ESA Report: Essential Facts About Computer & Video Games Industry

 

The Entertainment Software Association, better known as the ESA, has released its annual “Essential Facts” report about the gaming industry in the United States. I’d like to share the report itself and highlight some of its more interesting statistics, especially in the context of how much is spent on games here in the States and how much the industry contributes to the overall economy. This will be a bit more of a visual post, with some written excerpts from the report itself and commentaries from yours truly.

 

First, a quick overview of the report: it’s based on a survey of 4,000 U.S. homes plus data provided by the Entertainment Software Rating Board (ESRB), NPD Group (who you’ll recognize from its monthly reports on the U.S. gaming industry) and gaming research and consulting firm EEDAR. If you’re interested in gaming and the business surrounding it, these are among the best sources to follow and I often reference data provided by them.

 

 

Now, let’s dig into the report. Above images show some of the general talking points and statistics:

 

  • 67% of U.S. households own a gaming device, and 65% are home to someone that plays 3 or more hours of games per week.
  • Average gamer is 35 years of age. Women under the age of 18 play more games than men within the same age bracket.
  • Consumers spent $30.4 billion on video game software, hardware and accessories in 2016.
  • 1 in 3 of the “most frequent gamers” said they were likely to buy a virtual reality device in the next year.
  • More than half (53%) of the “most frequent gamers” play multiplayer games at least once per week.

 

Keep in mind that these stats include mobile games, so a gaming “device” is everything from smartphones to computers to dedicated gaming consoles.

 

 

Given that my focus here is mostly on the business side of technology and gaming, I’d like to expand on the spending and economic impact sections of the report.

 

In 2016, almost 3/4 of gaming purchases were digital. You’ll notice above that this is a sizeable shift from where this number was even a handful of years ago, such as in 2012-2013 when the split between digital and physical was about even. As games become more service-oriented and publishers continue to support games long after release with additional content or cosmetic items, I expect this trend to continue and settle somewhere in the 75% to 80% digital range.

 

 

 

As I mentioned earlier, $30.4 billion in total was spent on video games last year. This includes software, hardware and accessories. “Content” spending, or the money people spent on games, was $24.5 billion. Hardware accounted for $3.7 billion, while the remainder was accessories such as controllers and virtual reality devices.

 

Basically, since 2010, annual dollars spent on games has grown 40% to that $24.5 billion figure. Today’s households are spending much more on games, and I attribute that to a variety of reasons: the rise of mobile gaming, digital purchasing capabilities become more widespread on all devices plus gaming becoming more mainstream and an alternative to more “mature” forms of entertainment such as films and TV. With new hardware such as the Nintendo Switch and Microsoft’s Project Scorpio combined with the ubiquitous nature of smart phones, I anticipate the growth will continue at its current pace into at least next year.

 


Going further into gamers’ spending on individual software, the best-selling games of 2016 were Call of Duty: Infinite Warfare (Activision Blizzard $ATVI), Battlefield 1 (Electronics Arts $EA) and Grand Theft Auto V (Take-Two Interactive $TTWO). Sports games Madden NFL 17 (Electronics Arts $EA) and NBA 2K17 (Take-Two Interactive $TTWO) rounded out the Top 5.

 

Yes, you read that right. A game that originally released in 2013, Grand Theft Auto V, was one of the best-selling games of all last year. This ties back into my earlier comment on digital spending in that the reason it’s been so successful is in part to the ongoing support provided by its developer Rockstar Games. Granted, it’s basically the must-own game this generation and is often purchased when someone buys a new console, but its constant online updates and live events entice players to stick around and spend more time (and more importantly, money) than they would in other games.

 

Breaking the top-sellers out by genre, the most was spent on “Shooters” at 27.5%, which makes sense as the two best-selling games of the year fall into this category. “Action” titles were next, accounting for 22.5%, while Role-Playing represented almost 13% of total spending. More than half of the overall spending was on just these three segments.

 

 

The last area I’d like to cover is where the report reveals a good amount on how gaming contributes to the overall U.S. economy. More than 2,300 game developers operate across all 50 states, while over 500 publishers are present in 44 states. As for employees, more than 65K folks are employed in gaming across the country, with an average salary of $97K annually.

 

These companies, both public and private, contributed $11.7 billion to the overall U.S. economy last year as measured by Gross Domestic Product (GDP). The largest public gaming companies headquartered in the country by market capitalization include familiar names like Activision Blizzard $ATVI ($26.8 billion), Electronic Arts $EA ($23.8 billion) and Take-Two Interactive $TTWO ($4.2 billion). All of these sizes are as of year-end.

 

Note there are many more topics in the full report from the ESA, including the demographics of U.S. gamers plus what drives purchasing decisions. It can be viewed here.

 

Personally I think these are fun to talk about since it allows us to better understand the industry and where it’s headed, and I look forward to seeing where the trends go next year! That said, how do you compare to the “average gamer” in the United States? How much do you spend on gaming purchases in a given year? Did you buy one of the best-selling games last year? Feel free to comment or shoot me a note on Twitter!

 

Sources: Entertainment Software Association, The NPD Group, EEDAR, Google Finance.

 

-Dom

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