Market researcher Newzoo reported that the top 25 public game companies account for nearly 80 percent of the global market, and they generated $107.3 billion in revenue out of a total $134.9 billion market in 2018.
That was the first time the top 25 have exceeded $100 billion in annual revenue. Tencent was the No. 1 company for the sixth year in a row. China’s internet and social giant grew 9 percent in 2018 to $19.7 billion in game-related revenue. That was almost 15 percent of the entire games market.
Sony came in second at $14.2 billion. Microsoft had $9.8 billion, and Apple was No. 4 at $9.5 billion, according to the Newzoo Global Games Market Report.
Combined, the top 10 companies grew 19 percent in 2018. However, the top 11 to top 25 companies together grew just percent, and many companies in this bracket were unable to keep pace with the market leaders.
Apple and Google are getting more active, but they have always fared well on the top 25. The American tech giants’ consistent strength is a direct result of revenues generated from their respective app stores, where both take their cut of every transaction.
Google recently announced Stadia, the company’s cloud gaming platform that allows users to stream entire games via the Internet. The games are run on hardware at Google’s data centers, which means the consumer doesn’t need to own expensive hardware. At the same time, Google announced the creation of Stadia Games and Entertainment, its own studio that will develop Stadia-exclusive games.
Apple, on the other hand, is working on Apple Arcade, which will be released later in 2019. The subscription service gives users access to a library of 100 new games for a monthly subscription fee. Interestingly, the platform features no ads and no in-app purchases, key drivers for growth in the mobile games market in past years.
For years, both companies have acquired top talent from the games market but have remained relatively quiet about their expansion plans. It is now clear that both companies will use their unique strengths to greatly expand their activities in the games market, Newzoo said.
Google leverages the global presence of its data centers and strong technology credentials, while Apple uses its expertise in accessibility and an overarching focus on content curation. Meanwhile, they will continue to reap the benefits of their lucrative app stores while catering to new segments of the market with their new services.
Console growth is strong
Console companies showed particularly strong growth in 2018, accounting for 38% of revenues earned by the top 25 companies, up from 34% in 2017. Notably, five out of the top 10 companies earned most of their revenues from console gaming.
Platform owners Sony, Nintendo, and Microsoft drove console’s strong performance. This partially offset slower-than-expected revenue growth across mobile and PC. Sony generated revenues of $14.2 billion, a year-on-year growth of 41% — the highest in the top 10.
Sony had an array of critically and commercially successful PlayStation 4 exclusives throughout the year, including the highly acclaimed God of War and Marvel’s Spider-Man. High-profile third-party titles such as Red Dead Redemption 2 also strongly contributed to the company’s revenues through the PlayStation Network.
Microsoft also performed well—so well, in fact, that it jumped one position from last year to No. 3, overtaking Apple. Microsoft generated revenues of $9.8 billion in 2018, growing up 32% from 2017. The company has been making strides with its Xbox subscription services, Xbox Game Pass, and Xbox Live. Owing to this success, it is unsurprising that the company is starting to position Xbox as a service rather than a hardware platform.
Nintendo also did well, with revenues of $4.3 billion, up 36% from 2017. This was driven by the popularity of the Nintendo Switch, which—like in 2017—had an appealing lineup from Nintendo’s strong game roster.
As Microsoft and Nintendo now have vastly different value propositions, they are no longer in direct competition. The two companies have even developed a working relationship of sorts, including playful communications regarding crossplay and Microsoft bringing Xbox Live and once-Xbox-exclusives to the Switch.
Other console-first companies stagnate
Under the pressure of a dynamic market, continuously changing business models, and high consumer expectations, traditionally large console publishers such as Activision Blizzard, Electronic Arts, and Ubisoft have struggled to keep pace with the growth of the platform holders.
Activision Blizzard (No. 5) earned revenues of $6.9 billion, growing 6% over last year. Its console revenues were up year on year but were partly offset by declining mobile revenues. To counterbalance this, Activision Blizzard is looking to bring its strong IP to mobile in the coming years, with titles such as Diablo Immortal.
Meanwhile, EA (No. 8) generated revenues of $5.3 billion in 2018 with year-on-year growth of just 4%. Similarly, Ubisoft (No. 13) produced $2.2 billion in revenues, growing 3% year on year. In the face of growing slower than some of the competition, Activision Blizzard, EA, and Ubisoft have all strived to diversify their release lineup over the past few years, especially their games-as-a-service offerings.
Since 2017, Nexon gained a place on the ranking, reaching No. 12 and moving above Ubisoft. Nexon earned $2.3 billion in 2018, growing 8% year on year. Nexon’s owner put his stake in the company up for sale at the start of 2019, making it potentially the largest acquisition ever seen in the games market.
Meanwhile, Netmarble (No. 14) reported one of 2018’s biggest declines, dropping 17% year on year. The company generated revenues of $1.9 billion in 2018, compared to $2.3 billion in 2017. Many Netmarble titles scheduled for 2018 were delayed until 2019, so the company largely leaned on its aging lineup of games.
Social casino game company Aristocrat Leisure was one of the top 25’s fastest growers, with revenues increasing 187.3% year on year to $1.1 billion. The Australian company’s success was driven by its portfolio of mobile casino games, bolstered by Aristocrat’s acquisition of Plarium Global in October 2017 and Big Fish Games in January 2018.
Capcom also had an impressive year, rounding off the ranking at No. 25 with revenues of $809 million (year-on-year growth of 49%), led by the success of Monster Hunter: World. Capcom last made the top 25 in 2012, coming in at No. 20. It was No. 31 last year. The Monster Hunter series had traditionally been a major success in Japan, but the latest installment in the franchise resonated with Western audiences. The company’s success will likely continue into this year, thanks to the successful launches of Resident Evil 2 and Devil May Cry 5 in the first quarter of 2019.
Update, 12:25 p.m. with Capcom’s last time in the top 25.