Hardware revenue down as UK game market valuation dips to £7.05 billion in 2022

The UK consumer video game market was valued at £7.05 billion in 2022, representing a slight 5.6 percent dip on its record valuation of £7.16 billion in 2021.

That's according to the Consumer Market Valuation report from industry trade body, Ukie, which noted that although there was a slight decline, the UK game industry remains strong compared to pre-pandemic figures.

For instance, Ukie says the latest valuation is still 17 percent above pre-pandemic levels, when the UK game market was valued at roughly £5.3 billion (or £6.03 billion when adjusted for inflation).

Digging into the latest figures, sales of all video game hardware in the UK dropped by 19 percent to £832 million, with console revenue taking the biggest hit with a downturn of 27 percent year-on-year.

Ukie suggested that decline is part of a repeat cycle that results in a drop in console hardware sales two to three years after 'next-generation' devices make their debut.

Hardware down, software flat

Software revenues, meanwhile, remained steady, growing by 0.4 percent to £4.57 billion. Digital PC and mobile game sales were notable contributors, with Ukie adding that mobile software revenue increased by 11 percent year-on-year to £1.43 billion. The same, however, couldn't be said of console software.

"Digital console revenues were down by 4.7 percent, while boxed game sales declined 4.3 percent, making 2022 the only year in the past decade where boxed software has seen better year-on-year performance than digital console sales," added Ulkie. "This suggests a levelling off of the decline in boxed software sales over the past decade as digital formats have grown in popularity. The pre-owned market was also down to £21 million."

For the first time, the report also detailed the UK market share of titles made by UK-based studios, and based on that research found that 16 percent of the £4.57 billion game software total was spent on games developed by British game companies.

"The digital segment of the UK's console market was impacted by a further shift towards pre-pandemic engagement levels, resulting in fewer downloads of legacy software titles and reduced spend on console DLC," said Matt Bailey, principal analyst at Game Developer sibling company Omdia.

"A lack of hardware supply–particularly for PS5–also prevented many would-be ninth-generation console owners from shifting their spend toward higher value digital content. And, although console subscription services remain a key area of growth, they are not yet generating the amount of spend required to offset declines in other areas of digital console spend.

“PC digital was relatively flat, propped by the microtransactions segment. The healthy debut of Valve’s Steam Deck–which we estimate sold 135k units in the UK in 2022–indicates there’s still appetite for spend residing in the PC market."