Global Gaming Reenergized: Augmented Reality, Location Based Gaming and Connected Toys Fuel Mobile Gaming, finds Frost & Sullivan

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Decline in gaming console shipments will be offset by growing demand for Toy-to-Life and smartphone supported games

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Jul 28, 2016, 02:13 ET

SINGAPORE, July 28, 2016 /PRNewswire/ -- The mobile gaming market seems to have reached an impasse with increasing saturation, heavy consolidation, and steadily declining unit shipments. In recent years, strong game development companies such as Supercell and Mixi have also come to dominate the industry. There are also increasing concerns over market saturation in Japan, the US, Europe and Korea and the lack of payment options in emerging markets. However, in terms of revenues, 2015 was another strong year for the industry with hardware and software revenues reaching US$52 billion globally.

New analysis from Frost & Sullivan, Global Gaming Market Tracker—Mobile & Console Gaming Market Forecaster (http://www.frost.com/sublib/display-report.do?id=P91D-01-00-00-00&src=IN) analyzes key gaming markets such as the US, Japan, Korea, China and the UK in terms of hardware and software and offers forecasts until 2020.

Some key findings:

Mobile games will show significant growth by 2020

Marc Einstein, Research Director, Japan, Frost & Sullivan is bullish towards the market.

"There will still be significant growth in the mobile gaming market. The recent release of Pokemon Go has provided a proof of concept for augmented reality and location based gaming. The partnership with the game and McDonald's in Japan also opens the door for new revenue streams for gaming companies. There are also many new interesting areas such as connected toys which will further bridge the gap between digital and physical products so we expect continued growth in the gaming market," noted Einstein.

Einstein also expects that it will be a matter of time before disruptive payment channels for digital services become popular in emerging markets.

"Countries like Indonesia and Brazil are showing increasing interest in Bitcoin and this will eventually lead to further growth in mobile gaming revenues," he added.

Revenue from Console Sales will continue to decline

On the other hand, the market for console hardware and software is expected to slowly decline from US$23 billion in 2015 to US$16 billion in 2020, at a negative Compound Annual Growth Rate of 6.6%. Among the key markets, USA, Japan and UK still accounted for more than 70% of global revenue in the segment in 2015.

Cris Duy Tran, Consulting Analyst, Digital Transformation, Asia Pacific, Frost & Sullivan noted that the massive uptake of mobile games has limited prospects for the console market in emerging markets and impacted sales in developed markets.

"Moving forward, console makers will need to continue to explore new areas to drive business in such as augmented and virtual reality," he added.

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SOURCE Frost & Sullivan