Digital games market to reach $30b: Ovum

The Asia-Pacific digital games market is expected to more than double over the next five years, to reach an estimated value of over $30 billion in 2016, according to research firm, Ovum.

In a new forecast, named Digital Games Forecast 2011-2016, the analyst firm predicts that revenues will grow at a compound annual growth rate (CAGR) of over 18 per cent from $13 billion at the end of 2011. Digital games are defined as those that are played online (on PCs or game consoles) or on mobile devices, such as smartphones and tablets.

According to Ovum analyst, Mark Little, the rapid growth of games, such as Angry Birds, that have mass-market appeal is the primary driver of revenue growth.

“With the addition of more and more casual gamers, the market is no longer the sole preserve of the teen male hardcore gamer. Gaming is fast establishing itself with a much wider mainstream audience, with serious ramifications for other rich-media entertainment such as TV, video and music,” Little said.

Ovum’s forecast for the Asia-Pacific region predicts that revenues from the mobile gaming market alone will more than triple over the next five years to hit $8.2 billion in 2016.

The company stated that in addition to casual gaming, another driver of revenue growth is the free-to-play business model, which has exploded onto the video games market and lowered barriers to entry – eventually encouraging consumers to purchase low-priced virtual goods.

Little said that game publishers’ evolving strategy is evolving game products into game services, extending product life with virtual content that continually refreshes a title’s ability to engage the gamer.

He also stated that publishers are finding that digital distribution is delivering a host of other benefits.

“These include boosting margins from 20 to 30 per cent on boxed games and 50 to 75 per cent on digital. Meanwhile publisher’s use of online passes, increasingly required for network gaming, is cutting down the threat from the pre-owned game market,” he added.

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