Leveling Up for the New Reality – The Gaming Report

DECEMBER 2024
Leveling Up for
the New Reality
The Gaming Report

The gaming industry was enjoying rapid growth—then a postpandemic
correction hit
Sources: Ampere Analysis; IDC; BCG analysis.
Note: VR = virtual reality. Because of rounding, the numbers may not add up to the totals shown.
1VR includes only Meta Quest game sales; other VR game sales are included in the PC or console categories. 2Includes handheld devices, depending on their operating system. (For example, Steam Deck falls into the
PC category, and Nintendo Switch falls into the console category.)
GLOBAL GAMING REVENUE BY TYPE ($BILLIONS)
64 75
85107
114
107108
29
34
3443
44
4143
33 33
3233
36
36 37
6 9
11 13
17
20 24
2017
2018 2019 202020212022
1
2023
131 150
163197
211
204 214
1 1
Ads in mobile games 26
Cloud and VR 1 120
PC 2 2
Console 2 7
Mobile 9
CAGR, 2017–2023 (%)
+1 3%
+1%

Future growth will be more modest, as double-digit rates are unlikely to return
Sources: Ampere Analysis; IDC; BCG analysis.
Note: VR = virtual reality. Because of rounding, the numbers may not add up to the totals shown.
1VR includes only Meta Quest game sales; other VR game sales are included in the PC or console categories. 2Includes handheld devices, depending on their operating system. (For example, Steam Deck falls into the
PC category, and Nintendo Switch falls into the console category.)
GLOBAL GAMING REVENUE BY TYPE ($BILLIONS)
Ads in nonmobile games 56
Ads in mobile games 7
Cloud and VR 1 16
PC 2 2
Mobile 4
Console 2 3
CAGR, 2023-2028E (%)
108113118 124130 137
43
4345 47
48 50
37
3739 39
40 41
24 2628
3132 34
+5%
1
2023
0
2
2024E
0
2
2025E
1
2
2026E
2
3
2027E
2
3
2028E
214 221232 243
254 266

Sources: Ampere Analysis; Statista; annual reports; BCG analysis.
Note: AR = augmented reality; VR = virtual reality; UGC = user-generated content.
1Excludes hardware. 2Based on companies’ estimates of developer payouts.
Emerging platforms are gaining momentum, but they will remain niche markets
while the technologies and economics improve
Maturity
Feasibility for
mass adoption
MARKET SIZE ($MILLIONS)
Cloud AR and VR 1 UGC
1,1831 ,750
112
2019 20242028E
464 939
19
2019 20242028E
1101 ,750 2 ,70 0
Q2 2020 Q2 2022Q2 2024
DEVELOPER PAYOUTS ($MILLIONS) 2 MARKET SIZE ($MILLIONS)
Infrastructure (such as data
centers) and network speeds are
currently limiting the types of
games that run well in the cloud Hardware expense and content
selection are currently limiting
the pace of adoption
There is high potential for wider
adoption, much as short-form
video and social media changed
video distribution

The costs of AAA game development have increased sharply in recent years, as
have sales and marketing expenses, but fewer games have been released
Sources: Companies’ public filings and statements.
1The costs were adjusted based on the 2023 US dollar foreign exchange rate. Costs include full-game and major expansions but not general releases of downloadable content. The games include those the company
directly developed (as opposed to the games it published but did not directly develop).
2Includes games that were directly developed by the company as well as games that the company published but did not develop
directly.
3An average was used to mitigate pandemic-related effects.
AAA business
Publisher 2
Publisher 1
NUMBER OF GAMES RELEASED 2
2017
2012
20212023 (average) 3 20212023 (average) 3 2017
2012 2017
2012
20212023 (average)
3 20212023 (average) 3 2017
2012 2017
2012
20212023 (average)
3 20212023 (average) 3 2017
2012
197 316
69 144
26 55
34
34107 11
28 45
26
87
19
12 7
+449% +36 0%
+323% +220%
63% 73%
DEVELOPMENT COSTS
($MILLIONS)
1
SALES AND MARKETING
COSTS ($MILLIONS)
1

The mobile game space has seen trends similar to those in AAA game development
Sources: Companies’ public filings and statements.
1The costs were adjusted based on the 2023 US dollar foreign exchange rate. Costs include full-game and major expansions but not general releases of downloadable content. The games include those the company directly
developed (as opposed to the games it published but did not directly develop).
2Includes games that were directly developed by the company as well as games that the company published but did not develop directly.
Mobile games
Publisher 3
Publisher 1
DEVELOPMENT COSTS
($MILLIONS)
1
SALES AND MARKETING
COSTS ($MILLIONS)
1
NUMBER OF GAMES RELEASED 2
2021
2019 137
169
–19%
2023
2020 70
52
+36%
2021
2019 239
155
+54%
2023
2020 74
57 +30%
2021
2019 4
3
2023
2020 3
4
Publisher 2
2023
2019 406
211
+92%
2023
2019 586
414
+42%
2023
2019 1
1

Game development budgets are growing faster than game revenues are, and the
gap will only increase
Sources: Ampere Analysis; IDC; expert interviews; BCG analysis.
AAA DEVELOPMENT BUDGET VS. CONSOLE GAME REVENUES, 2017–2028 (CAGR, %)
0
5
10
15
2017 2022 2028E
+6%
+5% +3%
+8%
Console game revenues (historical)
Console game revenues (estimated)
Development budget (historical)
Development budget (estimated)

Few publishers expect development budgets to decrease, suggesting that GenAI
savings will help fund bigger, better games
Sources: BCG’s gaming industry survey, December 2023; BCG analysis.
Note: n = 40 (AAA); n = 20 (AA); n = 21 (indie). Because of rounding, the percentages may not total 100.
5
5
5 5
5
5 65
75
57 10
10
14 10
5
10 55
3
3
AAA
AA
Indie
Increase by >20% Increase by 16%–20% Increase by 11%–15% Increase by 6%–10%
Increase by 1%–5% Keep unchanged Decrease by 1%–5% Decrease by 6%–10% Decrease by >10%
Question: Does your company plan to adjust its game development budgets to better leverage GenAI and the increased productivity?
RESPONDENTS (%)

To break even in the first year, a $50 million console game must crack the top 20,
but typically, two-thirds of the slots are taken by recurring titles
Sources: Circana; Competition and Markets Authority; BCG analysis.
1The analysis looked at the top 20 AAA and AA games released in 2023. It assumes each unit sold at $70, with a 30% platform fee, resulting in approximately $50 net revenue per unit. 2This game replaced FIFA in 2024.
3These are notable because they are new games that broke into the top 20.
1 5 10 1520
0
250
500
750
1,000
25
US 2023 game ranking
1
First-year sales
$50M–$100M
>$400M
$100M–$300M
$300M–$400M
Games that are regularly in the US top 20
Annual
release
Franchise
release
Notable
exceptions
3
UNITS
(MILLIONS) REVENUE
($MILLIONS)
1,250
20
15
10
5
0
Elden Ring
Call of Duty
Hogwarts Legacy
MLB: The Show
Spider-Man
Madden NFL
EA Sports FC
2
NBA 2K
Mario Kart
Super Smash Bros.
Mortal Kombat
Super Mario
Minecraft
Pokémon
2022
Resident Evil
2023 2019
Assassins Creed
2021 2020
Breakeven by development budget size (at games’ current price points)

An increasing share of revenues for mobile games is from in-app ads, while
subscriptions and digital sales have grown most in console
Sources: Ampere Analysis; IDC; BCG analysis.
Note: Because of rounding, the percentages may not total 100.
1Subscription services only. In-game subscription spending is included under in-game purchases. 2Remaining physical share is largely driven by Nintendo Switch software.
SHARE OF REVENUES BY MONETIZATION MODEL (%)
Console 2
$34B
PC
$32B
Mobile
$96B
33
18
22
28
31
30
13
24
2019 2024
2019
87
79
11
19
0
1 1
1
0
2024
18 22
72
69
8
9
2
2019 0
2024
$139B $37B$42B
In-app advertising
Third-party advertisements published in
free-to-play games
Subscriptions
Recurring spending on single games or
game services (such as Xbox Game Pass
and Apple Arcade)
In-game purchases
Microtransactions and sales of virtual
goods and downloadable content
Digital full-game sales
Digital copies distributed via a console
gaming marketplace (such as PlayStation
and Xbox stores)
Physical full-game sales
Physical games sold through traditional
brick-and-mortar stores or online retailers

Monetization model shifts are expected to be more dramatic for consoles than
for the overall market
Sources: Ampere Analysis; IDC; BCG analysis.
Note: DLC = downloadable content. Because of rounding, the percentages may not total 100.
1Remaining physical share is largely driven by Nintendo Switch software.
19 30
30
49
22
7
21
29 36
11
20 27
2017 2023 2028
7376
78
12
5
10
12 12
6
7
3
2
2017 1
2023 1
1
2028
SHARE OF REVENUE IN CONSOLE MARKET (%) SHARE OF REVENUE IN OVERALL GAMING MARKET (%)
In-game purchases and DLC
Premium physical full games 1
Premium digital full games
Subscription to a service
Subscription to a game

More than half of core gamers—those who play at least six hours per week—are
open to seeing advertising inside premium games
Sources: BCG’s gaming survey, 2024; BCG analysis.
Note: n = 5,199.
Statement: I don’t mind ads in my PC or console games.
50
Statement: I don’t mind ads in my mobile games.
27
18 1414 17
16
14
20 1715 16
10
36
29
2624 18
23
15
23
29 30
29
26
8
10
14 16
20
25 28
181514
1215
15
201615 19
15
34
272623 19
21
14
26 3131 28
20
8
9
13
17 21
30
50
RESPONDENTS (%)
RESPONDENTS (%)
Hours per week
Strongly disagree Somewhat disagree Neutral Somewhat agree Strongly agree
Receptive to ads Resistant to ads

Gamers in China show the highest willingness to pay—both for single-player and
live services games
Sources: BCG’s gaming survey, 2024; BCG analysis.
Note: For single-player games, the respondents are from the UK (120), the US (124), Germany (95), China (135), Japan (113), India (64), Brazil (124), and Mexico (104). For live services, the respondents are from the UK
(145), the US (146), Germany (107), China (130), Japan (148), India (73), Brazil (138), and Mexico (139).
1A weighted average.
Optimal
Price range
Country Single player
Live services
$51
$45–$62
UK
$41
$40–$58
US
$58
$46–$66
Germany
$82
$60 –$93
China
$45
$43–$59
Japan
$59
$ 4 8 – $74
India
$42
$40–$57
Brazil Optimal
Price range
$53
$42–$62
$49
$41–$58
$53
$42–$66
$81
$61–$93
$44
$41–$59
$57
$ 4 6 – $74
$45
$40–$57
$56
$44–$67
$48
$42–$67
Mexico
$54
$44 –$67
$53
$46 –$67
Overall average 1

Players in emerging economies play more—and plan to play more in the
future—than do players in developed economies
Source: BCG’s gaming survey, 2024.
Note: n = 2,029. Emerging economies are Brazil, China, India, and Mexico. Developed economies are Germany, Japan, the UK, and the US.
4 23
25 28
28 28
27 15
3
1
15
3
Emerging economies
Developed economies Emerging economies
Developed economies
Question:
How much time do you spend playing games
per week?
43
19 53
73 4
8
Question:
How do you expect the amount of time you
spend playing games to change in the future?
RESPONDENTS (%) RESPONDENTS (%)
50 hours
Increase Stay the same Decrease

Genre preferences vary by age, likely driven by lifestyle and generational differences
Source: BCG’s gaming survey, 2024.
Note: n = 2,029. MMORPG = massively multiplayer online role-playing game; MOBA = multiplayer online battle arena.
Question: In the last six months, what types of games have you played most frequently?
RESPONDENTS BY AGE (%)
>65
5 1 – 65
4 1 –50
3 6 –40
3 1 –35
2 6 –30
2 2 –25
1 8–21
Role play ing
First-person shooters
Sports and racing
Simulation
Strategy
Fighting
Horror
MMORPG
MOBA
Battle royale
Sur vival
Collectable card
Casino
0%60%
Puzzle and casual
Educational
World building, sandbox
Action or adventure
T YPE OF GAME
1
2
3
4 Younger generations strongly prefer
action or adventure games and may
continue to do so as they age
Adults older than 51 prefer puzzles
(possibly because they are brain
exercises) and casual games (possibly
because they are closer to the classic
arcade titles with which they grew up)
For the educational game market,
players older than 51 present an
opportunity for growth
Interest in world building among older
gamers is likely because parents and
grandparents play games such as
Minecraft with their kids and grandkids 1
2
3
4

The next generation of retirees expects to play games more than current retirees do
Source: BCG’s gaming survey, 2024.
Note: n = 2,029. Because of rounding, the percentages may not add up to 100.
Question: How many hours do you play games per
week currently? Question:
How do you expect the amount of time you
spend playing games to change in the future?
RESPONDENTS (%) RESPONDENTS (%)
50 hours
Increase Stay the same Decrease
Student
Establishing independence
Starting a career
Advancing in career
Forming a long-term relationship
Starting a family
Parenting young children
Parenting teenagers
Empty nester
Approaching retirement
Retired 6
8
7 26
12 13
17 2011
18 26
354142 20
22 2829 37
32
28 25
312928 30
30 2631 31
26
3331
231917 16
29 24 17 9
19
1416
67 1
1
2
3
4
4
4
4
2
3 3
2
4
1
2
4
4 5 2540
37
36
35 35
36 39
16 24
13 64
53
54 60
62
60
59 58
76 67
79 11
7
9
5
5
8
9 8 4
3
3 Next generation
of retirees
Current generation
of retirees

Children are playing games at increasingly younger ages, expanding the size of
the potential audience for games
Source: BCG’s Digital Play parental survey, December 2023.
Note: n = 2,400.
1Percentage of parents indicating that their child plays games either sometimes or often.
0
2
4
6
8
10
12
14 16
18
10 15 20 25 30 35 40 45 50
Current age
Starting age for playing games
97%
The share of children,
aged 10 through 13,
who play games
1
By contrast, today’s
43-year- olds were closer to
aged 13 when they started
Todays 15-year- olds
started playing games
at about aged 7

About the Authors
Giorgo Paizanis
Partner
BCG X – Manhattan Beach
paizanis.giorgo@bcg.com
Rob Schonfeld
Senior Advisor
Los Angeles
schhonfeld.rob@advisor.bcg.com
For Further Contact
To discuss this report and our findings, please contact one of the authors. Ernesto Pagano
Managing Director & Partner, Global Sector Leader, Media
Miami
pagano.ernesto@bcg.com
Nicolas Schmidt
Managing Director & Partner
Stockholm
schmidt.nicolas@bcg.com