Video games

Playing field

The Dutch video games market exceeded revenues of €1.0bn in 2018. The main drivers for the growth were social/casual gaming and online/microtransaction sales for consoles. We believe the social/casual gaming segment will show single-digit growth from 2019 onwards, as the market saturates. The main growth going forward will come from the online/microtransactions segment, which will continue to show double-digit growth until 2022. Games relying on online/microtransaction sales come up with innovative ideas each year (e.g. Auto Chess/Battler) to maintain revenue streams and growth momentum.

What’s new

Last year, we wrote about the exceptional success of Battle Royale games such as Fortnite and PlayerUnknown’s Battleground and spill-over effects into other media segments. The most popular new game of 2019 in this genre – APEX Legends from publisher Electronic Arts (EA) – combined both, resulting in a huge success. The game was announced on Sunday, 3 February 2019 and released the next day. within one month of its release, the game already had more than 50 million players. EA spent virtually no money on traditional advertising. Instead, EA paid several game influencers such as Tyler ‘Ninja’ Blevins. Ninja showed the game to his 15 million followers on Twitch, which paved the way for EA to monetise its free-to-play game with microtransactions.

The Battle Royale genre is also boosting the global e-sports segments. On 28 and 29 July 2019, the first ever Fortnite World Cup was held in the Arthur Ashe Stadium in New York. The stadium was completely sold out with 23,000 visitors and the total prize pool was $30 million.

The average age of the contenders was 17 years. There was notable Dutch success, as player Dave ‘Rojo’ Jong finished second with his UK teammate Jaden Ashmen in the Duos tournament, winning $2.3m. E-sports still provides a huge opportunity for established Dutch companies to (re-)engage with young, digital natives and build relationships with the customers of the future to create new revenue pools. Although e-sports as a segment is slowly maturing, there is no clear leader in the Netherlands and initiatives are mostly small scale.

On the PC front, we have seen the introduction of the ‘store-wars’, with Microsoft entering the fray with the ‘Xbox Game Pass for PC’ and EPIC opening a store of its own. They will have to compete with incumbents like Steam and GOG.com and publisher-specific stores (such as Blizzard, Ubisoft’s Uplay and EA’s Origin). EPIC’s strategy in particular has been to gain exclusive content. Fragmentation of the store landscape might drive prices down for consumers, encourage incumbents to invest in their storefronts, and mean a bigger cut for certain developers (as stores try to lure them in), but from a gamer’s perspective, the inconvenience and the longevity concerns are real (Discord just announced it will shut down its Nitro games store); it remains to be seen whether EPIC’s strategy is sustainable.

Video games market (€ millions)

Netherlands Historical data Forecast CAGR%
  2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2019-23
Physical PC games 22 21 20 19 19 16 14 12 10 9 -13.4%
   y-o-y growth   -5.0% -3.1% -5.7% -1.4% -15.5% -11.9% -15.7% -18.8% -4.6%  
Digital PC games 15 18 19 19 20 20 21 22 24 24 4.2%
   y-o-y growth   16.0% 4.9% 1.4% 4.6% 2.6% 4.8% 6.0% 6.1% 1.8%  
Online/microtransaction PC games 167 177 195 205 214 225 234 243 250 253 3.4%
   y-o-y growth   5.6% 10.3% 5.1% 4.4% 5.2% 3.9% 3.8% 2.9% 1.2%  
Physical console games 142 141 135 135 129 126 121 116 111 105 -4.0%
   y-o-y growth   -0.5% -4.3% -0.5% -4.2% -2.3% -4.0% -4.1% -4.3% -5.4%  
Digital console games 55 63 69 75 80 88 97 106 115 125 9.3%
   y-o-y growth   14.4% 9.3% 8.8% 7.2% 9.8% 10.2% 9.3% 8.5% 8.7%  
Online/microtransaction console games 58 71 83 97 111 125 139 154 169 185 10.6%
   y-o-y growth   23.4% 16.8% 16.6% 14.8% 11.9% 11.2% 11.1% 10.1% 8.9%  
Traditional gaming revenue 460 491 521 549 573 600 626 653 679 701 4.1%
   y-o-y growth   6.8% 6.1% 5.4% 4.3% 4.7% 4.3% 4.4% 3.9% 3.3%  
App-based social/casual 129 193 259 322 375 400 422 433 450 460 4.2%
   y-o-y growth   50.2% 33.9% 24.6% 16.2% 6.8% 5.5% 2.6% 3.9% 2.2%  
Browser-based social/casual 16 15 15 14 14 13 13 13 12 12 -2.9%
   y-o-y growth   -2.3% -4.7% -2.5% -2.4% -2.9% -2.8% -2.9% -2.9% -3.2%  
Social/casual gaming revenue 144 208 273 337 389 414 435 446 462 472 4.0%
   y-o-y growth   44.5% 31.1% 23.2% 15.4% 6.5% 5.2% 2.4% 3.7% 2.1%  
Video games advertising revenue 35 38 43 46 50 51 53 55 56 59 3.5%
   y-o-y growth   8.1% 11.8% 6.8% 9.0% 2.4% 4.1% 3.4% 2.4% 5.1%  
Total 639 738 837 932 1,011 1,065 1,114 1,154 1,197 1,232 4.0%
   y-o-y growth   15.4% 13.5% 11.3% 8.6% 5.3% 4.6% 3.6% 3.8% 2.9%  

Source: PwC. Note: Because we rounded off amounts and percentages throughout this Outlook, tables may not sum to 100%.

Outlook

The coming years will not only be characterised by new consoles, but also by cloud giants pushing game streaming services. Microsoft is likely to soft-launch Project xCloud in October in South Korea and Google will follow suit with Stadia in November across multiple regions (incl. the Netherlands). The companies aim to leverage their extensive technical capabilities and exposure to target markets, whilst capitalising on their investments with monthly subscriptions. It remains to be seen if sufficient momentum can be built to sway current mobile phone, PC and console users to these subscriptions, amid ownership concerns (do I own a game that I am renting? What if a game disappears from the store due to corporate agreements?), and technical limitations (both latency and bandwidth). Both Microsoft and Google will at least try to get as many game developers as possible on their new platforms, whilst also investing in creating in-house content. Without a doubt, the video games market will remain a dynamic and promising media segment.

By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement (including international transfers). If you change your mind at any time about wishing to receive the information from us, you can send us an email message using the Contact Us page.

Contact us

Jeroen de Visser

Director, PwC Netherlands

Tel: +31 (0)88 792 72 81

Jordy Swart

Manager, PwC Netherlands

Tel: +31 (0)88 792 39 62

Hide