According to PricewaterhouseCoopers (PwC), spending on games for consoles is a significant contributor to the South African gaming market, with the firm anticipating that console game spending will reach R1 billion by 2015.

When looking at the global video games market, PwC expects the global console games sales to be driven over the next few years by new games. The firm says that these titles will be marketed for the current generation of consoles such as the Nintendo Wii, Xbox 360, and PS3.

“We expect that by 2015, the next generation of consoles will begin to be introduced, which will spur renewed growth in console games,” said Myburgh.

Global console games, the largest category at $28.1 billion in 2010, will expand to reach $34.8 billion by 2015. Total global spending on video games will increase from $55.5 billion in 2010 to $82.4 billion within 2015.

In South Africa, the video games market grew 1.2% in 2010 to R1.2 billion. This market consists of consumer spending on console games (including titles for hand-held systems like the Nintendo 3DS), PC games, online games, mobile gaming, as well as video game advertising. This category excludes spending on the hardware used to play the games.

Mobile games big in SA

Console and handheld games were found to represent the major category of video games spending, as these amounted to 62% of the market during 2010.

Additionally, for many people in South Africa, the cost of a console or gaming PC is prohibitive, but almost everyone has a mobile phone. Mobile games are also much more affordable than titles developed for consoles. Declining handset prices and data fees are further assisting the mobile gaming market’s growth.

According to PwC, the mobile games segment is the second largest category within the South African video games market, as it represents 17% of the total amount of spending. Growth has been further fueled by the introduction of new mobile devices that are capable of playing games. The mobile market is expected to show the second strongest level of growth among end-user categories, as more mobile users download games onto their smartphones.

The company stated that the rapid take-up of smartphones and tablets, including Apple’s iPad, will raise the bar for the quality of wireless games and drive demand for these kinds of games. At the same time, new application stores will increase the number of gamers willing to purchase games, whilst the growth of 3G/4G networks will enable wireless games to approach the quality of console games.

Broadband key to online gaming

A report by the company entitled South African Entertainment and Media Outlook 2011–2015, revealed that digital distribution of content was emerging as an important segment of the online market. For example, gamers are able to use their consoles to compete against other online players and can download additional content, such as new maps and weapons, for their games.

The company sees many game developers adding downloadable digital content (DLC) to their gaming titles, in order to enhance the gaming experience and add additional revenue sources as online gaming becomes more prevalent.

PwC says that broadband is a key factor in the growth of online gaming, because most games require a broadband connection to play titles effectively. The local broadband subscriber base has increased by around 50% over the last two years, but penetration remains low at only 600 000 households. Over the same period, the number of online video game subscribers nearly doubled from 45 000 in 2008 to 85 000, according to the firm.

Small size, rapid growth

“The South African online games market is relatively small due to low broadband penetration,” explained Vicki Myburgh, PwC Southern African Entertainment and Media Industry leader. “However, as the appetite for broadband develops among households, this online segment is expected to grow more rapidly than other video games.”

Myburgh stated that PwC expects the number of broadband household subscribers to grow by nearly five times to 2.85 million by 2015. However, the company believes that the penetration of online players is likely to decrease from 14.2% in 2010 to 10.5% by 2015 due to the substantial  increase in the number of broadband households.

“Despite the decrease in penetration levels, we expect the number of online players to almost quadruple from 85 000 in 2010 to 300 000 in 2015, representing a 28.7% compound annual growth rate.”

PC games market in decline, social gaming on the rise

Online gaming may be on the rise, but PwC said that the PC games market declined 7% during 2010, as more attention was focused on other segments of the market.

The company stated that the PC market’s fall would have been even larger if not for the growth of massively multiplayer online role playing games (MMORPGs), which is a buoying segment of this market. The PC market is expected to continue to decrease.

Unlike the declining PC market, PwC sees casual games as well as titles available via social networks growing in importance.

PwC stated that online gaming on social network sites the like of Facebook is also growing exponentially, as free social games such as FarmVille have reached tens of millions of gamers globally. Aggregate spending on online games is expected to increase from R78 million during 2010 to R241 million in 2015.

 

In related market research news, Canalys recently announced its analysis of the mobile market for Q4 2011, whilst the NPD Group presented its analysis of the US mobile market for the same period.