Last year was a record breaker for games, with tech M&A advisor Digi-Capital’s new Games Report 2017 (www.digi-capital.com/reports/#global-games-investment-review ) recording $30.3 billion games deals in 2016.
The $28.4 billion of games mergers and acquisitions (M&A) was 77% higher than 2014’s previous record, and $1.9 billion games investment was the second highest ever. With games revenue set to grow from $117 billion in 2017 to over $170 billion by 2021, games has turned into a two speed market driving massive consolidation around mobile games in particular.
So what’s behind the consolidation around mobile games? Mobile apps (not just games) revenue grew an unexpected 40% last year, with China a major driver. Taking over three-quarters of all mobile apps revenue globally, mobile games had an absolute flyer. Despite this outperformance, mobile games growth could slow to 14.5% annually long-term (CAGR) for over $80 billion revenue by 2021 (gross apps revenue across iOS, Google Play and all the Chinese app stores). That’s more revenue than the entire games market a few years ago.
At the other end of the spectrum is the land of the indies, where there isn’t enough money yet for the big boys. VR hardware, AR games and VR games have a lot of runway and look set to drive over $20 billion revenue combined by 2021. Together with the games tech/services and mobile games, these smaller, faster sectors are where billions of dollars from VCs and corporates were invested into games in the last 12 months.