The video games industry is drawing investor attention as consultant BCG estimates the market will grow by about 6% a year, reaching a value of $350 billion by 2030. Other estimates put the growth rate even higher.
Gavin Smith, a senior commercial banker at Arbuthnot Latham, said the industry has become "an established, mainstream constituent of the entertainment industry", with an estimated 3.6 billion people around the world now playing games in some form. However, he warned that rising development costs, greater regulatory scrutiny and the concentration of player attention around a handful of major franchises could limit that growth.
The industry's reputation for being recession-resistant has already been tested, with companies cutting around 45,000 jobs since 2022, according to Adam Smart, global director of products for gaming at AppsFlyer. Artificial intelligence also has "significant transformative power", though it is too early to say whether this will be good for the sector, Smith said.
Much of the growth has come from games played on mobile phones or through web browsers, which Matthew Dolgin, a senior equity analyst at Morningstar, said are "really easy for virtually anyone to play" without expensive gaming hardware. Stein Janssen, chief operating officer at browser-based games website Poki, said browser-based games are the future because they can be played immediately rather than waiting for a download.
Big-budget games are still performing well, with BCG forecasting revenue growth of 4.7% a year for the next four to five years. Noam Korbl, CFO at PropFirms, said much of the growth outside expanding areas such as Asia is less about attracting new players and more about getting existing players to spend more through continued access, cosmetics, season passes and subscriptions.
Gaming intellectual property is also being adapted for film and television, with well over 200 adaptations commissioned since 2019, according to market research firm Ampere Analysis. Smith said such adaptations represent "one of the biggest opportunities across the media industry".