The video game industry is undergoing changes driven by advancements in technology, the rise of metaverse-style environments, and new monetisation models, according to a recent analysis by Bain & Company. The industry’s growth trajectory is poised for substantial acceleration, with global revenues projected to increase by over 50% in the next five years.
The integration of better technology and the development of metaverse environments are revolutionising how games are developed and played. These changes necessitate significant investments and a large global audience, given the high costs associated with producing major game titles. Successful franchise management and fan engagement are becoming increasingly vital, with companies placing these aspects at the core of their strategic decisions.
As stated in the report, innovative monetisation strategies are reshaping the financial landscape of the gaming industry. The competition is intensifying, making scale an essential factor for success. Leading companies are focusing on acquiring and retaining top creative and technical talent, which remains challenging as developers are often lured away by larger tech firms.
Bain & Company’s analysis forecasts that global video gaming revenue will grow from $199 billion in 2022 to $307 billion by 2027, representing a compound annual growth rate (CAGR) of 9%. This growth is being driven by the heavy engagement of younger gamers, particularly those aged 13 to 17, who spend about 40% more time in video game environments than on other forms of media, including social media, music, and TV.
The gaming sector is experiencing a surge in deal activity, particularly in gaming software and financial investments. Key transactions in recent years include Microsoft’s proposed acquisition of Activision for $69 billion, T2’s acquisition of Zynga for $12.7 billion, and Sony’s acquisition of Bungie for $3.6 billion. The total deal value in gaming software reached $95 billion, with financial investments amounting to $49 billion, e-sports at $39 billion, and gaming hardware at $19 billion between 2019 and 2022.
Customer experience is becoming increasingly important, with players expecting seamless transitions between gameplay, socialising, and commerce in both physical and virtual worlds. Companies will need to create highly personalised journeys for consumers, moving seamlessly across devices and platforms. Establishing strong out-of-game communities on platforms like Discord and Reddit, as well as leveraging user-created content on TikTok and Twitch, will be essential for maintaining engagement. Influencers play a significant role, with 66% of US teens following gaming influencers like Valkyrae and Asmongold.
The report highlights that the gaming industry’s growth will be fueled by heavy engagement from younger gamers and increasing deal activity in the sector. As companies navigate these changes, success will hinge on good franchise management, fan engagement, and the ability to attract and retain top talent.