Finance ⋮ Gaming
If there’s one thing we know from their financial reports, the large companies of the games industry aren’t actually struggling, despite what the missing of targets and recent layoffs may indicate. Activision (NASDAQ:ATVI) had a record year in 2018 , Electronic Arts (NASDAQ:EA) brought in $262 of net income for the final three months of 2018 alone , Ubisoft (EPA:UBI) surpassed their Oct-Dec 2018 targets and even Nintendo (TYO:7974) saw a strong end of the year with a significant increase in profits .
One area that has truly benefitted from the continued growth of video games is the UK market. Today at the London Games Festival, Ukie – the trade body for the UK’s games and Interactive Entertainment industry – revealed that the consumer market in the UK alone reached a whopping £5.7 billion across 2018. This spanned across software, hardware and other game-related culture.
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Software saw a significant growth of 10.3% year over year, hitting £4.012bn. Unsurprisingly, the division of this was skewed in favour of digital sales – which will include in-game transactions. Digital & Online PC/Console software sales have risen 20.3% YoY from £1.669bn to £2.008bn. Boxed software has remained relatively stable, falling just 20.5 million, or 2.6%. Significantly, Pre-Owned software, a core element for stores like Game (LON:GMD), has fallen 30.8%.
One consolation for these retail stores comes in the form of Hardware sales. With the exception of VR Hardware, which has seen a slump of 20.9%, across the board sales have increased significantly. While console hardware has grown at the smallest rate, PC Game Hardware, as well as Peripherals & Accessories, bring hardware to a total of £1.574bn, a 10.7% YoY increase on last year. However, it’s worth noting that with a lot of PC Game Hardware, stores that focus around video games don’t tend to stock more than a very narrow selection, with specialist stores picking up the slack.
Its not just about the fun and games. Other than providing action-packed, fun-filled entertainment for the entire family, VR plays a big role to help humanity as developers use it to help those in need in ways that were unimaginable 20 years ago. Some use it to cure phantom pain among amputee victims, while others rely on VR to provide therapy for soldiers suffering from post-traumatic stress disorder. VR has also been proven to help children with autism by teaching them social cues and real world lessons. It is being used as a practice board for surgical students before they make the first cut. There is even a VR content targeted at young adults that simulates their physical condition when they get to their 60s, and thus encourages them to save for the future.
The spending on game-culture is one area where revenue has fallen over the year. Rather than the 10% YoY fall it saw, the numbers could have been significantly lower were it not for the launch of movies like Tomb Raider, as well as the demand for video game soundtracks. Indeed, Movies & Soundtracks actually grew 34% YoY, from 17.6m to 23.6m. Toys and Merchandise was the largest fall in this section, from 77.7m to 59.3m, or 23.7%. With Books & Magazines remaining fairly stagnant, Events & Venues saw a slight increase of 0.4m. This, if any, is likely to see a further increase as a result of the growth of eSports.
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All things considered, it’s an undeniable fact that the UK games industry, much in line with that of the rest of the world, is continuing to see growth, acting as a significant draw and market for the largest companies within the industry and a strong base for those starting off.
Dr Jo Twist, OBE and CEO of Ukie had this to say regarding 2018 within the games industry:
2018 has been another record year for the UK games industry. Both software and hardware markets have seen steady growth; with the software sector’s digital, online and mobile sales all increased over the 12 months; and the hardware market seeing significant gains across PC game hardware, peripherals, and accessories. The UK games industry is a cornerstone of the country’s cultural landscape and continues to work hard to create new, innovative and exciting content that consumers want to experience, and that helps to drive the industry forward year-on-year.
Most of the major brands worldwide are investing in some way in virtual reality.