If you thought that Call of Duty and Candy Crush had passed their peak, think again. According to recent research by Mizuho, these remain top console and mobile games. But this isn’t to say that there’s no room for expansion in the gaming industry. Far from it. According to the report, about 68% of the 800 console gamers surveyed said that they plan to spend the same or more money on games over the coming year. They’re also spending more time playing and looking to expand the number of platforms they use.
The current market penetration of gaming consoles is remarkable, with over 26 million PS4 and Xbox One consoles sold to date in the U.S.– the equivalent of 1 in 5 of U.S. households. It’s a close competition between the two consoles, with NPD data showing a 53%/47% lead for PS4, while the Mizuho survey had it 47%/53% the other way.
Interestingly, the most popular retailer for game purchases was Amazon, which edged out GameStop and the Xbox Live Store in the 800-person survey. Big-box stores like Walmart, Best Buy and Target lagged.
This is all good news for the industry, especially as mobile is emerging as real alternative to the well-established dominance of Xbox and Playstation systems, Mizuho says. With only about 2/3 of respondents playing games on their smartphones, there is still plenty of growth potential.
So, who is playing what games? While Call of Duty: Infinite Warfare had the distinction of a trailer that was the second most disliked video in the history of YouTube, it was easily the most popular game among Mizuho survey respondents, illustrating the powerful pull of social and network effects for gamers who enjoy CoD as a social activity. As a side note, Grand Theft Auto, the granddaddy of games, is owned by more than one-third of the respondents to the survey. From this data, Mizuho calculates that the average player is still spending $7 each month on the game, equating to around $25 million each quarter in revenues for GTA V Online in the U.S, and perhaps twice that globally.
While the support for gaming remains strong, it’s taking a little while for digital use to take off. According to Mizuho, only about 30% of gamers regularly download digital copies of games, although half have done so at one time or another. The analysts see the long-term potential of digital but recognize the dampening factors of a strong pre-owned ecosystem, download speeds, hard drive storage limits and payment limitations with cash vs. credit cards. The good news, according to Mizuho: about one third of people that have downloaded digital content have not spent money on it yet. By improving the allure of digital content and chasing the majority of players who have yet to download content, the analysts believe that publishers of mobile games have strong revenue growth opportunities.
But there is more to a gamers life than just games, we are assured by the survey. Top of the list for other uses of consoles: Netflix. More generally, video streaming is the leading non-gaming use of consoles, with 58% of those polled saying that they used their consoles for YouTube video streaming, leading competitors such as Amazon Prime Video, Hulu, HBO Go and ESPN. After video streaming, internet access and music were the next most popular uses of the consoles for the gamers questioned.
Eighty-one percent of gamers are also playing mobile games, with 52% saying they use their smartphone. It’s no surprise that Candy Crush remains one of the most popular mobile games in the U.S., according to the report, although ~98% of players do not spend money on the game – yet. While 52% of those polled spend nothing on mobile gaming in general, that leaves 48% of the marketplace today that can be monetized through subscriptions, advertising or game promotions.
The outlook doesn’t seem quite so positive for virtual reality, with 74% of respondents to the Mizuho survey not planning on buying a fully-integrated virtual reality headset in the next 12 months. Perhaps it’s a little early, but the results of the research suggest that there is plenty of potential elsewhere in the gaming world to keep gamers, programmers and marketers alike busy.
Simon Hylson-Smith is a former financial industry editor and currently CEO of Paragon.