In the competitive world of entertainment, not many industries have witnessed exceptional growth like the gaming sector has. The growth of the sector can be understood from the fact that it replaced filmed entertainment and became the fourth largest segment in the Indian media and entertainment sector in 2023, as per a recent FICCI-EY report. As online gaming have blurred lines between traditional entertainment and interactive experiences, it becomes very important to understand the financial dynamics of game development and publishing.
It is a diverse ecosystem where creativity meets commerce. Starting from local developers operating on lesser budgets to major studios releasing blockbuster titles, each type of developer has their revenue streams. In this article, BrandWagon Online takes a look at how developers and publishers monetise their creations and the shifting consumer behaviours which have been instrumental in these changes.
Not just a game
The video game industry generated an estimated revenue of $184 billion in 2023 globally. The revenue is distributed between mobile (49%), console (30%), personal computer (20%) and browser (one percent) games as per a report published by the World Intellectual Property Organisation(WIPO) in 2024. Nowadays, big-budget movies have more budgets than rival big-budget movies. For instance, in 2023, Cyberpunk 2077, a video game cost $340 million. On the other hand, Fast X, the most expensive film released that year cost $340 million, as per the WIPO report. It is also mentioned in the report that, between 2018-2022 the video game industry workers earned one to three times the average in Finland, Japan, Poland, and the USA.
Revenue models and channels
The online gaming industry seems to have many revenue models to earn money. In-app purchases, advertising, freemium, and subscription models are some of this industry’s most tried and tested revenue models. However, digital channels now account for the majority of gaming market revenues worldwide. As per a 2023 report by Statista,convenience, frequent digital sales offers, extra digital content, and most recently, the outbreak of the COVID-19 pandemic have led to gaming audiences spending most of their money digitally. For instance, GTA 5 publisher Take-Two Interactive generated approximately 95.1% of revenues from digital edition sales. Gaming publisher Electronic Arts (EA) was the second-ranked gaming company, having successfully made the switch to monetizing digital content. EA generated 90.9 % of its FY 2023 net revenues via digital game downloads and live services. Packaged gaming software sales are projected to decline throughout the next years, the Statista report said.