Video Games In Australia Could Be Worth Almost $5 Billion By 2025

COVID hit plenty of industries this year and last, but the most resilient of them all — even with all the delays — has been video games. And there’s more proof in the pudding of the sector’s strength in Australia, according to the latest findings from PwC.

PwC released the latest Australian Entertainment & Media Outlook this week, an annual report that looks at the overall revenue, consumption and trends across the ways Aussies like to stay entertained. For the last several years, the video game industry has been a part of that report with consistent year-on-year growth. Unsurprisingly, 2020 continued that trend, with the coronavirus unable to reverse the upswing in revenue from new console launches and a year with hugely anticipated titles (Doom Eternal, Animal Crossing: New Horizons, Final Fantasy 7 Remake, Cyberpunk 2077, Ghost of Tsushima, The Last of Us: Part Two, Demon’s Souls and so on).

© Provided by Kotaku Australia Image: PwC

The total revenue for video games in Australia for 2020 was $3.41 billion, a figure that’s expected to reach $4.9 billion in 2025 under the medium-term estimates. (It’s possible the figure could be even higher than that, particularly if supply issues with next-gen consoles rectify sooner than expected.) PwC estimates that microtransactions will become a large driver of this growth, especially once 5G starts to become more relevant in the Australian market.

“High smartphone ownership and an increasingly sophisticated range of software offerings have transformed Australia into a mobile-first games market, with globally popular titles such as PlayerUnknown’s Battlegrounds (PUBG) Mobile, Among Us and Pokémon GO all significant earners in 2020,” PwC said, although they didn’t disclose how much money each title made.

Australians are expected to spend over $1.5 billion on microtransactions by 2025, up from almost a billion dollars in 2020.

© Provided by Kotaku Australia Image: PwC

Esports is expected to enjoy more growth, although PwC believes it will still account for a small fraction of overall gaming revenue by 2025 — $16 million, up from around $6 million last year. Kotaku Australia understands that some parts of the local esports industry privately raised concerns with the projections, noting that all of the revenue and spend in the market isn’t fully accounted for. (It’s not known whether major events like Melbourne Esports Open or IEM Sydney, for instance, have their figures and expenses realised in the esports figures, or whether that data was supplied to PwC for the report.)

© Provided by Kotaku Australia Image: PwC

This year’s PwC report also included a special section on content consumption, looking to analyse any changes in Australians’ behaviour. There were some interesting takeaways:

  • 41 percent of those surveyed watched esports content spontaneously, while 38 percent planned to watch esports content;
  • Most gaming in Australia is spontaneous, as opposed to planned;
  • 40 percent of those who play games on console do so as part of a routine, compared to 36 percent who routinely play on a desktop PC and 32 percent who routinely play on a gaming laptop

Interestingly, physical console sales are expected to suffer a 7.1 percent drop in compound annual growth rate in Australia. The reduction is less related to the current shortage of silicon and supply chain constraints, but more the natural trend of consumers buying digitally versus physically. It’s worth adding that the competition among retailers is also contributing to this: while lower prices for a game launch at JB Hi-Fi or Amazon can be beneficial for the individual spending the money, it also means the overall console sales revenue is decreasing too.

But compared to other industries, Australians still spend — and are expected to continue doing so — more on video games than any other form of entertainment. Around 7.9 percent of all consumer spending in Australia for 2020 went towards video games in some form, a figure that’s expected to grow to 9.1 percent by 2025.

© Provided by Kotaku Australia Image: PwC
© Provided by Kotaku Australia Image: PwC

Mentioned in the report, but not factored into the figures, is what potential impact the Federal Government’s 30 percent tax offset for video game production. The tax offset hasn’t even been finalised and it’s not expected that studios will begin to start applying for it until the 2022-2023 financial year. One possibility, however, is that the offset could encourage more local video game developers to list on the stock market — like PlaySide and Mighty Kingdom have done. That might not necessarily grow the overall consumer spend for video games in Australia, but it would have a marked difference on the revenue generated by Australian-only developers.

For more info and detail on PwC’s projections for the entire Australian entertainment industry, read the full report on the PwC website here.

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