Could Grand Theft Auto V Revive the UK Video Games Market?

Following its launch in October, Grand Theft Auto V (GTA) has become the fastest selling game of all time, breaking all UK records according to MCV Magazine, giving static video console games a much-needed boost. Overall video game sales have been in steady decline since 2009, due mainly to the end of console product lifecycles as well as the more evident shift from packaged software and hardware to digital gaming. However, GTA V’s phenomenal sales performance could be seen as evidence that there might still be life left in the market for blockbuster console titles. With the greatly anticipated new generation consoles Xbox One and PlayStation 4 just about to hit the shelves and the ever rising popularity of digital gaming, there has never been a more interesting time to look into the category in the UK in more detail.

UK Video Games Sales, Rsp, 2008-2017

Source: Euromonitor International

Note:  Note: Video games hardware includes static and hand-held video game consoles and video games hardware accessories. Video games software includes games for static and hand-held video game consoles and games for PCs/MACs. Digital gaming includes mobile and online games, PC and console game downloads.

A Clear Shift Towards Digital Games

Video games put in a poorer performance in 2012 than in 2011 in the UK, declining by 13% in value terms. Games for hand-held video game consoles, static video game consoles and games for PCs/MACs all contributed to the decline, slumping by 50%, 31% and 26%, respectively, in 2012. The much-anticipated Nintendo Wii U launch in static video games consoles failed to revitalise overall sales as consumers awaited the next generation, with the category acknowledging the full impact of the end of its lifecycle. With more consumers utilising their iPads or iPhones and smartphones for gaming, hand-held devices took the worst hit.

Game developers are increasingly designing games for mobiles and tablets as opposed to consoles, and this trend is set to continue over the long term. As more consumers prefer a choice of where to do their gaming, either during transit, on holiday or waiting in the queue of a grocery store, gaming is starting to take place at any location. Due to this versatility, game developers are taking advantage of the trend. Tablets are also now being designed with the ability to be connected to the television, giving gamers the option of playing games on an even bigger screen.

Digital Gaming Already Accounts for One Quarter of Video Games Sales

In 2012, digital gaming was the only category in video games to record a positive performance in the UK, with mobile games posting the strongest growth of 46% in value terms. The rising penetration of smartphones and tablets, as well as an improved gaming experience on these devices, has made digital gaming the rising star of toys and games in recent years, with the category recording a 35% CAGR over 2007-2012 to outperform all other categories by a large margin.

Digital gaming’s share of total video games sales surpassed the 25% mark in 2012 for the first time in the UK, with sales of over US$1.1 billion, more than three times the figure in 2008. Over 2012-2017, digital gaming is forecast to be the most dynamic category with a 28% CAGR, and is projected to account for almost half of overall video games sales in value terms by 2017.

The unstoppable dynamism of digital gaming will undoubtedly continue to affect sales in other video games categories, including static video game consoles and games. The recent launches of blockbuster titles such as GTA V and Call of Duty: Ghosts, which was also a great success, are aimed at core gamers, largely like the imminent Xbox One and PlayStation 4 releases. As we approach the critical Christmas period, these new titles and consoles will indeed give a boost to sales. However, the burning question is will this be enough to overhaul the year-on-year decline the category has suffered in recent years.