It's tempting to look at the video game industry as a small niche targeting only a select portion of the population. However, the global video game industry is almost a $200 billion market, surpassing traditional entertainment venues like movies and music.
In this clip from Backstage Pass, recorded on Sept. 13, the Motley Fool's Sanmeet Deo, Clay Bruning, and Jon Quast give investors an overview of this important industry, including the fastest growing segment of the market.
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Sanmeet Deo: The total global games market, how are these video games played? It breaks down essentially between mobile, PC and consoles. Mobile is the fastest and biggest growing segment of the industry, your tablet game, your smartphone games, and it comprises almost 52% of that projected about a $180 billion of gaming revenue for 2021. This is according to Newzoo. PCs are about $36 billion, 20%, and then consoles are about 28%, things like Xbox and PlayStation and all those other things.
Mobile is really where the fastest growing segment of the business is and it makes a lot of sense. Our phones are essentially a gaming device right in our hands and I think I was joking about it with Clay, is that I don't know if this is also included in those mobile gamings, but I did a fantasy DraftKings game this weekend just for fun yesterday actually and just did a fantasy lineup and participated in that. I wanted to try it out and just see how it was going. That was kind of fun. I won like $10. That was cool. That too, it's almost like you can imagine different areas being gamified essentially.
Clay Bruning: Yeah, I think it's another thing to consider there is within that, not just on sports betting, but gambling as a whole, you also have this whole segment it's called simulated gaming. But it's the same as gambling except instead of trying to actually win money, for example, you put in $50, you know that $50 can't win you anything else but you're playing because you enjoy playing the game and having that adrenaline rush without having real money on the line. That'll be interesting to see if there's more expansion in terms of simulated gaming, whether it's with these gambling companies or some of these gaming companies that we'll talk about in a little bit as well.
Deo: Yeah, and then like what Jon was asking about earlier, video game is bigger than just the direct revenues that we talked about. Accenture estimates that direct and indirect video game revenues will reach almost $300 billion.
Now, indirect revenues are things such as gaming video content, Esports, accessories, hardware, mobile devices. Also, like anything that's periphery to just gaming and gaming itself, for example, the chips that go into basically everything that runs these PCs and the mobiles and these devices, that too can be an indirect revenue beneficiaries. Indirect revenue is essentially anything that benefits from this core direct revenue of gaming.
That's a bit of a quick overview on the industry itself and just a couple of quick notes too about the industry that I had come across. You know in 2020 the US video game industry grew about 27% to almost $57 billion in revenue, which was surpassing movies and music combined which was according to NPD Group. It's a large business that is growing, that's expanding, that's almost encompassing more than just the traditional mode of gaming and what gaming is. I feel like there's going to be a blur of what's gaming and what's not gaming, especially when we started delving into that metaverse realm.
That's overview of the industry. I don't know if you guys have any thoughts on the industry based on what you guys have researched before, what you've seen from your experience?
Jon Quast: Well, I'll just say real fast, it's so tempting and I'm not a gamer anymore, personally, but for me as an outsider, it's so tempting to just think of your Nintendo consoles, your PlayStation consoles, your Xbox consoles as what we're talking about with gaming, but in reality, and I think it was up there and one of those slides, the disproportionate size of the mobile gaming industry is on your smartphone. The size of that compared to traditional consoles, mobile gaming is a very big part of what we're talking about.
Clay Bruning owns shares of DraftKings Inc. Jon Quast owns shares of Nintendo. Sanmeet Deo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Accenture. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
