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November 8, 2011

Angry Birds-style games will see market double to $53bn

The global digital games market will more than double over the next five years: analysts

By Jason Stamper

The global digital games market will more than double over the next five years to be worth $53 billion in 2016, according to analyst firm Ovum.

In a new forecast, the independent telecoms analyst predicts that revenues will grow at a compound annual growth rate (CAGR) of 17 per cent from $24 billion at the end of 2011.

Digital games include those that are played online (on PCs or game consoles) or on mobile devices such as smartphones and tablets.

Ovum analyst Mark Little said that the explosive growth of casual games – simple games, such as Angry Birds, with mass-market appeal – is the primary driver of revenue growth. He commented: "The rise of casual games is continuing apace, driving soaring digital gaming revenues.

"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.

"Casual games are often simpler to play and easier to learn, making for a more spontaneous experience, ideal for mobile phones and tablets."

Ovum’s forecast predicts that revenues from the mobile gaming market alone will triple over the next five years to hit $17.5 billion in 2016.

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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, lowering barriers to entry and encouraging consumers to purchase low-priced virtual goods.

Little commented: "Game publishers’ evolving strategy is turning game products into game services, extending product life with downloadable content that continually refreshes a title’s ability to engage the gamer.

"Besides this, publishers are finding that digital distribution is delivering a host of other benefits. These include boosting margins from 20-30 per cent on boxed games, to 50-75 per cent on digital. Meanwhile online passes, increasingly required for network gaming, are cutting down the threat from the pre-owned game market."


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