Loot Boxes and In-game Spending Will Drive Digital Games Market

A new study from Juniper Research forecasts that the total digital games market will reach $160 billion by 2022, up from $117 billion this year.

The market is set to be boosted by the increasing prevalence of loot boxes; purchasable in-game packs which contain a random selection of items, thus monetising users in-game. The practice has already proved immensely popular globally, especially in the Chinese games sector. The new research argued that how loot boxes are monetised will be a critical decision for games developers for the future.

Research author Lauren Foye explained: “Loot boxes play upon the gamers’ desire to have the most prestigious and sought-after in-game items, whether these be weapons or cosmetic goods. By monetising the random generation of items, developers are effectively encouraging a form of in-game gambling, extending both the lifecycle and engagement of games titles to their audience.“

In addition, the research notes the opportunity presented by evolving game formats, as evidenced from the surge in popularity of Battle Royale titles, where dozens of players face-off in a ‘last-man standing’ format. Titles include PUBG & Fortnite, each of which hosts 35 million unique players. Meanwhile, in the well-established mobile games sector, Juniper finds advertising is set to play a still greater role in monetising consumers whom avoid paying into popular free titles; with ad spend reaching $20 billion by 2022.

Juniper states that the console market is set for a revival, noting that the Nintendo Switch has done markedly well with over 16 million units sold since its March 2017 launch. Console revenues are set to hit $33.2 billion by 2022, up from $25.3 billion in 2017. The research pinpoints growth in digital formats, as well as anticipated boosts to sales from the next generation of consoles, now expected from 2020 onwards.