Playtime is over; with revenue surpassing one billion euro in 2018, video games are serious business and here to stay.
The video games market in the Netherlands continues to grow strongly, with total revenues expected to surpass the €1bn threshold in FY18. The historical and projected growth is mainly driven by:
We believe this strong growth will continue over the forecasted period as mobile game developers are becoming better at monetising their titles. Although market saturation will be reached somewhere around 2020.1
1 The projected social/casual revenue growth is at the high end of the spectrum. Due to the hit-driven nature of social/casual games the revenue growth can fluctuate year-on-year depending on major releases failing or succeeding.
Continued success remains elusive for many Dutch game companies.
Advertising revenue remains relatively small, but only represents static advertising as dynamic advertising is included in the Internet Advertising section.
Last year, digital revenue on consoles exceeded physical revenue for the first time, which is in line with the overall shift towards in-game purchases, DLC and microtransactions.
|Video games market (€ millions)|
|Netherlands||Historical data||Forecast data||CAGR %|
|Physical PC games||28||23||22||21||20||19||18||17||16||15||-6.5%|
|Digital PC games||9||12||15||18||19||19||19||19||19||20||1.3%|
|Online/microtransaction PC games||142||155||167||177||195||205||215||225||235||245||4.7%|
|Physical console games||191||143||142||141||139||135||132||128||124||121||-2.8%|
|Digital console games||42||48||55||63||68||74||80||88||101||115||11.0%|
|Online/microtransaction console games||21||29||58||71||83||96||109||123||136||150||12.7%|
|Traditional gaming revenue||433||409||460||491||524||549||573||600||631||666||4.9%|
|Social/casual gaming revenue||55||92||144||208||273||337||385||414||429||439||10.0%|
|Video games advertising revenue||29||32||35||38||43||46||48||51||53||55||5.1%|
Microsoft and Sony opt for mid-cycle hardware upgrade and Nintendo innovates with hybrid console
New hardware releases are shaking up the console market with all three major platform suppliers launching new devices in 2016 and 2017. Sony and Microsoft have opted for “mid-cycle” refreshes which maintain compatibility with existing games while adding improved features and visuals, particularly support for 4K resolutions and HDR (high dynamic range) video.
Sony’s PS4 Pro launched in November 2016, while Microsoft is planning a November 2017 launch for the Xbox One X. The latter is a more ambitious upgrade, although its launch price of €499 is likely to be a stumbling block for many consumers.
Nintendo, meanwhile, has opted for an entirely different strategy by launching the Switch, an all-new hybrid console, in March 2017. The device is based on tablet technology, but is designed to be used both on the go and connected to a TV. The Switch has enjoyed strong early sales, but to secure long-term success it will need greater support from third-party publishers than has so far been forthcoming.
Nintendo is also – for the first time in its existence – moving its intellectual property beyond its own hardware platform, Super Mario Run being the prime example, although results lagged expectations.
eSports slowly gaining some traction, but we believe the Dutch market will remain small
eSports are slowly gaining some traction in the Netherlands, but is lagging compared to the rest of the world. One notable event was the launch of the E-Divisie in February 2017, with FIFA17 players representing each of the eighteen Eredivisie teams in a digital league. Reception of the E-Divisie was, and still is, mixed. This is perhaps exemplary of the low maturity level in the Netherlands when it comes to organising eSports events.
It is difficult to make a living from eSports in the Netherlands, with notable exceptions being Fabian Diepstraten (League of Legends) and Thijs Molenaar (Hearthstone). The current Dutch presence on the international scene is limited and there aren’t any Dutch eSports players in international top 100 lists anymore. Whereas in the past Sander ‘V0o’ Kaasjager (Painkiller, now retired) and Manuel ‘Grubby’ Schenkhuizen (Warcraft 3) almost made it to the top 10.
We see a number of user experience changes in the gaming marketplace, but these will take time to fully materialize
The consoles of Nintendo, Sony, and Microsoft, and the PC have been the dominant ways to game for the last decades. For most of this timespan, they have remained separate camps. Once a gamer has opted for a camp, they are likely to stick with it, due to friends that have made the same choice, the cost of acquiring a new console or PC, the (exclusive) gaming franchises that they have grown to like, and the perceived “inferiority” of the other camps.
We see an increasing number of games offering cross-platform support, breaking down the separated camps of consoles and PCs. Notable examples are Rocket League, Street Fighter, Minecraft and Portal. Although cross-platform gaming is on the rise, we don’t expect this to become a major force in the market, as the applicability highly depends on the type of game.
Cross-platform support only makes sense for games where the pace is slower or those games with a “level playing field” where the same input method (e.g. a controller or keyboard and mouse) is required or dictated by the game.
Virtual Reality (VR) and Augmented Reality (AR) are also on the rise. We also do not expect these to be a major force in the market until 2020 due to immature hardware, lack of content and high cost of entry. It will likely take at least two more hardware cycles before these to truly become mainstream.
The Dutch gaming industry is dominated by a few larger players. The rest of the market consists of small (<25 FTE) firms, for whom continued success remains elusive
The Dutch gaming industry consists of more than four hundred companies involved in the creation and publishing of games, including:
Some of the companies mentioned above have a long history spanning multiple decades. However, the games industry remains a tough industry. Making games is a highly complex activity, which is compounded by the rapid pace of innovation, and the many companies involved in putting a game on the market (all requiring a share of any revenue). This means that continued success will remain elusive for many game companies, particularly smaller ones.
Manager, PwC Netherlands
Tel: +31 (0)88 792 47 33
Jeroen de Visser
Senior Manager, PwC Netherlands
Tel: +31 88 792 72 81