**Gaming’s Growth and Opportunities for the Entertainment and Media Industry**
The global entertainment and media (E&M) industry experienced significant growth in 2023, despite economic challenges and increased competition. According to PwC, total revenues in the E&M industry rose by 5% to $2.8 trillion in 2023, outpacing the overall global economic growth rate of 3.2%. In fact, the industry is projected to reach $3.4 trillion by 2028.
Gaming, in particular, stood out for its growth rate within the E&M industry. PwC reported that gaming revenue hit $216.3 billion in 2023, growing by 4.3%. The industry is expected to continue growing, with revenue projected to reach $321.4 billion in 2028, representing a compound annual growth rate (CAGR) of 8.2% over five years. Gaming accounts for 9% of overall E&M industry revenues.
Asia Pacific remains the largest regional market for gaming, representing 48.1% of the segment’s global total in 2023. This is expected to rise to 54.4% or $181.8 billion by 2028. However, gaming’s popularity is not limited to this region alone.
Despite recent layoffs within the gaming industry, PwC still considers gaming as one of the four major opportunities for growth in the E&M sector. CJ Bangah, Principal at PwC U.S., explained that gamers tend to spend a significant amount of their free time and money on gaming, making it a transformative and high-growth category within the industry. Bangah also highlighted that game companies are actively seeking new sources of growth beyond traditional revenue streams.
One factor contributing to the revenue growth of the gaming industry is the inclusion of various subcategories such as PC and console game revenue, esports, social/casual games, mobile games, ad revenue, and cloud/subscription game revenue. PwC’s forecast shows that gaming is expected to grow at a higher rate than other entertainment and media categories over the next five years.
However, the anomaly of revenue growth alongside layoffs in the industry can be attributed to unmet profit expectations. Rising costs and high inflation have put financial pressure on game companies, despite the overall revenue growth. Bangah emphasized that the gaming industry is still optimistic about future growth but needs to make short-term optimization decisions to ensure profitability and self-fund investments.
In terms of geographical growth, Bangah highlighted high-growth markets like Pakistan and countries with multi-generational consumers of games such as Indonesia. Additionally, governments in countries like Saudi Arabia have made substantial investments in gaming, recognizing its influence on culture and economic development.
The PwC report also identified other opportunities for growth in the E&M industry, such as advertising, rethinking business models in the streaming sector, and leveraging generative AI. Advertising plays a crucial role in driving the growth of the entertainment media sector by providing revenue streams for content production. With consumers increasingly expecting low-cost or cost-free content experiences, advertising becomes a vital component of sustaining these expectations.
Streaming services face challenges in getting consumers to pay more for digital goods and services. As a result, leading streamers are exploring new business models, including ad-based variants, cracking down on password sharing, introducing live sports, and pursuing industry consolidation.
Generative AI also presents significant opportunities for the E&M industry. This technology can enhance content creation, streamline production processes, and drive innovation. However, the exact impact of generative AI on revenue growth is still uncertain, and industry participants need to focus on how this technology can lead to greater value creation.
In conclusion, the E&M industry continues to grow despite economic headwinds and increased competition. Gaming stands out as a high-growth category within the industry, with revenue projected to double by 2028. Advertising, rethinking business models in the streaming sector, and leveraging generative AI are additional opportunities for growth. By understanding consumer preferences, embracing new technologies, and putting fans at the center of the experience, companies can position themselves for success in a rapidly evolving industry.