If you asked parents around a decade what they thought of videogames, more than likely they would have simply scoffed at it as a hobby.
Well, the videogame development market has come a very long way since the days of hashing out backyard projects in a garage, and has been turned into a billion dollar industry over the space of a few short years.
In the US, the videogame market brings in more cash annually than the films released by Hollywood, and in South Africa the picture isn’t much different.
According to PwC’s Entertainment and media outlook: 2015-2019, the videogame market as a whole in South Africa was worth R2.6 billion last year. That is an increase of R1 billion from five years ago, and it is expected to continue growing to R3.6 billion in 2019.
When speaking of the video games market in SA, PwC includes all forms of videogaming – PC, console, casual and social.
It might not really come as a surprise, but the biggest driver of revenue in South Africa will stem from social/casual gaming – R608 million in 2010 to R1.3 billion in 2014 – and is projected to shoot up to R1.9 billion by 2019.
South Africa is also one of only nine territories globally where social/casual gaming will overtake traditional videogame revenues by 2015.
The traditional game market (consoles and PCs) will account for R1.6 billion in revenue by 2019, but only 23% of console revenues will be driven by digital platforms including online or microtransactions by 2019.
“Without mastering, distribution or retail costs to worry about, games should in most cases be more profitable when sold through a digital channel – assuming a similar price point. Another benefit is that because digital distribution is typically tied to a single user account or console, it reduces piracy opportunities, such as they exist, while simultaneously opening up more opportunities for add-in downloadable content (DLC) once consumers have become used to transacting digitally,” the report said.
When it comes to PC gaming, the market is growing faster than the console game market. Worth R529 million in 2014, PC game revenues will grow to approximately R731 million by 2019.
“However, this overall growth hides major shifts in the monetisation of PC gaming. As with most markets, the physical sale of PC games is in decline, dropping from R258 million in 2014 to an estimated R216 million in 2019.”
“Microtransactions have proven to be a very successful charging model for the gaming industry, especially the social/ casual one. As consumers become more comfortable and accustomed to paying for various add-ons, upgrades etc., we expect to see these behaviours also influencing the PC gaming space. Microtransactions can recoup revenues that would otherwise have been lost tothe industry.”