This year broken down into the juiciest, chunkiest numbers and graphs.
December 21, 2023
[This unedited press release is made available courtesy of Game Developer and its partnership with notable game PR-related resource Games Press]
Newzoo :
23 was a year for the video game history books. Almost too many game launches, deals, new ventures, innovations, and strategic shifts to unpack.
Updating 2023’s Global Games Market Report and identifying the developments that will define 2024 reminded us how essential it is to understand the major industry trends. The games market is complex, and knowing what developments to focus on is integral to crafting and implementing winning strategies.
But before you can leap into the future, you should see the market forces from the past and present. Let’s look back at 2023’s biggest numbers and most significant games market developments.
The global games market will generate $184.0 billion in 2023
Let’s wind the market clocks back a year. We had estimated that the games market generated $182.9 billion in 2022. It was the first time since we started tracking global games market revenues that we forecast a year-on-year decline. We deemed it a corrective year for the market.
Fortunately, the decline didn’t last long. We now forecast that the global games market will generate $184.0 billion in 2023, growing +0.6% year on year. It will also grow to $205.7 billion by 2026, representing a 2021-2026 CAGR of +1.3% for the total market.
Getting platform-specific, our forecast for console gaming is now $53.2 billion, growing by +1.9% year on year. Foreign exchange rates influenced the growth rate, but it isn’t the only factor at play.
The brightest spot of 2023’s games market was the PC segment, which will grow by an estimated +3.9% to reach $40.4 billion. While live-service games are the primary revenue driver on PC, 2023’s results so far show that premium releases can drive growth in the PC segment.
This is what Tom Wijman, Newzoo’s Lead Games Analyst, said in our October 2023 games market update:
Six months into 2023, we can only conclude that the hits have performed in line with expectations, but this performance was not supplemental to live-service revenue or even back catalog sales. In fact, premium titles seem to have cannibalized revenues from the live-service heavy hitters, again pointing to the somewhat zero-sum game of live-service monetization.
The number of players worldwide is also set to reach 3.38 billion in 2023, growing by +6.3% year on year. Player growth in emerging regions continues to drive the global number of players up. Payer numbers will also end up growing by +7.3% to reach 1.47 billion, as access to local payment options plays a major part in unlocking potential games market growth.
These are just the big numbers. Want to get a more detailed breakdown of the key markets, regions, and trends to focus on in your forecasting? Get access to the Games Market Reports and Forecasts data sets, our market sizing and forecasting tool, and industry-leading quarterly reporting.
The top 10 PC and console releases by revenue in 2023 from January through October
Using the Game Performance Monitor’s Revenue Add-On, we were able to break down 2023’s top game releases in the US and the UK by cumulative revenues.
In a year filled with massive releases, it’s interesting to track which games sold best. NBA 2K24 topped the ranking thanks to its massive fanbase in the US and a shrewd combination of premium and recurring revenue.
The single platform releases The Legend of Zelda: Tears of the Kingdom and Marvel’s Spider-Man 2 were notable inclusions to this list. Baldur’s Gate III, which just won Game of the Year, also deserves a mention for being the only game in the top 10 released by an independent studio.
Bear in mind that this ranking tracks the top-earning releases throughout the year. This means that it skews towards titles released earlier in 2023, such as Hogwarts Legacy. It also doesn’t include revenues for those crucial holiday months. Call of Duty: Modern Warfare III would’ve rocked this list if November and December data were included.
These were the top 10 PC and console games by MAU in 2023 from January through October
It was a massive year for PC and console games, but some titles were more engaging than others (in terms of monthly active users). The Game Performance Monitor gave us insight into which games indexed the highest for engagement for much of 2023.
Perhaps unsurprisingly, live service titles dominate the top 10 most-played games by MAU. With consistent free updates, these games are built around constant engagement. Notably, none of the games featured in the top 10 launched in 2023, although arguably Counter-Strike 2 and Call of Duty: Modern Warfare III are more than mere updates.
If we look at average MAUs from January through October across 37 markets, Fortnite comes out on top as the game with the highest engagement on PC and console. Fortnite’s MAU growth may have slowed a bit in 2023, at least until the (re-)launch of Fortnite OG in November 2023. It still outpaced other titles in the top 10 by average MAU (and Player Share).
Fortnite, Minecraft, and Rocket League were among the top 10 games by average MAU for the Nintendo Switch. Currently, we only track engagement metrics in the US and the UK for the Switch, so we didn’t include the main Nintendo console in the year’s ranking.
Of course, we’d be remiss if we didn’t mention that The Legend of Zelda: Tears of the Kingdom was the highest-ranking game on the Switch by average MAU. Given how popular it became to post mad inventions from Hyrule’s sandbox, this comes as no surprise.
Want to know the top PC, PlayStation, and Xbox games by player share every month? Get access to our game rankings with the Newzoo Platform.
The top 10 public game companies by revenues generated $54 billion in H1 2023
In the first half of 2023, the top 10 public game publishers’ revenue accounted for nearly 30% of the entire market’s revenues all year.
Game market revenues have always been top-heavy and skewed towards the most prominent companies. These top 10 public firms generated a staggering $54.4 billion in H1. The fact that only a few companies command such a massive market share reflects the industry’s ongoing consolidation.
In fact, if we combine Microsoft and Activision Blizzard’s revenues for H1, the total is $10.4 billion. This would make Microsoft the #2 games company by revenue, knocking Sony down to #3 for the first time since we started tracking public company revenues.
The united forces of Microsoft and Activision Blizzard will shake up the global market in 2024 and in the years to come. Industry consolidation and the emergence of massive M&A deals will definitely be trends to watch now.
What was the games market up to in 2023 (and were our start-of-year predictions right)?
At the beginning of the year, we made a few predictions about the top trends of 2023. Let's see how accurate we were:
More AAA and AA publishers will pivot their main franchises to a service-based model. This didn’t come true (yet).
The Microsoft-Activision deal may happen after all, but regulators will continue to make an impact. Microsoft completed its acquisition of Activision-Blizzard in October, but not before promising deals that will allow third-party cloud gaming services to stream Microsoft (and Activision Blizzard) games.
The PC and console markets will embrace hybrid monetization strategies (including advertising). Partly true. PC and console markets use varying monetization strategies, but advertising hasn’t made a splash yet.
The appetite for M&A will continue to slow down. Correct, despite the deal finally closing.
The global semiconductor supply chain will bounce back, boosting console availability. This one came true.
User acquisition for mobile games will become harder for (hyper)casual games in the post-ATT era. Yes, which is why many mobile developers are considering pivoting to PC and console development.
Cloud gaming service providers will invest more in Platforms as a Service (PaaS). Yes! Many cloud gaming service providers are diversifying from pure-play consumer gaming offerings to powering any graphically intensive program, including generative AI tools.
Generative AI will make it easier to develop games (but we’re years away from full automation for AAA design). True, for better or worse. Generative AI makes it easier to perform certain tasks (and development tasks at scale). Use cases remain limited (for now).
VR gaming will continue to grow but will remain relatively niche. Partly true. The VR install base is growing steadily and will reach 30.8 million by the end of 2023 (+15.6% year-on-year). VR got more popular during lockdowns, but it's proving tricky to keep newly acquired users active and spending on new content. Despite the growing install base, we now forecast that spending on VR games will decline in 2023 to $1.3 billion.
Gaming in cars may be closer than we think. It depends. While we’re not playing Fortnite in AI-powered autonomous vehicles today, gaming is undoubtedly a promising avenue for the automotive industry.
Nearly half of gamers played on more than one platform, and 15% played on all three
Gaming is undoubtedly part of the zeitgeist now, with our medium impacting more people than ever before.
In 2023’s Global Gamer Study, which covers 74,000 respondents across 36 markets, we found that nearly eight in 10 people out of the total online population covered in the research engage with video games. We also uncovered that almost half of gamers play on more than one platform—15% of gamers play on all three platforms (PC, console, and mobile).
Gaming engagement continued to expand beyond the dimension of play. Today, people engage with games in many ways and across many other media aside from computers and consoles.
Non-gaming brands are taking note and leveraging IPs from the gaming world to draw in gaming audiences, while many players respond positively to brand activations within their gaming experiences (so long as they aren’t disruptive).
Out of the total online population covered by the Global Gamer Study, 54% of game enthusiasts also watched video game content in the past 12 months. Meanwhile, a third engaged in other ways beyond playing and viewing, including socializing via online gaming communities, chatting about video games IRL, attending conventions, and tuning into gaming podcasts.
Before you go, what about Microsoft's historic acquisition of Activision Blizzard?
Early last year, news broke that Microsoft intended to acquire Activision Blizzard, soon becoming the most discussed news in the global games market. Nearly two years and many legal battles later, the deal closed on October 13th, 2023.
This is what our financial analyst, Michiel Buijsman, had to say about the finalized deal:
According to Microsoft's latest financial report, the company itself expects its gaming revenue to jump by over 40% range next quarter—a result of the acquisition and revenues from Call of Duty: Modern Warfare III.
There are many other ways Activision Blizzard can help Microsoft’s gaming efforts:
First, the acquisition adds Call of Duty to Xbox’s already impressive roster of shooter IPs, including Halo, Gears of War, DOOM, and Wolfenstein. This reinforces Microsoft’s position in one of gaming’s biggest genres.
Xbox is also expanding its brand and content across as many platforms and screens as possible. Activision Blizzard brings several new teams versed in multiplatform development to Xbox. Development across multiple platforms and running massive live services like Call of Duty ensure consistent revenue.
King brings mobile expertise to the company’s traditionally PC- and console-first strategy. Xbox has previously announced plans to launch a mobile app store, and Candy Crush would be quite the addition.
Adding Game Pass Ultimate perks like World of Warcraft subscriptions and Call of Duty in-game items and cosmetics could drive subscribers to increase.
For now, Microsoft is hard at work putting strategies like these in motion, and we are excited to see—and analyze—how everything plays out.
Were there other pieces of gaming news that we missed?
As we said before, this was quite the year for the games market. Here are a few more of the notable stories that shaped 2023 in gaming:
Many gaming companies of varying sizes and stages went through restructuring, and a lot of industry jobs were lost (between 6,500 and 9,000). There’s no doubt that a lot of talent left the industry in 2023.
recent Bloomberg report hinted there may be trouble breaking at Bungie, and Naughty Dog just announced that it was stopping development on The Last of Us Online.
Playtika’s president mentioned that they “don’t believe it’s prudent … to invest significant dollars into new game development” when discussing the company’s 2022 financial results. Playtika joined a growing cadre of game makers, like Supercell and Voodoo, facing similar challenges.
One angle that mobile developers have begun pursuing is to expand their addressable market to PC gaming. Supercell is already doing this with Clash of Clans and Clash Royale, using Google’s Play Games platform. More mobile publishers are eyeing the PC and console markets to diversify their revenues as mobile faces increasing challenges.
Unity changed its pricing model twice in September after its first announcement caused outrage among Unity developers. Some developers celebrated the second round of policy changes, while others were spooked by Unity’s retroactive shift. To Unity’s credit, its engine powers a significant share of games (70% of mobile games, according to Unity) across the massive $184.0 billion games market.
Prices for multi-game subscriptions changed throughout the year. Xbox Game Pass and PlayStation Plus are shifting away from their growth phases towards user retention, where revenue maximization and cost saving become more important. Both Xbox and PlayStation have increased their subscription prices, and you may notice fewer promotions. Xbox, for instance, canceled its $1 Game Pass trial month right before the launch of Starfield.
The biggest reveal of GDC 2023 was Unreal Editor for Fortnite—a significant next step for Fortnite’s Creative Mode and Epic Games’ vision of the metaverse. The news signaled the importance of user-generated content (UGC), which seems to be the industry’s answer to the massive (and growing) demand for additional content in live service games. UGC outsources development to the masses and rewards the most popular experiences.
Toward the end of the year, Epic Games unveiled LEGO Fortnite, another step in establishing Fortnite as a platform. The new game, part of a sweeping collaboration with LEGO, joins Rocket Racing from Psyonix and Harmonix’s Fortnite Festival as another building block in Epic Games’ platform ambitions.
E3 2023 was canceled at the end of March after it was set for a grand return after years of pandemic-induced disruption. Several notable game company cancelations made it challenging to hold the event. And to finish off a tumultuous year, the Entertainment Software Association (ESA)—E3’s longtime organizer—announced that the event was canceled permanently.
One of the year’s biggest stories came late. On December 11th, a San Francisco jury ruled that the Google Play Store operated as a monopoly and that the company had engaged in anticompetitive behavior. According to lawyers, Google stifled competition by making deals with smartphone makers to pre-install Google Play and give it prime screen real estate despite Android’s open ecosystem. Google also paid game publishers to discourage them from opening their own app stores that would compete directly with Google Play.
What will happen to the games market after 2024?
This year was hectic and exciting; filled with industry highs and lows, we’ll be unpacking 2023 for years. Next year will likely be a sober year for the market as studios reorient their strategies in an uncertain financial climate. There will still be growth, but 2023’s big game launches and layoffs (a tricky combination) will have a lasting impact.
Let’s jump a bit further into the future. In 2026:
The global games market will generate revenues of $205.7 billion. The current console generation will be in full swing, bolstered by the Nintendo Switch’s successor. Mobile developers will also adapt better to the new privacy landscape.
The global player count will reach an estimated 3.79 billion.
Payer numbers will also grow to 1.66 billion, bolstering revenues across the board.
Full game (or boxed) revenues will grow but at a slower pace than digital game sales. Digital-only consoles and early-access options will drive the growth of digital monetization.
Cloud gaming will rack up an estimated 80.4 million paying users by 2025, with that number rising steadily in 2026.
As the curtain closes on 2023 in gaming, all the industry players are asking the same thing: what will power engagement and revenue growth in games in 2024 and beyond? Stay tuned for our 2024 games market trends report, where we’ll break down the major market drivers to watch out for.
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