Video Gaming Becomes a Hobby for All Ages

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It’s becoming a pastime across multiple generations, with younger people leading the way. With increasingly powerful narratives and emotionally charged storylines, video games like The Last of Us and Red Dead Redemption 2 show how games rival traditional media in storytelling.

While gaming is vying with other media creatively, its revenues surpass other entertainment sectors like film and music. The industry’s global revenues are projected to reach $187.7 billion in 2024,¹ according to the respected Newzoo consultancy. It’s also expected to keep on moving forward over the next few years.

The industry boomed during 2020 as Covid-19 lockdowns confined people to their homes. In search of entertainment and social interaction, they turned to games consoles, PCs and mobiles to play games and watch e-sports. They did so not just to compete but also to meet other gamers. However, after lockdowns were lifted, people's dependence on the virtual world lessened.

A Return to Growth?

Source: Vantage Market Research, Pelham Smithers.

The latest industry forecasts confirm this return to growth. Newzoo estimates that the global gamer community is also expected to grow 4.5% in 2024, according to the report, reaching 3.42 billion people while lifting revenues by 2.1%. That means nearly one in three people globally are playing video games. Further, 85% of global consumers are engaging with gaming in some form, either by playing or viewing content.

Source: Newzoo Global Gamer Study 2024, How consumers engage with gamers today.

Within video gaming, esports is steadily transitioning from a niche interest to a significant part of the landscape. While its popularity continues to rise, drawing millions of viewers to international tournaments, there are still challenges related to infrastructure, regulation, and long-term sustainability. Nevertheless, esports has growing support from major sporting organizations and has the potential for expansion.

In July, the International Olympic Committee² voted to create the Olympic Esports Games, marking a significant milestone. The first games are scheduled for 2025 in Saudi Arabia. Saudi Arabia has already hosted major international tournaments, including the inaugural eSports World Cup, which brought together over 1,700 elite players from more than 80 countries and attracted nearly 4 million live spectators, with an additional 1.3 billion viewers tuning in via global streaming platforms.

From 2022 to 2027, Newzoo thinks video gaming’s revenues will have a steady compound annualized growth rate of 3.1%, reaching $213.3 billion³. In other words, the gaming industry is expected to continue expanding at a faster pace than many other entertainment sectors, driven by growth in mobile and PC gaming.

Will AI Cut Costs?

To give a sense of the work that goes into blockbuster games, Grand Theft Auto (GTA) 6, set for release in autumn 2025, is rumored to have a production budget of approximately $2 billion⁴, greater than the total budget of blockbuster films. For comparison, Pirates of the Caribbean: On Stranger Tides is reportedly the most expensive film ever made, with a budget of $378.5 million.

For anyone interested in investing in the gaming sector, the combination of ongoing revenue growth and the possibility of improving efficiencies is encouraging. Remember, though, that video gaming is a specific theme and while you can gain stock level diversification through a vehicle like our ETF, there’s no way of guarding against the type of unusual volatility seen in the aftermath of the pandemic.

There is no denying that video gaming has grown from a niche teenage activity to a hobby embraced by people of all ages, but its continued success will depend on evolving trends and consumer preferences.