Americans will spend $20.5 billion on games this year, with about 65 percent of that amount spend via digital means through online downloads for consoles, PCs, smartphones, and tablets.
About 31 percent of the business, or $6.4 billion, flows through retail sales of boxed games, according to Amsterdam-based market researcher Newzoo. (These numbers don’t include sales of hardware). About 13.3 billion of the revenue is generated through digital means.
Compared to 2012, new and pre-owned game retail sales are expected to be down 10 percent in 2013. But that’s not so bad, considering the retail decline in 2012 from 2011 was 21 percent. By contrast, digital game spending rose 10 percent, resulting in a modest year-on-year growth of 2 percent for the U.S. (Revenues include the retail margin but do not include tax and consumer-to-consumer trading).
Newzoo said 170 million Americans play games and 60 percent of them spend money. The average monthly spend is $16.50 for those 103 million consumers who spend money. Only China has more paying gamers, and those ones spend less than half the U.S. monthly average.
The fastest-growing category is tablet gaming, with a compound annual growth rate of 47.6 percent compared to 18.8 percent for smartphone gaming in 2013. Market researcher Distimo reported that during November, the revenue for games on the iPad exceeded revenue from iPhone games. While the iPhone is losing ground to Android smartphones and the Google Play Store is catching up, the dominant position of the iPad and iPad mini keeps Apple significantly ahead in revenues generated. Fragmentation is still hurting Google Play, said Peter Warman, CEO of Newzoo.
Newzoo’s estimate is based on the assumption that December sales will compared similarly to last year. Second-hand game sales are expected to be $1.6 billion this year, not counting the sales revenue that consumers keep for themselves.
Retail is shifting its focus from boxed game sales to console hardware, accessories, pre-paid game credits as well as collectibles and physical game-elements such as the Skylanders and Disney Infinity action figures.
Cross-screen gaming is taking off, and that is increasing the time spent playing games. Over 40 million gamers, or 24 percent of all gamers, play on all the major screens: the TV, PC, smartphone, and tablets/handhelds. Two years ago, the number was just 30 million.
Only China and Spain have a higher share of gamers that use all four screens.
Meanwhile, eSports is taking off in the U.S. as game streaming platforms such as Twitch and the game video portion of YouTube take off.
In 2014, free-to-play AAA-quality titles such as Dust 514, Warface, and World of Tanks will likely generate new free-to-play revenues on the TV, Newzoo said.