Gamer Growth

The USA has the most gamers, but other countries are growing.

Some interesting information from a survey by Newzoo about gamers in emerging markets. Especially interesting is that two-thirds of gamer spending is online, and passing the retail market in the West for the first time. Growth is swift in emerging markets, especially when payment processing becomes easier; transactions grew over 100% in Russia and 228% in Brazil in 2010, for instance.

It's pretty clear that developing countries will be see explosive smartphone growth, as people there bypass computers and consoles to go directly to Internet-capable phones (and perhaps tablets). Gaming will grow tremendously, but the majority of the growth will be outside the traditional console/computer markets of North America and Europe. Companies and developers that want to catch the growth surge will want to get a firm grip on the smartphone market.

Internet Access Worldwide

You'll notice that the US is not the top rank on either axis.

The above chart shows the percentage of Internet access for the population of various countries on the vertical axis. The horizontal axis shows the Internet Freedom score, which is a rough measure of just how much people in that country can go to any site they wish on the Internet. Of course, this is designed to showcase how repressive some governments are when it comes to allowing Internet freedom, or just how few people in a country have Internet access for various reasons which may range from cultural to economic to geographic.

There are some interesting implications here for the gaming market, though. China still has less than 40% penetration of the Internet, and despite that is poised to become a larger game market than the USA in a couple of years. On my recent trip to China, I was struck by the sheer lack of computer or video games being sold anywhere (except for Hong Kong, which doesn't exactly count). China's game market is mostly online gaming, and I suspect that will be true for a long time... or maybe forever. Which means that despite its already large size, the Chinese market could easily double in size just by increasing Internet penetration.

Similarly, Brazil has a lot of potential... and India has an incredible amount. I think the odds are good that these countries (and others in the developing world) will just skip by the whole concept of buying expensive packaged games in retail stores for consoles or computers. They'll go straight to digital distribution, and free-to-play games. Smartphones will be the first and only computer for billions of people worldwide, so if you really want to be part of the future of the game industry, digital distribution and smartphone games are where you need to be. Oh, and lower prices, too.

Amazing how that one chart can show you the future of the game industry, if you know how to read it.

Console Market Shrinks, Social/Mobile Gains

Total spent on games in the US in 2010: $24.7 billion.

This study just released  by Newzoo has some very interesting data. They show the overall money spent by US consumers on  games to ring in at $24.7 billion, just 2% less than 2009. (Yes, I realize this isn't counting paper games... but that category is going to amount to just a percentage point or two on this scale.) Console game sales dropped 29%, which accounts for the grim faces of the major console publishers. Still, it's not as if those gamers just disappeared; they just started spending their money on other types of games. Yes, boxed retail PC games dropped, but every other category grew... and substantially.

Social games grew the most, by 66%, followed closely by PC downloadable content at 60%. (That must account for why League of Legends publisher Riot is looking to hire 100 people.) Mobile games grew 46% (note that the numbers for DS and PSP are counted under consoles, not mobile devices.) Growing 46% is a lot of smurfberries in one year.

The interesting lesson here is that yes indeedy, gamers will get their groove on in different ways. Console gamers are getting more picky about spending money on console games when they see interesting choices appearing on their PC, on Facebook or on their smartphone. All of those things are direct threats that the console game publishers need to deal with.

Some publishers are pushing into those spaces through acquisition; some are building their own titles or working with partners to get some traction in these new areas. Unfortunately, some are insisting that everything's fine with their current business model. If you're not concerned about the future of the gaming industry, you're not paying attention. Games aren't going away, but how consumers spend money on them is certainly changing. Design and marketing need to follow that money.

One thing marketers should think about: Social games can take advantage of a mobile client, and mobile games should have a social component (at least to their marketing through social media).