The video game industry is set to record exponential growth over the long-term, as rapid acceleration of the metaverse and virtual reality (VR) piques investor interest.
This is based on insights in the latest technology report compiled by investment advice company Arden Partners, which notes huge investment flows in the gaming industry.
According to Arden, the global video game market recorded deal flows of $60 billion in gaming and eSports combined in the first half of 2021, compared to $34 billion in 2020.
Overall, there were 635 completed transactions, including 169 merger and acquisition deals, and 364 private placements, it states.
Arden indicates the industry is now worth $170 billion, outpacing both the music ($20 billon) and film sectors ($43 billion).
“The video gaming industry is set for an explosion of investment over the next decade,” says Alex DeGroote, research director at Arden. “The unprecedented growth recorded in 2020, accelerated by the pandemic, has put the sector on a really strong footing and its growth is only set to continue. It's no surprise that companies want a piece of the pie.
“By 2025, it is predicted the industry will generate more than $260 billion in revenue as more technological breakthroughs occur, leading to further investment of capital.”
Arden research indicates VR is the gaming industry’s fastest-growing market segment.
The rise of virtual spaces – where gamers can create and explore with other people through online avatars – has led to significant technology conglomerates such as Facebook, Amazon and Google hiring thousands of employees to work on the development and rebrand their purpose towards becoming leaders in the space.
In addition, the COVID-19 pandemic and repetitive lockdowns helped spark significant growth in the games market, shattering revenue, user and growth records, it states.
Manjot Heer, analyst at Arden Partners, adds: “Our report highlights how significant technological developments in cloud gaming, virtual reality and the metaverse are laying the foundations for a new era of personalised gaming that will see the advent of new companies challenging the likes of Facebook that are trying to reform and rebrand their business model to take advantage of the potential returns from the gaming industry and virtual reality space.”
Wikipedia defines the metaverse as a VR space where users in different parts of the globe can interact with each other in a computer-generated environment.
The trend relies on emerging technologies, such as blockchain, crypto, gaming, VR and augmented reality, to create a 3D universe.