A newly released report has suggested that the global videogames market will reach $294.35bn by 2026.
The analysis from ReasearchandMarkets indicates that the industry will enjoy a compound annual growth rate (CAGR) of 8.53% over the next four years, helped along the way by factors such as an increasing youth population, higher disposable income and higher penetration from technology like smartphones.
But how well placed are businesses to capitalize on this growth?
This article will discuss the issue in relation to Meta Platforms (NASDAQ: META), Qualcomm (NASDAQ: QCOM) and Electronic Arts (NASDAQ: EA).
Electronic Arts (NASDAQ: EA) develops, publishes and distributes branded interactive entertainment software worldwide for video game consoles, personal computers, handheld game players and cellular handsets. The company also provides online game-related services.
For the three-month period ended 30 June, the company recorded revenue of $1.77bn, up from $1.55bn in the same period one year prior. Electronic Arts said this growth had been powered by its strong portfolio of sports titles and owned intellectual property.
However, the business does face what could be a bump in the road. Its FIFA football franchise is a huge contributor to revenue, with in-game purchases helping the business’ Life and Services revenue reach $1.43bn in its most recent quarter.
In fact, the company’s annual report for 2020 showed that in-game purchases from FIFA’s Ultimate Team game mode represented approximately 27%, 28% and 23% of total net revenue during fiscal years 2020, 2019 and 2018 respectively.
The company had enjoyed a decades-long exclusive licensing deal with the Fédération Internationale de Football Association (FIFA), Football’s global governing body, to use the organization’s branding.
However, this deal has expired and, though Electronic Arts has been granted an extension for 2023, FIFA has stated that it expects more competition as new third-party studios get the chance to launch their own licensed football games.
This could be bad news for the company, which has long held something of a monopoly on football gaming.
Meta Platforms (NASDAQ: META) operates as a social technology company, building applications and technologies that help people connect, find communities and grow businesses. The company is also involved in advertisements, augmented and virtual reality.
Unlike more established game studios and gaming companies, the business is trying to wade in on this lucrative space after years as a giant of social media.
First off, the business launched its cloud gaming effort in 2020, which is intended to allow users to access games regardless of location or whether they have access to the latest technology.
Speaking of the latest technology, Meta Platforms’ most notable push towards gaming might be its emphasis on the metaverse, the hypothetical next stage in the internet’s evolution which is anticipated to come in the form of an immersive virtual reality simulation.
The company’s biggest step towards this goal so far has been Horizon Worlds, a social virtual reality game where users can engage in a litany of activities such as bowling, exploring or even trying stand-up comedy. The project is steadily becoming more expansive, with the virtual world opening up to users in France and Spain in mid-August.
With the game coming to more platforms before the end of the year, Meta Platforms anticipates a “dramatic increase” in the number of people using Horizon Worlds.
Qualcomm (NASDAQ: QCOM) operates as a multinational semiconductor and telecommunications equipment company. The company develops and delivers digital wireless communications products and services based on CDMA digital technology, serving customers worldwide.
While it might not have a hand in making the games themselves, chipmakers like Qualcomm benefit significantly from the increasing demand of the gaming industry. Indeed, a number of the company’s products are specifically made for machines that are optimized for gaming, including its Snapdragon semiconductor products for mobile devices.
Qualcomm is targeting the mobile gaming market in particular with its offerings, though its products are used in a variety of other areas. The company might be hoping that this focus on mobile gaming allows it to navigate a tricky spell for the gaming industry with more ease than some of its competitors.
While the industry is expected to grow across the next four years, there are concerns that it could face a slowdown as consumers respond to the rising cost of living by tightening their purse strings and holding back on major purchases.
Mobile gaming could fare better than console and PC gaming during this tricky period though, given the diverse functionality of smartphones and the high number of free-to-play titles in the mobile gaming market.