The Games Market in 2022: The Year in Numbers
To reflect on one of the most tumultuous years in gaming, we’ll now look back at our data and analysis over the past year. The article will also highlight some of the year’s most significant developments, featuring quotes from Newzoo’s market analysts.
For the first time since Newzoo started tracking global games market revenues, we forecast the market to decline year on year. We now estimate that the games market will generate $184.4 billion in 2022, down -4.3% year on year.
Tom Wijman, Lead Analyst Games: “2022 was a tumultuous year, with two successive downward corrections to our 2022 forecast to land at our current forecast of $184.4 billion generated by 3.2 billion players across the globe. We see 2022 as a corrective year following two years of lockdown-fueled growth for the market. Looking back at our pre-pandemic forecast for the games market (from January 2020), revenues in 2020 and 2021 were much higher than we anticipated, while 2022 is slightly lower. This revised forecast may seem like a setback for the games market, but the sum of revenues generated from 2020 to 2022 is almost $43 billion higher than we originally forecasted pre-pandemic.”
Mobile game revenues will decline faster than other segments. We forecast the mobile games market to generate $92.2 billion in 2022, down -6.4% year on year. Moreso than PC and console gaming, spending on mobile games is affected by the recession’s impact on people’s disposable income.
Tianyi Gu, Newzoo’s Mobile Market Lead: “There are two main factors contributing to mobile game revenues’ decline this year. First is the ongoing development in mobile gaming related to privacy, especially on iOS. The limited ability to identify and track valuable users continues to cause headwinds for mobile developers, publishers, and advertisers. Secondly, spending on mobile games dropped in consumers’ priorities as the world opened again after two years of lockdowns, and people’s disposable income became increasingly strained by inflation. In other words, mobile’s lower barrier to entry is also a lower barrier to exit.”
Console gaming will also see a -4.2% decline in spending year on year due to fewer releases, whereas PC gaming is not as hit-driven as console gaming and will see slight year-on-year growth (+0.5%) this year.
Of the top 10 games by average MAU, only one was released in 2022: Call of Duty: Modern Warfare II, which was also packaged with the 2.0 release of Call of Duty’s battle royale mode Warzone. Only three entries this year weren’t featured in last year’s top 10, with Fall Guys and FIFA 22 being the other two. The fact that the list has seven repeat entries isn’t shocking. After all, these are live-service games designed to retain players and keep them engaged, as opposed to premium, pay-to-play titles where the developer also wants to incentivize players to buy their next release.
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2022’s Games Market Highlights
This year’s most discussed news came early: in January, Microsoft announced its intention to acquire Activision-Blizzard. The proposed $68.7 billion deal would eclipse any deal made in the gaming industry’s history and give Microsoft control over several of gaming’s largest franchises. It continues to dominate gaming news media and has drawn the eyes of market regulators in both the U.K. and the U.S.
This is what our financial analyst Michiel Buijsman had to say about the deal when it was first announced: “Activision Blizzard’s impressive roster of IP (including Call of Duty and World of Warcraft) and talented studios can help Xbox bring even more value to its Game Pass subscription, acquiring new users and keeping current ones engaged. Now-dormant smaller IP like StarCraft and Spyro are also valuable for Xbox, which can add legacy titles to its subscription and make new games in these franchises. Xbox is a first mover in-game subscriptions, so the company pooling its resources here makes sense. Xbox has already claimed that PlayStation and Nintendo are no longer direct competitors, eyeing other tech giants instead. Microsoft is playing the long game, and content and services are at the heart of it.”
Other notable stories this year were:
- The end of one of the longest-lasting partnerships in gaming: FIFA and EA’s partnership ends after FIFA 23.
- Take-Two buys Zynga for $12.7 billion enterprise value.
- Sony revises its subscription plans to compete closer with Xbox Game Pass.
- Bungie, Haven, and Savage Game Studios join PlayStation.
- China ends the gaming approval freeze and grants the first licenses since July 2021.
- Unreal Engine 5 (UE5) becomes officially available to developers.
Newzoo’s market analysts cover the most essential news in gaming every week in the Analyst Feed, exclusively available to Newzoo platform subscribers. Contact us to see how to get access.
Cloud Gaming Highlights
Cloud gaming is one of the bright spots in this year’s market. We forecast that over 30 million paying users will spend a combined $2.4 billion on cloud gaming services—and games played via the cloud—in 2022. We expect these revenues to grow to $8.2 billion by 2025.
The cloud gaming market has matured significantly since the new wave of services launched in 2019, and new cloud gaming services continue to launch. Moreover, existing ones are expanding, tweaking their marketing and business to better align with consumers’ wants and needs. Service providers are innovating across monetization and use cases—attracting more users and attention than ever before to the power of the cloud. At the same time, some of the most prominent players in traditional gaming—Xbox and PlayStation—are supplementing their core hardware experiences via cloud gaming. Core to the value proposition of cloud gaming is the seamless experience of accessing game content the same way today’s consumers are used to accessing video and music. This is what our Cloud Gaming Lead Guilherme Fernandes had to say about that:
“Seamless is the word of the day, and the cloud allows players to instantly try a game before they download it, access new-generation content without hard-to-find or expensive hardware, and jump into a game from a live-streamed video. Video-streaming companies like Netflix are also looking to games to help boost engagement following fierce competition within their core market segment. We believe cloud gaming will have a huge part to play here—again, making everything more seamless and removing friction.”
Instinctively, it might feel odd to mention cloud gaming as a bright spot in the market when the most impactful news in the segment this year was Google’s announcement that it would shut down its Stadia service from January 2023. The announcement’s timing couldn’t have been worse: it happened on September 29th, the same day our annual Global Cloud Gaming Report launched. While the timing was a shock, the news itself was not; the possibility of Stadia shutting down had loomed over the cloud gaming market since its unsuccessful launch in 2019. This is what our Cloud Gaming Lead Guilherme Fernandes had to say about it:
“The positive developments in the cloud gaming market support a bright future for the technology, and these do not evaporate with Stadia’s shutdown. Moreover, Google’s decision to refund all the hardware and game purchases related to Stadia prevents a broader negative ripple impacting the player perception of cloud gaming.”
Discover more insights into cloud gaming from Guilherme and other Newzoo experts in this free cloud gaming report, which includes an infographic of the cloud gaming ecosystem.
VR Gaming Developments
Another of 2022’s bright spots is the blooming VR games market.
Growth has continued even after 2020’s resurgence. The active VR install base is growing faster than ever—from 27.7 million this year to 46.0 million by the end of 2024. Meanwhile, yearly VR game revenues are also due to rise, from $1.8 billion this year to an estimated $3.2 billion by 2024.
Looking ahead, more (affordable) headsets will bring in more players, incentivizing developers to create engaging VR content, which, in turn, will help to attract more players.
“VR is becoming a financially sustainable platform. Beat Saber, one of the most iconic VR games, earned nearly $100 million in 2021 alone thanks to licensed DLC and the game’s status as a VR must-have. With the Quest 3 in development and PS VR 2 on the way, Meta and Sony will further boost their VR content strategies via first and third-party studios (leveraging their already-popular IP).
VR found its killer consumer use case in gaming, but the technology’s use extends far beyond gaming; VR will continue to benefit industries like healthcare, education, engineering, and other entertainment sectors. These use cases spur technological innovations in motion tracking, haptic feedback, and spatial audio, among others, which then further enhance VR gaming experiences,” says Tomofumi Kuzuhara, Newzoo’s VR Market Analyst.
In October 2022, Meta launched the Meta Quest Pro, a VR headset more aimed at mixed reality and businesses than immersive gaming, and is launching the Quest 3 headset in 2023. With its headsets, Meta is relying on the idea that VR will be a key entry point into the metaverse in the future. The idea is not so outlandish: Rec Room, a social platform and currently one of the most popular VR apps, attracted over 3 million MAU in April 2022.
Read our Free VR Market Report to learn more.
The Metaverse in 2022
Rec Room is an example of social platforms succeeding on VR, but outside of VR, social games like Roblox, Minecraft, or Fortnite are among the world’s most popular franchises. Over the past two years, these franchises have evolved into platforms where players share all sorts of gaming and non-gaming experiences, fueling the metaverse gold rush.
After a spectacular 2021, the metaverse hype has been cooling down in recent months due to easing COVID-19 conditions and a looming global recession.
However, interest in the metaverse as a new advertising channel for brands is as strong as ever.
“Traditional media channels like television and, more recently, social media have been the go-to destinations for advertisers, but these channels lack the gamified, interactive element that virtual worlds provide. Until now, advertising could not stimulate meaningful interaction between consumers and brands—consumers could merely watch. However, as social platforms like Roblox or Fortnite drew younger generations’ attention, brands were forced to follow and engage with this novel entertainment medium,” says Mihai Vicol, our in-house metaverse expert.
This transition into virtual worlds can only accelerate as the current generations of digital natives age and as virtual experiences become more authentic. Fast-moving brands such as Nike and Louis Vuitton have already developed metaverse strategies.
The potential for social games as advertising channels moves both parties. After years of exclusively selling virtual goods in-game, Roblox announced its plans to debut advertisements next year in September. Diversification of its revenue streams makes sense after a November business update by Roblox Corporation showed slowing growth and a decline in earnings from its daily users.
Moderation on a global scale in an open metaverse with unlimited user-generated content presents a wealth of challenges, even more hazardous than those that already exist on an unmoderated World Wide Web. Privacy and ethical considerations for the metaverse have barely scratched the surface of what will be required to keep these spaces safe. The potential for abuse of power in a centralized metaverse is also non-trivial. Recognizing this, 35 founding members founded the Metaverse Standards Forum in June 2022 to create interoperability standards for the metaverse.
While blockchain games and game-related NFTs experienced a similarly spectacular 2021, the severe correction in the crypto market and fears of a global recession have led to public interest and coin valuations substantially waning throughout 2022. Moreover, this past year exposed some fundamental flaws in the play-to-earn business model. It highlighted how creating a fun experience where players willingly spend is essential for others to be able to earn.
Read more about the Metaverse in our Free Report.
What’s Next for Games?
2022 was a hectic year for gaming, but the future is bright.
- The global games market will generate revenues of $211.2 billion.
- Mobile games alone will generate $103.1 billion via consumer spending.
- Cloud gaming will generate $8.2 billion.
- VR gaming will generate $3.2 billion by 2024.
The number of global players is still growing across the globe. Price-sensitive players may spend less during tougher economic times, but engagement remains high across segments.
But what about the trends powering revenues and engagement in the games industry in the upcoming years? Stay tuned! We will start publishing our 2023 Trends to Watch for these markets in the coming weeks and months. For now, contact us if you’d like us to help you navigate (mobile) games, cloud gaming, VR, or the metaverse.