Analysing game industry revenue: A frustrating endeavour

January 11, 2012

I should warn the reader that what follows is a wall of text and a somewhat (but not very) interesting  line chart.

So I thought I would be smart and tackle part of my research from the economic angle. Money makes the world go round, after all. I thought this would be useful because it consists of hard numbers and quantifiable results that can be compared to form trends and stuff.

I could not be more wrong.

Gathering comprehensive, accurate statistics of the gaming industries revenue over a period of just ten years is Hard, with capital H! After scouring all over the web I had dozens of sources consisting of news articles, blog posts, and press releases. All of them containing little tidbits of information and conflicting with each other half the time. Of course the actual reports are safely locked behind paywalls. And that is not even considering that some companies, like Valve with their Steam platform, refuse to give anyone information about their revenue.

Another great difficulty was the absence of revenues for different sub industries. I was able to get decent data for the global total revenue over time, but not for either Core games or Casual games. Part of this is the fact that these things are normally divided into console and pc gaming revenue, with casual games a distant extra. This information also gradually get less easy to find as you go back in time.

Results and methodology

Nevertheless, I managed to create a spreadsheet with data which is hopefully somewhat accurate. Wherever I wasn’t sure because of conflicting sources, I took a guestimate putting it somewhere in the middle. For ease of analysis I considered core games to be pc and console games. I made a chart to visualise the data and any trends. It’s interesting but also incomplete so there is very little to be concluded from it.

The most obvious conclusions that can be drawn from this graph are the following:

• Core gaming is more than half of the total gaming industry. (This is probably an understatement)
• Casual gaming is still very small compared to core gaming in revenue.
• The global gaming industry is steadily increasing and projected to continue this way. This goes for both core gaming and casual gaming.

Conclusion

My preliminary conclusion from this is that the rise of casual gaming does not have any significant effect on the rest of the game industry in terms of revenue. Of course this might change with all the buzz that goes around about casual gaming these days, or it might not. People can be fickle.

Now that I’ve given this more thought, I believe the results actually make sense. The social and core gaming markets are probably two different beasts. What follows is mostly conjecture by me. Even though they are both considered part of the games industry, they are really quite isolated. The two markets are very separate.

A console gamer might decide to play some casual or social games during his commute or similar situation, but at home he will probably go back to his console or pc quite fast. He will not reduce his regular amount of core gaming. Similarly a casual gamer attracted to mobile/social games will not easily make the transition to core games any more than he normally would because he is not interested in that. If he did have an interest in that, he would already be a core gamer. So it is a moot point.

Based on this theory and the numbers I believe both markets will continue to run parallel to each other for the foreseeable future. It also looks like both of them are still on the rise, so we will be able to look forward to both a lot of casual and core games.

Sources: [1], [2], [3], [4], [5], [6], [7], [8], [9]

Next post in this series: A ‘trendy’ topic