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Video Games and Consoles - UK - August 2018

“Volume sales of video games are consistently declining despite the rising popularity of gaming and increased frequency of play. This reflects the extent of competitive online play, with gamers seeking to improve their performance and focus on fewer titles. Consequently, revenue streams are shifting towards online subscriptions, in-game payments for additional content and season passes."

– Adrian Reynolds, Consumer Technology Analyst

This report examines the following issues:

  • Can the current range of consoles keep driving the market?
  • What are the key decisions for the next generation of consoles?
  • How are gaming revenue streams changing?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Declining market value will be boosted by next-generation consoles
              • Figure 1: Value of the UK video game and console market, 2013-18
              • Figure 2: Forecast for the value of the UK video game and console market 2013-2023
            • Software advertising dominates total spend
              • Figure 3: Total above-the-line, online display and direct mail advertising expenditure on video games and consoles, 2015-2017
            • The consumer
              • Nearly two thirds of 16-24s have a static console in the household
                • Figure 4: Static and portable console ownership, December 2013-June 2018
              • Half of console owners have a PlayStation 4 and four in 10 have an Xbox One
                • Figure 5: Static console ownership, June 2018
              • Nearly half of portable console owners have a Nintendo 3DS
                • Figure 6: Portable console ownership, June 2018
              • Regular purchasers are favouring digital games
                • Figure 7: Purchase regularity, by format, June 2018
              • Seven in 10 gamers stick to similar genres
                • Figure 8: Attitudes towards game buying, June 2018
              • Three in 10 gamers have bought new titles due to online trailers
                • Figure 9: Important factors when buying new games, June 2018
              • Frequency of gameplay is rising
                • Figure 10: Frequency of video game activity, June 2018
              • Seven in 10 gamers play alone
                • Figure 11: Social gaming, June 2018
              • Little intent to buy as people wait for next-generation consoles
                • Figure 12: Intention to buy consoles in the next year, June 2018
              • Four in 10 gamers are interested in playing virtual reality games
                • Figure 13: Interest in virtual reality gaming, June 2018
              • Seven in 10 gamers play on smartphones or tablets …
                • … while six in 10 play on both consoles and laptops or desktops
                  • Figure 14: Console and device behaviours, June 2018
                • Most gamers still prefer the transparency of upfront payments
                  • Figure 15: Video game behaviours, June 2018
                • What we think
                • Issues and Insights

                  • Can the current range of consoles keep driving the market?
                    • The facts
                      • The implications
                        • What are the key decisions for the next generation of consoles?
                          • The facts
                            • The implications
                              • How are gaming revenue streams changing?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Declining market value will be boosted by next-generation consoles
                                      • Nintendo Switch popularity supports growth in 2017
                                        • Competitive online play hitting game volume sales
                                          • Growth in eSports driving live streams of top gamers
                                            • Revenues are shifting towards in-game payments and season passes
                                            • Market Size and Forecast

                                              • Declining market value will be boosted by next-generation consoles
                                                • Figure 16: Value of the UK video game and console market, 2013-2018
                                                • Figure 17: Forecast for the value of the UK video game and console market, 2013-23
                                              • Nintendo Switch popularity supports growth in 2017
                                                • Figure 18: Volume of the UK games console market, 2013-18
                                                • Figure 19: Share of volume sales of games consoles, by brand, 2016 and 2017
                                              • PlayStation 5 and Xbox ‘Scarlett’ not expected for at least two years
                                                • Figure 20: Forecast for the value of the UK games console market, 2013-23
                                                • Figure 21: Forecast for the volume of the UK games console market, 2013-23
                                              • Competitive online play hitting volume game sales …
                                                • Figure 22: Volume of the UK video game software market, 2013-2018
                                              • … while popularity of free titles has limited value growth
                                                • Figure 23: Forecast for the value of the UK video games software market, 2013-23
                                                • Figure 24: Forecast for the volume of the UK video games software market, 2013-23
                                              • Forecast methodology
                                              • Market Drivers

                                                • Console market relying on existing consoles and retro gaming
                                                  • Consoles discounted in Amazon Prime Day sales
                                                    • Growth in eSports driving live streams of top gamers
                                                      • Franchises continue to drive game sales
                                                        • Figure 25: Best-selling console games, 2017
                                                      • Revenues are shifting towards in-game payments and season passes
                                                        • The most popular games on Steam are free-to-play
                                                          • Figure 26: Number of worldwide players on Steam, by 20 most popular games, May 2018
                                                      • Companies and Brands – What You Need to Know

                                                        • Updated Xbox One X pushes 4K HDR gaming
                                                          • Atari to return to console market with VCS in 2019
                                                            • Fortnite becomes the most popular game globally
                                                              • Software advertising dominates total spend
                                                                • Nintendo was the biggest spender on software advertising in 2017
                                                                • Launch Activity and Innovation

                                                                  • Updated Xbox One X pushes 4K HDR gaming
                                                                    • Figure 27: The Xbox One X
                                                                  • Atari to return to console market with VCS in 2019
                                                                    • Figure 28: The Atari VCS
                                                                  • FIFA extends its grip on the football gaming market
                                                                    • Annual E3 gaming conference reveals host of new games
                                                                      • Fortnite becomes the most popular game globally
                                                                      • Advertising and Marketing Activity

                                                                        • Software advertising dominates total spend
                                                                          • Figure 29: Total above-the-line, online display and direct mail advertising expenditure on video games and consoles, 2015-2017
                                                                        • Digital accounts for nearly half of video games and console advertising
                                                                          • Figure 30: Total above-the-line, online display and direct mail advertising expenditure on video games and consoles, by media type, 2016 and 2017
                                                                        • Nintendo was the biggest spender on software advertising in 2017
                                                                          • Figure 31: Total above-the-line, online display and direct mail advertising expenditure on video games software, by leading advertisers, 2017
                                                                        • Nielsen Ad Intel coverage
                                                                        • The Consumer – What You Need to Know

                                                                          • Half of console owners have a PlayStation 4
                                                                            • Regular purchasers are favouring digital games
                                                                              • Gamers aged 16-24 more likely to choose digital than physical formats
                                                                                • Seven in 10 gamers stick to similar genres
                                                                                  • Frequency of gameplay is rising
                                                                                    • Men play more often but gaming is increasingly popular among women
                                                                                      • Two thirds of 16-24-year-olds play video games at least once a week
                                                                                        • Little intention to buy as people wait for next-generation consoles
                                                                                          • Four in 10 gamers are interested in playing virtual reality games
                                                                                            • Seven in 10 gamers play on smartphones or tablets
                                                                                            • Console Ownership

                                                                                              • Nearly two thirds of 16-24s have a static console in the household
                                                                                                • Figure 32: Static and portable console ownership, December 2013-June 2018
                                                                                              • Half of console owners have a PlayStation 4 …
                                                                                                • … while four in 10 have an Xbox One
                                                                                                  • Figure 33: Static console ownership, June 2018
                                                                                                • The majority of gaming households just have one console
                                                                                                  • Figure 34: Repertoire of static console ownership, June 2018
                                                                                                • All age groups are more likely to have a PlayStation 4 than Xbox One
                                                                                                  • Figure 35: Proportion of console owners with PS4 or Xbox, by age, June 2018
                                                                                                • Nearly half of portable console owners have a Nintendo 3DS
                                                                                                  • Figure 36: Portable console ownership, June 2018
                                                                                              • Gaming Purchase Patterns

                                                                                                • Downloadable content driving demand for additional storage capacity
                                                                                                  • Regular purchasers are favouring digital games …
                                                                                                    • … while 16-24s are more likely to choose digital than physical formats
                                                                                                      • Figure 37: Purchase regularity, by format, June 2018
                                                                                                    • Seven in 10 gamers stick to similar genres
                                                                                                      • Figure 38: Attitudes towards game buying, June 2018
                                                                                                    • Three in 10 gamers have bought new titles due to online trailers
                                                                                                      • Figure 39: Important factors when buying new games, June 2018
                                                                                                    • Half of gamers buy new games based on trailers and price promotions
                                                                                                      • Figure 40: TURF Analysis – Video game purchase enticements, June 2018
                                                                                                  • Gaming Behaviours

                                                                                                    • Frequency of gameplay is rising
                                                                                                      • Men play more often but gaming is increasingly popular among women
                                                                                                        • Two thirds of 16-24-year-olds play video games at least once a week
                                                                                                          • Figure 41: Frequency of video game activity, June 2018
                                                                                                        • Seven in 10 people with an Xbox One or PS4 play at least once a week
                                                                                                          • Figure 42: Gaming frequency, by console ownership, June 2018
                                                                                                        • Seven in 10 gamers play alone …
                                                                                                          • Figure 43: Social gaming, June 2018
                                                                                                        • … but over half of Xbox One and PS4 households play online
                                                                                                          • Figure 44: Online play*, by console ownership, June 2018
                                                                                                      • Intention to Buy

                                                                                                        • Little intention to buy as people wait for next-generation consoles
                                                                                                          • Figure 45: Intention to buy consoles in the next year, June 2018
                                                                                                        • Intention to buy PS4 Pro or Xbox One X twice as high among men
                                                                                                          • Figure 46: Intention to buy consoles in the next year, by selected demographics, June 2018
                                                                                                        • Half of PlayStation 4 owners are interested in virtual reality
                                                                                                          • Figure 47: PlayStation VR ownership and interest, June 2018
                                                                                                        • Four in 10 gamers are interested in playing virtual reality games …
                                                                                                          • Figure 48: Interest in virtual reality gaming, June 2018
                                                                                                        • … rising to two thirds of frequent gamers aged 16-34
                                                                                                          • Figure 49: Target group for VR gaming – CHAID – Tree output, June 2018
                                                                                                      • Attitudes towards Video Games and Consoles

                                                                                                        • Seven in 10 gamers play on smartphones or tablets
                                                                                                          • Six in 10 play on both consoles and PCs
                                                                                                            • Downloadable content driving the importance of internal memory
                                                                                                              • Nearly six in 10 gamers aged 25-44 interested in retro consoles
                                                                                                                • Figure 50: Console and device behaviours, June 2018
                                                                                                              • Most gamers still prefer the transparency of upfront payments …
                                                                                                                • … and over a third have paid extra for expanded editions of games
                                                                                                                  • Six in 10 gamers aged 16-24 watch streams of other people playing
                                                                                                                    • Figure 51: Video game behaviours, June 2018
                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                    • Abbreviations
                                                                                                                      • Consumer research methodology
                                                                                                                        • Market size and forecast
                                                                                                                          • Fan chart forecast
                                                                                                                            • Total market value forecast
                                                                                                                              • Figure 52: forecast for the value of the UK video games and consoles market, 2018-23
                                                                                                                            • Hardware value forecast
                                                                                                                              • Figure 53: Forecast for the value of the UK games console market, 2018-2023
                                                                                                                            • Hardware volume forecast
                                                                                                                              • Figure 54: Forecast for the volume of the UK games console market, 2018-2023
                                                                                                                            • Software value forecast
                                                                                                                              • Figure 55: Forecast for the value of the UK video games software market, 2018-2023
                                                                                                                            • Software volume forecast
                                                                                                                              • Figure 56: Forecast for the volume of the UK video games software market, 2018-2023
                                                                                                                            • CHAID analysis – Methodology
                                                                                                                              • Figure 57: Target group for VR gaming – CHAID – Table output, June 2018
                                                                                                                            • TURF Analysis – Methodology
                                                                                                                              • Figure 58: Table – TURF Analysis – Video game purchase enticements, June 2018

                                                                                                                          Video Games and Consoles - UK - August 2018

                                                                                                                          £1,995.00 (Excl.Tax)