eCommerce: Gaming

Video Games: Key Insights

• Growth in Gaming: With the launch of Steam in 2003, the Valve Corporation revolutionized the online gaming market. The pandemic further boosted its growth, with revenues hitting US$184 billion in 2023.

• Most Lucrative Segments: Mobile games are the top performing sector in gaming, making up more than 90% of all revenues in 2023. Console games are second, with 52%.

• Revenues by Region: In 2023, Asia-Pacific generated the highest revenues in the gaming market, at US$84 billion. North America ranks second, at US$50.6 billion, followed by Europe at US$33.6 billion.

• Top Companies: With revenues worth US$24.2 billion in 2022, Tencent emerges as the most successful gaming company. Others like Sony, Apple, and Google are also strong market contenders.

The global gaming market is undergoing rapid growth, having generated revenues worth billions of dollars in recent years. Within this industry, however, the performance varies by segment, region, and companies.

Find out the growth rate of the online video games market, along with its best performing segments, leading companies, and biggest regional markets by revenue.

Video Games Market: ECDB Definition

Video games are typically not included in the ECDB online market definition, which encompasses physical goods distributed over the internet. But games are nowadays mostly consumed through downloads or cloud gaming on mobile devices.

For this insight, we expand our definition of online retail to include video games that are distributed online and downloaded to game consoles or PCs. We also include mobile games, pay-to-play games, and browser games that require in-game purchases. Network or cloud gaming will also be included, but hardware games, taxes and in-game advertising are excluded.

Video Games Market Grew Rapidly During the Pandemic

According Newzoo’s Global Games Market Report, the video games market is highly profitable, generating billions in revenue worldwide. A look at the revenue timeline shows that market value was at US$144.4 billion in revenue by 2019, and this figure has continued to grow throughout the pandemic to US$192.7 billion in 2021.

As people sought new forms of entertainment that did not require them to venture outside, gaming provided a perfect pastime that allowed for both social interaction and adherence to social distance guidelines. As a result, there were losses in growth after the step-by-step lifting of restrictions.

Despite these losses, the gaming market recovered in 2023, generating US$184 billion. It is expected that the market will continue to grow over the next three years, although it may not be as pronounced as it was during the global health crisis.

In absolute terms, the online gaming market is forecast to reach US$205.7 billion by 2026, which implies the continuous potential for growth in the gaming industry.

But examining revenue across all segments of the online gaming industry is only one aspect; more interesting is a detailed look at the revenue distribution of the individual segments that make up this market. Read on for a more thorough discussion in the next part.

Mobile Games Are the Most Lucrative Segment in 2023

As explained in the first section, there are different types of distribution platforms for online games that determine where and how players interact with the product. Accordingly, each distribution type generates revenue differently, and while some methods are more prevalent, others are more niche. 

The chart below illustrates the latest development in revenue of the biggest categories in the video game market:

Mobile Games Account for Largest Revenue Share

At first glance, the mobile segment accounts for the largest share of the video gaming market. In 2023, mobile games continue to dominate the gaming market with US$91.1 billion, representing nearly 50% of the total video game’s revenue for this year.

The easy accessibility of mobile games is a likely reason for their popularity, as the penetration of smartphones or tablets is higher than that of video game consoles. They also provide a fun distraction on public transportation or during waiting times and short breaks, which may account for their mainstream adoption.

Meanwhile, the underlying categories, console games and downloaded/boxed PC games, are experiencing losses. According to Newzoos’ report, this is due, among other reasons, to several delays caused by disrupted development schedules during the pandemic, such as in Hogwarts Legacy or Final Fantasy XVI, resulting in underperformance.

Where Do People Spend the Most on Gaming?

As we have already observed above, people have started playing more video games, especially during the pandemic. The Chinese government also recognized this trend and implemented strict playtime limitations for underaged consumers in 2021. This could be a reason for the minimal decline in the Asia-Pacific region.

Despite slight alterations, a regional depiction shows that video games generate the highest online revenues in Asia-Pacific, with around US$84 billion in 2023, compared to US$50.6 billion in second rank North America. In third place comes Europe holding US$33.6 billion, followed by Latin America (US$8.7 billion), and finally, the Middle East together with Africa with US$7.1 billion.

Developers and Distributors in the Video Game Business

The range of gaming platform providers is as large as it is diverse, so in this section we provide an overview of the key players operating in the field. First, however, we should distinguish between video game development companies and game distribution services. While game businesses can fall into both categories, they describe different aspects of the industry. 

Game developing companies are involved in the design, development, and sometimes the publishing of games. They are responsible for creating the game's content, graphics, sound, and gameplay. Game distribution services, on the other hand, are platforms that host and distribute games developed by these companies or by independent developers. As said before, big companies like Sony or Microsoft do both things. With big success!

Tencent Is the Most Successful Company

We use the data provided by Newzoo. Their estimates based on company data show that Tencent Holding Ltd. tops the list of the most successful gaming enterprises, with revenues of US$24.2 billion in 2022. The Chinese multinational conglomerate company owns the League of Legends franchise, which is one of the most popular games in the world. It is free to play, but players can purchase cosmetic items called skins to customize the appearance of their characters. 

Sony Interactive Entertainment follows with US$18.2 billion. Sony scored a major success with the release of its latest console, the PlayStation 5, on November 12, 2020. It also owns the game selling platform, PlayStation Store, and manages subscriptions like PlayStation Plus, which contribute to its revenue,

Next in line is Apple (US$14.8 billion), followed by Google (US$12.4 billion). Both are players that have been members of the gaming industry for years. However, Apple has recently placed increasing weight on the playability of its products, advertising, among other things, the MacBook 14.

In fifth place is Netease with 2022 revenues of US$10.8 billion, closely followed by Microsoft with US$10.3 billion. Further behind are Activision Blizzard (US$7.5 billion), EA (Electronic Arts) (US$3.5 billion), Nintendo (US$4.2 billion), and Take-Two Interactive (US$3 billion).

Note that all 10 companies on this list have annual revenues in the billions of dollars, indicating the immense profitability of the gaming industry. Considering that this is just one branch of the whole industry, we move on to the next category: video game distribution platforms.

Gaming Boomed During the Pandemic

As alluded to in the in-scope definition, most game sales today are made through digital distribution services. Even physical retailers tend to offer mostly game cards and codes that can be used on these platforms, some of which are listed below:

Steam is considered the largest game distribution service. The platform hosts thousands of games and new releases, excluding games from competitors that are limited to their own distribution services like Sony, Microsoft or CDPROJEKTRED. On the other hand, there are some Valve games that can only be accessed through Steam, such as Dota 2, the Left 4 Dead series, and Counter Strike.

Below is a chart depicting past and projected game sales revenue on Steam from 2020 to 2028. We can see that 2020 and 2021 were particularly profitable years for the service, in line with pandemic consumer behavior. While 2022 and 2023 saw a downturn, the following years are predicted to see a some minimal increase.

Other popular digital distribution platforms include:

• Green Man Gaming: This smaller platform gained popularity through a competitive pricing strategy and rewards programs, including rewards for purchases, trade-ins, referrals, and game reviews. 

• GamersGate, a Swedish digital distributor, is similar in size and strategy to Green Man Gaming, and also offers incentives, discounts, and rewards programs. 

• GOG.com, formerly Good Old Games, is a Polish distribution service. Having started out as a digital download platform for classic PC games, it now also provides new releases. GOG.com offers a money-back guarantee, additional downloadable content, and a loyal following of classic game enthusiasts. 

• Origin is Electronic Arts' distribution platform, launched in 2011 as a competitor to Steam. It contains some third-party games, a large catalog of older EA titles, and exclusive popular EA game titles. 

• Amazon offers new releases, online digital codes that can be used in Steam, and discounts. However, it lacks older titles and re-released classics. 

• Epic Games is a U.S. company, founded in 1991. The company is best known for one of the world's largest games, Fortnite, as well as Unreal Engine.

Video Games Market: Closing Thoughts

The online video games market has gained substantial ground in recent years. The pandemic also fueled its enormous growth. Yet some challenges prevail. For example, new legislation like the one implemented by the government in China in 2022 limits users and may also hinder gaming companies’ growth.

Nonetheless, the number of online gamers is climbing by the year. Statista estimates that the global number of users in the Games segment is 2.58 billion in 2024. The figure is expected to increase until 2029. Thus, projections for the video gaming market are optimistic, with stable growth expected going forward.

Sources: All Top Everything, Lifewire, Statista, Statista Digital Market Outlook