Deloitte: Game consoles are fitter than ever at 50 year mark

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According to accounting and consulting firm Deloitte, the game console is showing no signs of slowing down as it approaches its 50th anniversary. So much for the predictions that the console died.

This may not come as a surprise to close followers of the sports industry, as the epidemic led to a historic increase in players as people were forced to lockdown in 2020. Since then, there has been a surge in investment, with રમત 71 billion being poured into sports acquisitions and investments. And public offerings in the first nine months of 2021, according to Drake Star Partners.

Deloitte Global predicts that the console market alone will generate $ 81 billion in 2022, up 10% from 2021, thanks to strong content, gaming experiences and business model innovations that keep the industry competitive with other types of entertainment.

In the 2022 anniversary year (50 years after the launch of the Magnavox Odyssey), Deloitte expects strong revenue, a full slate of the latest generation of devices, and a strong foundation for further growth. Revenue per console player is expected to reach $ 92 per person by the end of 2022, significantly higher than $ 23 per PC gamer and $ 50 per mobile gamer.

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About 22 59 billion in console revenue by 2022 will come from software sales, including video game titles, subscriptions (over US $ 10 billion), and in-app payments. Console hardware sales are expected to top 22 billion, driven by resolutions (at least some) of supply-chain problems blocking the supply of the latest generation consoles released in late 2020.

Importantly, the prices for new gaming consoles have proven to be resilient, with launch prices being able to stay longer than previous generations of consoles. After 2022, sales of console software are expected to continue to grow, reaching close to $ 70 billion by 2025.

During this period, digital game purchases, including downloads, subscriptions, game passes and in-app payments, as a share of sales are expected to increase from 65% in 2022 to 84% in 2025.

Various innovations are promoting the console ecosystem

Nintendo has enough switch light stock to reach the end of the financial year.

Above: Nintendo Switch dominates as we enter the next generation.

Image Credit: Nintendo

The Games Console is at the heart of an expanding ecosystem that continues to innovate content, experiences and business models. These innovations are transforming the console ecosystem from one to one generating one-off sales based on end products – whether it’s a physical console or a game title – an ever-evolving entertainment service that promotes daily, multiplayer gameplay and generates steady revenue. Is.

Subscriptions like the Xbox Game Pass (and Netflix’s own new game subscriptions are included in its overall service) are a significant development. Deloitte predicts console owners will have more than 200 million multiplayer and games subscriptions by 2022. By 2025, these subscriptions will generate more than 11 billion in revenue, up from $ 6.6 billion in 2020.

A game console that has been owned for eight years can generate as much subscription revenue as console sales. Another notable innovation is GamePass, which offers gamers regular new “chapters” of gameplay and storylines, the use of virtual currency, and better gear and different outfits such as in-game add-ons.

Some titles have also evolved into a game-a-service with constantly updated storylines, content and events that promote regular play. For
Rockstar’s Grand Theft Auto, for example, launched as a top-level single-player experience on September 5, 2013, but has since expanded into a multiplayer service in the evolving game world – making it the best-selling game in the US market between 2010 and 2019.

Another approach is annual publication rather than occasional. This tactic is common in sports titles such as FIFA, Pro Evolution Soccer and Madden. Because the players on each real-world team are constantly changing, with big transfers once or twice a year, sports titles are ideal for annual updates. This type of annual game can also be bundled with additional revenue streams, such as in-app payments and game passes.

Console game makers have also borrowed an innovation from mobile / PC playbooks by offering free-to-play games that are monetized through in-app purchases. The most famous example of this is Fortnight of Epic Games, which has cost billions of dollars.

In some cases, games that were previously sold directly, such as Rocket League, have been switched to this model. Popular multiplayer titles are appearing like a few immersive social media, with more socialization and personalization of avatars through purchased “skins” (clothes, hairstyles and so on) and “emotes” (mostly gestures and dance moves).

The ultimate inspiration for console game growth is its growing integration with mobile. While games have historically been designed for any of the two very different device types, console titles are now beginning to integrate with complementary smartphone apps, allowing players to access the same game from any device.

In 2022, Deloitte expects this new trend, known as cross-play, to accelerate. An early example of console-mobile integration is Call of Duty, one of the most popular multiplayer console franchises. The franchise has released a mobile version of its games, designed to keep people away from playing and investing while away from the big screen. According to an estimate, Call of Duty: Mobile has a total of 200 million active users and about 30 million daily active users.

The jury is expected to decide in 2022 whether the console-mobile integration is net positive for the console. Over time, cross-play can dilute the value of a given console, or at least weaken the role of new releases that are specific to a single platform. This highlights the growing tensions in the gaming ecosystem: top game franchises are jostling for fame with the hardware they run.

Bottom line

PlayStation 5.

Above: PlayStation 5 is beautiful and bold.

Image Credit: Sony

The console has a great deal to look forward to in 2022, with the most prominent bulge being in the revenue line. With three model debuts in 2020 to 2021 and multiple major new titles to launch in 2022 to 2023, a new generation of consoles has just launched.

With an average lifespan of six years, the new console will probably be at the center of the most exciting gaming experiences. The console will also have no shortage of prospective customers, and this will have implications for other media categories that are competing for the same eyeball. The console user base is getting younger, getting older and expanding.

Deloitte’s research on U.S. consumers found that most people between the ages of 14 and 24 rank gaming as their favorite form of entertainment, even beyond TV and streaming video. As this generation ages, it will retain gaming as a leading part of their lives. Gaming is also on the rise between Millennials and Gen X. Middle-aged players who grew up with consoles as children have remained loyal or returned to them as 40- and 50-year-olds.

The epidemic has further accelerated adoption and engagement with gaming. During the epidemic, parents spent more time gaming with their children – a social activity that could survive well, Deloitte said. As the Covid-19 declines, outdoor activities will compete for leisure time, but gaming has remained strong even in reopened cities. (And with the Omicron variant… well, you know.)

Even before the epidemic demanded remote socialization, the most popular games, such as Fortnight, Call of Duty: Warzone, and Apex Legends, were based on social experiences that reinforce retention: leaving the game means disconnecting from friends.

Cloud vs. Console

Xbox Series X / S

Above: Xbox Series X / S

Image Credit: Microsoft

From a competitive standpoint, the cloud gaming console is expected to be grabbed, but its risk level is not high at present. In part, this is due to network readiness. This year, most homes globally will lack the connectivity needed to run high-performance cloud gaming while maintaining other in-house broadband needs.

A dedicated 20 Mbit / s connection may also be required for a 720-pixel (less than HD) cloud gaming experience. In addition, cloud gaming requires upstream handling of player inputs, placing additional demands on data connections – and possibly data plans.

Even from a gaming experience perspective, the offer of 4K from cloud gaming services will never be less attractive as the installed base of 4K (and 8K-ready) consoles continues to grow. Although publishers have allowed some of their titles to be ported to cloud services, they have received little incentive to just release games on the cloud platform.

To get started with cloud gaming, it will clearly need to offer a better price than a console – such as the promise of a very large and rich game world capable of hosting thousands of players in a single instance (most multiplayer games have caps. Out of 150 players in the same world. ), Deloitte said.

However, console makers should plan for the future where there is an increasing rate of game execution and delivery on the network. The best way to compete for the console ecosystem might be to combine the best components of a console, essentially a high-performance edge computing device with the best cloud, which already includes an online marketplace and multiplayer play.

Console makers can also develop, acquire or even license more content IPs by strengthening their role as a game development studio. They can explore how consoles can guarantee quality of service at home and play a stronger role in content, social moderation and shopping for different family members.

In addition, console manufacturers may consider adding premium hardware options or the ability to add additional graphics cards that provide gaming communities, such as participants in competitive sports, who generally prefer PC customization and extensibility, Deloitte said.

Overall, the console is already so far away that one would think it would have become such a respectable platform. Deloitte said their ability to deliver exciting and highly socialized game experiences, along with business models that allow for recurring revenue, keeps them very vibrant, good and ready for future growth.

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