| |SEPTEMBER - 20238CIOReviewIN MY OPINIONVIDEO GAMES ARE LEVELING UP; SOCIAL MEDIA SHOULD BE AFRAIDI've worked in the video game industry my entire career and continue to be amazed at how it constantly grows and evolves. Game revenues have grown significantly over the past decade and show no sign of slowing down. A combination of factors impacting leisure time, a constant flow of new technologies, and the convergence of multiple trends continue to fuel this growth. Industry research giant NewZoo forecasts that 2020's global games market will generate revenues of $159.3 billion, a solid year-over-year growth of +9.3%.To properly frame the video game industry and understand its global appeal, it's important to recognize that it's not just a technology sector; but rather a robust entertainment sector spanning many different technologies across three major platforms- Mobile, Console, and PC. Mobile gaming continues to experience the most rapid growth, as it has the lowest barrier to entry and is relatively easy to develop for. With 2.6 billion mobile gamers in 2020, this segment is expected to generate $77.2 billion in 2020, a year over year increase of +13.3%. Console gaming is expected to reach $45.2 billion in 2020 revenue, growing +6.8% year over year and seeing over 729 million players. We're expecting to see the next generation of Sony Playstation and Microsoft Xbox consoles released this year, although recent global concerns have put into question the timing and impact these releases will have on the near-term console business. PC gaming, my personal favorite, has 1.3 billion players worldwide and should achieve $36.9 billion in 2020, a +4.8% year over year increase.Growth across these technologically diverse ecosystems has been partially driven by the rise of digital distribution, which now delivers the majority of revenues across all video game sectors. In 2018, over 80% of all video games revenues were derived from digital sales channels; this includes upfront purchases of games and in-game sales. This doesn't mean that physical sales have gone through the floor, although they have declined significantly. Rather, this 80% figure represents a significant increase in microtransactions and lifetime value from game makers being able to easily expand upon hit games and continue monetizing them over many years, versus making sequels that monetize for a few months every few years. Within the industry this is known as the shift to a digital Freemium or Games as a Service (GaaS) model, away from the older analog Premium model. The largest companies, like Electronic Arts, Activision Blizzard, and Ubisoft, created or acquired their own digital distribution platforms and have profited from the shift to digital By Chris Hewish, President, Xsolla
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