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Invest In Video Gaming: A Booming Industry In Emerging Markets

220px-Virtual-camera-systemAn investment in the video gaming entertainment industry can pay an excellent return. As individuals, families and communities acquire more discretionary money there is a market that develops especially among the young. People will be looking for a way to entertain themselves that is safe and relatively inexpensive.

This provides an excellent opportunity for the gaming industry, particularly on-line and stand alone devices like the personal computer. The market for the industry is worth tens of billions of dollars. It has become a major growth industry in most emerging markets.

A perfect example is what is going on in China. The market there for video games is expanding rapidly. The demand is expected to grow by a rate of 40% this year alone. At this rate China will have a larger market then the United States in the next 3 years. To give one an estimate of the size of this industry in the United States it totaled $20.5 billion USD (United States Dollar) in 2013.

Where the PC (personal computer) share of the market is declining in the United States this is not the case in China. Video gaming revenue in China is nearly two thirds generated from sales for client based PC games at 64.5% or about $8.7 billion USD. Sales for PC video games are expected to remain strong in China partly due to the lack of the internet in more remote areas of the country.

Online Game Developers Conference

Online Game Developers Conference

In a recent industry survey sports video games were the most popular by far. Respondents admitted they played at least once or twice a week and some frequently throughout the work week and weekend. One could therefore expect that the market for new video game products will remain strong.

The four largest producers as well as markets for video and computer games are in North America which would include the United States and Canada, Japan, The United Kingdom and Germany. Next in line would be the markets in the countries of Australia, France, Italy, South Korea and Spain. Ireland is the biggest per capita consumers of video games.

The Legend Of Zelda The Forerunner Of Action Video Games

The Legend Of Zelda The Forerunner Of Action Video Games

In more established markets the way the video gaming industry developed has somewhat of a deviation. In Japan for example, console games are much more popular than elsewhere. These are interactive multimedia devices used exclusively for gaming purposes. Modern game consoles usually come in the form of a disc which is inserted in the game console.

Recent advances have allowed these games and demonstrations of games to be downloaded from the Internet which can then be installed on the console. Simpler consoles have a fixed selection of factory installed games but are now becoming less popular. Console games alone have seen an average of 6.9% growth world wide and is worth over $35 billion USD.

Game Console

Game Console

Most video games for consoles are now stored on CDs or DVDs. More recently Blu-ray technology is being used in devices like PlayStation 3. There are only a few games stored on traditional cartridges today known as cards remaining.

In Japan unlike the West, arcade games remain a large part of the video gaming industry. The commercial enterprise in video gaming, there is worth tens of billions of dollars.

In contrast South Korea, has a greater preference for computer games. The most popular are the MMORPG (Massively multiplayer online role-playing game) and real time strategy games. There are over 20,000 Internet cafes in South Korea where games of this sort can be played for an hourly charge. Online game sales are growing at a rate of 16.9% per annually.

Video Games For Sale

Video Games For Sale

As expected, sales of different types of games will have a wide variance depending on the market itself. This is due to cultural differences and local preferences. This will be important because the largest growth areas for the industry will be in India and China simply based on population, if nothing else.

Language and cultural barriers cannot be underestimated especially in India. Microsoft (product Xbox One) has already announced it is ready to debut in India scheduled for September of this year along with 25 other markets. The attempt is to beat rival Sony in these new markets.

Xbox 360 Elite and Xbox 360 S consoles.

Xbox 360 Elite and Xbox 360 S consoles.

The personal computer gaming industry in China is the largest in the world. This was partly the result of the banning of console games in the early 2000s. The prohibition ended in 2013 and as of January of this year sales are now permitted.

This has generated a great deal of excitement in the industry but most of the big players are somewhat cautious. Ninetendo for example, has little inclination to enter the new market whereas Sony is ready to sell millions of PS4s units this year. Industry analysts and leaders are concerned with piracy and the grey market.

The biggest challenge of course will be how to adapt to the differences of the Chinese market once new regulations and restrictions are understood. The restrictions of the Chinese government will be mostly with content, if one is to venture a guess.

There are major growth opportunities in Latin America as well, particularly Brazil. It has been estimated for example, that in Mexico 45% of all video gamers are actually adults. Africa is another region of the world that is about to experience major growth in the industry.

The fastest expansion is in mobile gaming with over a 25% increase predicted on a yearly basis in many markets worldwide to at least 2016. One of the key factors contributing to this market growth is the increasing use of smart phones and tablets to play games. The major challenge will be pirated versions of these games once markets are established. An investment in one of the industry leading companies or in a relatively new player is the decision the entrepreneur will need to make.

 

 

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