This week, consultancy firm PriceWaterhouseCoopers (PwC) presented its Global Entertainment & Media Outlook 2023-2027. This new key report showed revenues of USD 54.1 billion for video games + Esports sectors in the U.S. in 2022, a 2.4% YoY upsurge. Games involved the vast majority of that revenue, with USD 53.7 billion.
The composition of the video games market in the U.S. typifies that of a modern Western nation, with a rapidly growing social and casual gaming sector and a robust traditional gaming sector that exhibits slower overall growth as it transitions away from physical media to digital sales and microtransactions, PwC said.
SOCIAL AND TRADITIONAL GAMING
Moreover, social/casual gaming was worth USD 37.1 billion (68.6% of total video games and Esports revenue). Year-on-year growth in social and casual gaming was 3.6% in 2022, falling from 9.3% in 2021. The growth rate is forecast to increase to a high of 8.3% in 2024 and remain above 7.0% thereafter. In the next five years, social and casual gaming will enlarge its revenue share to 73.8%, reaching USD 53.2 billion by 2027 at a 7.4% compound annual growth rate (CAGR).
What PwC called ‘traditional gaming’ amounted to USD 15.3 billion. The latter was mostly flat year-on-year with a 0.7% decrease. Traditional gaming includes console and PC games, with the former representing USD 9.5 billion and the latter USD 5.4 billion in 2022. This segment was just 27.6% of the country’s total video games and Esports revenue. Because growth in this sector is occurring at a much-slower rate, revenue is forecast to reach USD 16.5 billion in 2027, increasing at a 1.9% CAGR. Specifically, console games will rise slightly to USD 10.1 billion by 2027, climbing at a 1.3% CAGR.
Physical sales generate the largest portion of console games revenue in the U.S., at USD 4.2 billion (44.2%), followed by digital sales at USD 3.4 billion, and online/microtransaction revenue, at USD 1.9 billion.
The Nintendo Switch was the biggest-selling console in the U.S. in 2022, followed by the PlayStation 5 and the Xbox Series X/S, which both have significantly higher price points than Nintendo’s six-year-old console. The biggest-selling game of the year was Call of Duty: Modern Warfare II, with other popular titles including Bandai Namco’s Elden Ring, Lego Star Wars: The Skywalker Saga and Pokémon Legends: Arceus.
About PC games, revenue in the U.S. was USD 5.4 billion in 2022, and is forecast to reach USD 6.3 billion in 2027, increasing at a 3.0% CAGR. Year-on-year growth of PC games in 2022 was -2.1%, with the sector exhibiting negative growth in all areas. Growth is expected to resume in 2023 at a respectable 3.5%, with the rate gradually slowing through to the end of the forecast period.
The PC games sector in the U.S. is overwhelmingly reliant on online/microtransaction revenue, which comprises 85.2% of the sector’s total revenue. Digital PC games sales generated USD 808 million in revenue in 2022, which is forecast to grow to USD 949 million by 2027, increasing at a 3.3% CAGR. As with console games and social and casual gaming, for the PC, all the biggest games are free-to-play. This includes not only multiplatform games like Fortnite, Apex Legends and Roblox, but also PC-exclusive titles like League of Legends, Valorant and Counter-Strike: Global Offensive.
FREE-TO-PLAY, MOBILE GAMING AND ESPORTS
Free-to-play gaming is becoming increasingly popular in the traditional gaming sector. Games like Fortnite, Apex Legends, Call of Duty: Warzone and Destiny 2 all allow players to invest significant time into their games at zero expense, with revenue generated through purchases of optional extras like cosmetic items, avatars, or additional downloadable content.
It was also a significant year for the mobile gaming market in the U.S. in 2022 because Apple’s iPhone overtook Google Android to claim the largest number of users there. As reported by the Financial Times, Apple’s active installed base, which accounts for users on both new and second-hand devices, claimed 50% of the total market. Following this trend, Apple’s presence in the video games industry is forecast to grow. In June 2022 S&P Global reported that video games accounted for 70% of the App Store’s revenue, with most of this revenue stemming from free-to-play mobile titles.
Alongside its substantial revenue from the App Store, Apple is also expected to expand its presence in mobile gaming through Apple Arcade, the company’s gaming subscription service, first launched in 2019. Apple Arcade provides access to over 200 curated mobile games for a monthly subscription fee. Apple Arcade is expected to increase its user base to 70 million by 2025, and its year-on-year revenue to USD 1.2 billion. Despite falling behind Apple in 2022, Alphabet’s Google Android still represents a substantial portion of the mobile installed base in the U.S., and it remains the leading mobile OS in most countries outside the U.S.
The most-popular mobile games in the U.S. are primarily free-to-play casual puzzlers, like Candy Crush Saga and Coin Master, as well as digital versions of classic physical games like Solitaire Grand Harvest and Bingo Blitz.
Furthermore, there is a growing trend for cross-platform experiences that balance the depth of a traditional game with the accessibility of casual gaming. Roblox is by far the most popular of these, while other notable cross-platform games include Minecraft, Genshin Impact and Among Us.
Finally, looking at a breakdown of the sector for 2022, Esports represented USD 455 million in revenue last year. Sponsorship is what created the most revenue, with USD 167 million, followed by media rights at USD 126 million.
Total Esports revenue in the U.S. will grow from mentioned USD 455 million in 2022 to USD 662 million in 2027. This is equivalent to an increase at a 7.8% CAGR, which is below the global average of 10.9%, although this is likely due to the Esports ecosystem being well established in the U.S. Sponsorship will lose its position as the largest segment throughout the forecast period to the media rights category, with revenue reaching USD 230 million in 2027.
In the U.S., consumer ticket sales will only increase at a 5.6% CAGR to reach USD 46 million in 2027. U.S. ticket sales recovered strongly in 2022, up from USD 13 million in 2021 to reach USD 35 million, as many events reopened to live audiences again. The U.S. has one of the most active Esports ecosystems, with many high-profile tournaments being staged in the country.
In a global view of the entire panorama mentioned in this article, the general games market in the U.S. is expected to reach USD 72 billion in revenue by 2027. That represents a 5.9% CAGR from 2022 to 2027. The growth rate is expected to increase to 5.1% in 2023, and oscillate between 6.6% and 5.6% for the remainder of the forecast period.