2013: year of the digital/physical tipping point – Screen Digest

Digital revenue in Europe will count for 53 per cent of the games market next year.

That’s according to data revealed by IHS Screen Digest at yesterday’s London Games Conference.

In a talk running through key metrics measuring the size, scope and future of the games market, senior analyst Piers Harding-Rolls gave attendees some of the biggest numbers of the night.

Digital and mobile game monetisation in games is far more advanced than in any other sector in Europe, at €5.1bn. It’s much bigger than online video’s €1.6bn, he said.

"The games sector is forging ahead," in digital delivery, he explained.

And that’s driving the market towards the inevitable inflexion point.

Next year will be a watershed in the games market with 53% of the market being digital revenues, up from 45% this year.

Harding-Rolls is forecasting €8bn of digital and mobile games revenue made in Europe during 2016.

IHS Screen Digest research says that during 2015-2020 the digital generation will really bed in once business models are established and consumers will really ramp up demands on what kind of content is available.

Mobile is the fastest growing area in games Harding-Rolls added, calling it "the engine behind market growth".

And while the roll out of connected devices has driven the explosion in new digital revenue streams, consoles still have a role to play in the wider ecosystem he added. Specialist devices are an important differentiation, especially connected TV consoles.

Looking at the wider market, he said that while many are positive about the opportunities and number ofplatforms out there things like open distribution, cheap development and free content has created clear challenges.

For a start, that all makes the content market very competitive – for instance there are 190k iOS ‘publishers’ and 35,000 new apps launched in 2012.

It also makes business planning harder and risk is increasing, businesses find it harder to scale and operating costs are rising, meaning "there is no ‘easy’ money out there".

This underlines how consumers must engage with customers, concluded Harding-Rolls. "Employing strategies to connect with future customers is how to get yourself on a strong footing."