Online gamers set to quadruple by 2015

Sony PlayStation, Xbox 360, Nintendo Wii and other gaming consoles have introduced a new level of gaming to the South African market, leading to an evolution of next-generation console games.

Adding downloadable digital content to games, developers seek to enhancing gaming. They are opening new revenue sources alongside increasing the prevalence of online games, says PricewaterhouseCoopers (PwC).

“The South African online games market is relatively small due to low broadband penetration. However, as the appetite for broadband develops among households, this online segment is expected to grow more rapidly than other video games,” says Vicki Myburgh, PwC Southern African Entertainment and Media Industry Leader.

Driving online gaming is the growing broadband universe as most games require a fast internet for effective gameplay. Growing by approximately 50% in the last two years, numbers remains low at around
600 000 household. Doubling during the same period, online video game subscribers increased from 45 000-85 000 since 2008.

PwC found digital content distribution is emerging as an important online market segment in their report entitled, South African Entertainment and Media Outlook 2011–2015. Players can battle it out online or download additional content to enhance their playing experience.

Online gaming on social network sites like Facebook is growing exponentially, as free social games such as FarmVille reach millions globally.

Aggregate spending on online games is expected to increase from R78 million in 2010 to R241 million in 2015, a 25.3% compound annual increase, the report shows.

“We expect the number of broadband household subscribers to increase almost five-fold to 2.85 million by 2015, a 36.6% compound annual increase from 2010. However, the penetration of online players is likely to decrease from 14.2% in 2010 to 10.5% in 2015 due to the large increase in the number of broadband households. Despite the decrease in penetration levels, we expect the number of online players to almost quadruple from 85 000 in 2010 to 300 000 in 2015, representing a 28.7% compound annual growth rate.”

In South Africa, the video games market grew 1.2% in 2010 to R1.2 billion, consisting of consumer spending on console, computer, online, wireless games and video game advertising. Console games was the largest taker with a 62% stake in 2010 with $28.1 billion. These figures excluded gaming hardware.

Driving the market for the new few years will be new games marketed for the current generation of consoles such as Wii, Xbox 360, and PlayStation 3. Total global video game spending will expand from $55.5 billion in 2010 to $82.4 billion in 2015 at an 8.2% compound annual rate. “We expect that by 2015, the next generation of consoles will begin to be introduced, which will spur renewed growth in console games,” adds Myburgh.

Second biggest is the South African mobile games market, representing 17% of total spending. New phones facilitating gameplay are fuelling this growth. The mobile market is expected to show the second strongest growth among end-user categories as people continue downloading games on their phones.

PC games declined 7% in 2010 as attention was focused on other market segments. This trend is set to continue, as the growth of massively multiplayer online games (MMOGs) are acting as their saving grace.

The cost of games consoles and computers are prohibiting many South Africans, but most have mobile phones. Users experiment with their mobile phones as phones are their primary access to electronic entertainment.

Mobile games are cheaper than console one. Plus, declining handset and data prices enables the drive for a global market for mobile gaming.

Threatening handheld consoles is the convergent world of the iPad and smartphones offering gaming, internet browsing, social media and entertainment.

Their improved graphic capabilities raise the standard of wireless games, driving demand. Simultaneously, new app stores will increase the number of gamers purchasing games. Growth 3G/4G networks enable wireless games approaching the quality of console games.

“Broadband penetration is a key catalyst for the growth of online gaming and video game spend in entertainment and media spending” concludes Myburgh. “It has and will continue to redefine the way that consumers interact across all segments.”

Staff writer