the idea that Nintendo would have abandoned its historic portable niche to bet everything on a hybrid console. The farewell to the dynasty that began with the Game Boy almost thirty years earlier, however, was a foregone move, looking at this data. The gray area, representing portable consoles, which reached its maximum extension ten years earlier, it had already thinned to its historical lows.
The reasons we will see later when talking about mobile gaming, but this is enough to understand how Nintendo's choices were less of a risk and more of an obligation than some could believe three years ago.
As for the Arcade, the resistance that this niche has been able to demonstrate is to be commended. The definitive failure in fact came in the last few years, sealed from the moment in which Sega also stated that it would withdraw from the arcade market. The Japanese niche is no longer enough, the Coronavirus has done the rest.
Console war and PC master race
Leave the remains of the past behind us, let's move on to the real beating heart of the video game community: the consoles and the PC. A total value of 75 billion dollars, two growing markets, with a recent almost vertical peak.
It all sounds like roses, but actually looking back a few years to understand that there is a problem with both media. While on the internet we fight hard to figure out which of the two new generation console it will be the best, with the laughter of PC gamers in the background, we are ignoring a detail not just. The growth of the console market is only a contingency, that of the PC market is very slow.
Growth is not enough for listed companies. Being attractive to investors means growing more than the previous year. Neither PC video games nor console games have been following this path in recent years.
For consoles, the peak depends almost exclusively on the extraordinary sales of Nintendo Switch. Another time the Kyoto company managed to pull off an ace that no one expected it to have and to upset the market. But it is a coincidence. Were it not for that, the market would be stagnant, stuck at the same sales as the previous generation, less and less dynamic, less and less attractive.
The PC world is relatively better off. Its growth is slow, but less fluctuating than the console one. It is a combination of factors that keep it above the waterline. MMOs like World of Warcraft, MOBAs like League of Legends, Twitch also seems to have played an important role. But without even one of these factors, even the world of computers would end up resembling that of consoles.
No wonder then, if the games become more inclusive. An industry that needs growth must try in every way to involve sections of the population it has not been able to reach up to now. And if you now have all the males on the planet among your customers, it's time to target the other half of the world population that has ignored you until now.
The real king
We have therefore come to the true ruler of the market. The huge red spot that takes more than half the extent of the graph, 85 billion worth. Mobile gaming is currently the largest source of revenue for the gaming industry.
But not only that, this value seems destined to increase. Since its real explosion, with Angry Birds, the mobile market has experienced an exclusively exponential growth, taking away perhaps only the 2017-2018 two-year period. Mobile games are the real majority of gaming, silent but rich.
It can make us turn up our noses, but the future lies in smartphones. No 120 fps in 8k, exaggerated particles or photorealism, the real keys to the industry are portability, free to play and virality. Mobile is the heir to portable consoles, and at the same time responsible for their downfall. Pokemon go and Fortnite are the two big names responsible for such sustained growth in recent years, but this market is not without shadows either.
Just this year we saw how in a world where games cost zero, in-game transactions become crucial, and on this battlefield the producers and the new distributors clash. The lawsuit between Apple and Epic could decide an important slice of the mobile market for the near future, but it is unlikely to reverse the direction of a constantly growing segment.
The future (?)
At the top of the graph, almost hidden by the arrogance of mobile gaming, is the future of video games, or presumed so. Virtual reality and cloud gaming are still extremely marginal, but for many they represent the new frontiers towards which the market is moving.
In reality, VR seems to represent a consolidated niche rather than a new market, waiting for better technology to explode. Its slow and steady pace is reminiscent of the first moments of portable consoles, before the Game Boy brought them to the fore.
This niche moment, however, has been prolonging for years now. The expectation of the technological leap, of the revolutionary game, increasingly resembles that of Godot. Not even Half Life: Alyx has managed to move the market significantly, and perhaps virtual reality has no place among the big players in the market, at least in this decade.
The gaming cluoud is just born. Stadia's first missteps have not deterred large companies, which have decided to invest in similar services. The potential is evident, the possibility of freeing the user from the need for performing hardware seems to be the definitive push that video games need to break through definitively. The only unknown is the games.
Video games for consoles and PCs carry with them three decades of practices and traditions that have made them very inaccessible to those who have never put their hand to a gamepad. Does it really make sense to propose Dark Souls through a service that targets a very large segment of the population?
The bigger picture
In conclusion, what does this graph tell us about the video game market as a whole?
It tells us that video games are the future of entertainment. In an industry, that of culture, which struggles for various reasons, video games are the only segment that has managed for at least two decades to carry on a constant and exponential growth.
No one reads books, music is in crisis because it cannot monetize streaming, cinemas and theaters are dying and not only because of the pandemic. Only interactive entertainment grows, and we must be happy about that.
The future is bright for our favorite hobby, We still have years of great games and great innovations ahead of us, even if maybe something will be lost in the process.