The world of gaming witnessed a rise in the year 2020 and since then the online gaming segment has moved in an upward direction. As per the data presented by Tracxn Technologies, investment in the gaming sector has increased 108% to $ 443.3 million in the year 2021 compared to the previous year, 2020 which was $212.9 million.
As per the latest KPMG report, the online gaming sector was valued at Rs 13,600 crore for the year 2025 and it is also predicted to reach the market size of Rs 29,000 crore. The main reason for the high growth in this sector is driven by increasing smartphone usage and high and affordable internet penetration in the country.
The vast gaming industry which is under the sub-category of the media and entertainment sector contains three key players. Starting from the game engines which helps the developers to build their games. then comes publishing game houses and gaming consoles. For decades, the current business model has been that of selling consoles at cost and making money on video games. But after the emergence of digital games, transformed the way the games were sold and distributed and it opened a door for “free-to-play” models.
Game Engines
It is a development framework that assists the developers to have a set of tools to build their games. This game engine comes in handy to users, especially beginners. There are several game engine companies such as Unity, GameMaker, Godot, Unreal, and others of the same category. The game development company Epic games, not only develops games but also permits licenses to the game engine like unreal. In several alternative firms that develop games, they also develop their engines. Usually, indie creators create games through these gaming engines.
Publishing Companies and Game Developers
Companies like Microsoft, Sony, Nintendo, Tencent, Epic Games, EA, Activision Blizzard, and a few more are termed game development companies. The gaming industry also consists of many independent developers and self-publishing companies as well. But, the market is combined around those three key players. Some of those companies mentioned are also hardware companies that build both hardware and software like Microsoft, Sony, and Nintendo. On the other hand, few companies like EA, Activision Blizzard, and Epic Games are publishers and developers. The companies which are publishers but don’t have the hardware, that part of the content will be diffused through the gaming console’s companies’ pipelines (like Sony and Microsoft). EA which is the publisher of one of the most successful games is FIFA ( which is comprised of 14% of EA of total revenues).
Gaming Pipelines
To understand the gaming industry, we need to look at its pipelines. So how do games get to consumers? How do they get distributed? What are the existing channels? And are those owned by few players? If so, what sorts of agreements exist?
There are 3 Types of Pipelines:
1 PCs:
With the help of Pcs, Video games like Fortnite or Minecraft can be freely distributed. That’s how the gaming companies have created global sensations in a matter of a short time.
2 Gaming Consoles:
Another important channel for distributing games is gaming consoles. There are hundreds and thousands of gaming consoles but primarily it is divided into three brands i.e. Nintendo, Sony, and Microsoft which dominates the whole gaming market. The companies which want to distribute their video games will have to get a license and distribution agreement with these companies.
3 Mobile and tables:
The games which will be distributed across mobiles and tablets will have to be passed through long processes. For the app stores like google play and apple store for iPhones and iPads. Firstly, the companies which want to distribute their video games will have to get a license and distribution agreement with these companies.
The video games which will be distributed through these channels have to follow all the distribution logic of these app stores. Then, these games can either be available for free in the app store or there will be an option of in-app purchase or they will get monetized through advertisement. And the revenues which they generate will be split with the company who’s owning the distribution pipeline (mostly apple for iPhone and iPad and google for google play store)
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Those app stores follow these three revenue strategies:Â
1. In-app purchases
It is similar to a free-to-play model. All those free games influence the gamers to buy either the premium version of the game or tell them to upgrade to the paid versions.
2. Game purchase
In this section, the gaming companies have to sell their games at a given price.
3. Ad-SupportedÂ
The third model is the ad-Supported. Where the gamers get the games for free and the advertising is applied within the game. Which will automatically monetize both on the click basis and an impression as well.
Digital new possibilities
As the tablets and mobile gaming markets have grown, this digital way has also opened up new possibilities of employment. With the growing demand for video games, gaming companies are also craving manpower. Because of its influence, the gaming institutes are also booming. There are several game designing courses that are helping the new aspirants to fulfill their dream of becoming game designers and game developers.