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Preview: Global forecast shows PC gaming true next gen device

By John Gaudiosi

Video Game Reviews

1:30 PM EDT, October 24, 2013

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Although Sony and Microsoft will sell millions of PlayStation 4 and Xbox One consoles around the globe this fall, the true next gen device, the computer screen, will continue to rule when it comes to market share of all video games. According to a new free 24-page PC Gaming Trend Report by research firm Newzoo, by 2016, PC gaming will make up 35.8 percent of the global market share and generate $30.9 billion. That's up from the $27.6 billion PC games will generate this year.

PCs have always been true next generation devices. But Moore's Law has dropped the price of cutting edge technology and the very definition of a PC has now expanded to include portable devices of all kinds. With consumer electronics companies, wireless providers and even game developers like Valve and startups like Oculus VR getting into the game, the PC takes the lead in innovation and will be able to leapfrog the cutting-edge next gen consoles in just a short time.

Of the 900 million PC gamers around the world, Newzoo found that 227 million are considered core PC gamers that play at least once a week and spend at least $5 per month on games. North America has the highest number of core gamers at almost 40 million, followed by China with 37 million. In relative terms, this means 32 percent of North American and 24 percent of Chinese PC gamers can be defined as core. Latin America boasts the highest percentage of core PC gamers (35 percent) of all regions. In comparison, there are 137 million core console gamers. Globally, 25 percent of all PC gamers can be considered core, while 18 percent of console gamers are core.

"PC gaming does not only appeal to men," said Warman. "Thirty-one percent of the 70 million 'core' PC gamers worldwide are female, a share that has been on the rise in recent years."

The success of Riot Games' "League of Legends," which has over 85 million gamers playing the free-to-play, five-on-five game, is one of the key drivers to the success PC gaming has globally today, according to Warman. "League of Legends" has capitalized on three trends that is keeping PC games at the forefront in the global market place. The title is free-to-play, which has opened the door to an audience that few console games can garner; it's an eSports mainstay, which has kept fans interested even if they don't play the title; and it's a livestreaming and video phenomenon, with gamers tuning in to everything from big eSports events like the World Championship at the sold out Staples Center to simply watching favorite players practice at home.

"One of the key points the report attempts to make is that the explosive growth of game video content and eSports is directly related to the free-to-play business model and running games as a service," said Warman. "Post-launch marketing is crucial in getting people to spend more time with your game or game brand and ultimately to spend (more) money within the game. Not surprising, free-to-play titles stimulate live game streaming and sharing of video content. At the same time, traditional companies like Nintendo are shunning free-to-play and preventing the sharing of video content by its gamers."

Riot has invested heavily in its video production group, hiring Emmy award-winning team members to capture the stories behind the players. The independent game publisher and developer has also invested millions in its eSports season, which gave away $8 million this year alone. While the company doesn't make money directly off these initiatives, it does profit from the global online exposure and community that comes back to play the game.

"By 2016, PC free-to-play MMO games revenues will total $13.3 billion globally with a compound annual growth rate, or CAGR, of 19.4 percent," said Sander Bosman, manager of research at Newzoo. "Only smartphone and tablet gaming shows a comparable growth going forward. Mobile gaming will grow at an average annual rate of 19 percent for smartphones and 48 percent for tablets, grossing $13.9 billion and $10.0 billion in 2016 respectively. Combined, they will take a 27.8 percent share of the global market, up almost ten percentage points when compared to this year. Overall game revenues will grow at a CAGR of 6.7 percent to $86.1 billion by 2016."

The number of gamers worldwide will rise from 1.21 billion this year to 1.55 billion; driven by PCs and the continued explosion of mobile gamers. When you look at the hardware of the latest smartphones and tablets, these devices truly are PCs in their own right. From a screen perspective, games played on the computer screen gross more revenues than games played on TV: $27.6 billion, or 39 percent, versus $25.4 billion, or 36 percent. Worldwide that is. The PC platform continues to shape trends and lead innovation in the industry in terms of game genres, free-to-play business models, eSports and video content.

There's great growth potential with PC gaming, especially in countries where the cost of next gen, and even current gen, consoles is prohibitively expensive. Future growth within the games industry will be primarily driven by emerging markets, illustrated by the fact that 14.9 percent of the world's population currently accounts for an astounding 73.6 percent of all gaming revenues. This population/revenue gap is expected to shrink over the coming years as the online population continues to grow within emerging markets, leading to an increase in active and paying gamers. PC gaming will follow this trend, with the largest growth expected in the Asia Pacific and Latin American regions.

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