The top 10 publicly traded companies by gaming revenue generated a combined $126 billion in revenue last year, resulting in +10.2% year-on-year growth.
These companies were the most significant contributors to the 2021 games market’s $192.7 billion in revenue, but the top 10 companies were the slowest growing of all publicly traded companies.
Tencent maintains its #1 position
Tencent’s gaming revenue grew 9.9% year on year to $32.2 billion in 2021. Again, the Chinese tech giant’s gaming growth was predictably driven by live service franchises.
Much of Tencent’s growth came from international games with the opening of Level Infinite, its Western publishing division.
- In China, the mobile MOBA Honor of Kings, one of the world’s most giant games in terms of engagement and revenue, was a massive contributor to revenue.
- Clash Royale, which received a new update, provided engagement and revenue increases on the international front.
- League of Legends benefited from cross-promotion through the Netflix show Arcane, based on the game’s characters and knowledge.
Xbox Game Pass gives Microsoft healthy growth.
Sony and Nintendo suffered the most from the supply problems caused by the pandemic in the console.
- The console’s hit-driven nature means PlayStation and Nintendo are struggling to reach 2020 highs; this includes:
- The release of the PlayStation 5 and accompanying first-party software such as Spider-Man Miles Morales.
- There are also highly anticipated first-party titles on older devices, such as Animal Crossing: New Horizons for Nintendo, The Last of Us: Part II for PlayStation, and Ghost of Tsushima.
The overall increase in console spending from orders received during the stay-at-home period is due to the pandemic in 2020.
However, Microsoft (#4) is showing healthy growth (9.6% YoY versus Sony’s -2.3% and Nintendo’s +1.9%) thanks to recurring annual revenues and growth from Xbox Game Pass subscriptions. An increase).
Numerous high-quality titles, including Halo Infinite and Forza Horizon 5 in 2021, drew even more people to Game Pass while supporting boxed and digital revenues.
After all, both games feature monetization from the live service, and over a million people paid extra to play before they came to Forza Game Pass (about $50 million in revenue).
Thanks to Xbox’s Game Pass success, which recently crossed the 25 million subscriber mark, it’s no surprise that both Sony and Nintendo have updated their service offerings with continued innovations in the revamped PlayStation Plus and Nintendo Switch Online.
PlayStation announced that the number of PS Plus subscribers has been falling year on year, clarifying why the company is refreshing the service with new tiers, cloud gaming, and a more extensive library of gaming content.
Mobile: SEA Limited enjoyed increased revenues last year
The mobile game market grew by +12.5% year-on-year in 2021. Of course, this increase has helped the two biggest mobile platform owners boost their 2021 game revenues. Both companies take a 30% share of all game purchases made through their app stores.
Meanwhile, Sea Limited posted triple-digit year-over-year growth thanks to its battle royale game Free Fire, which quickly became one of mobile’s most popular and lucrative games thanks to its success in Southeast Asia, Latin America, and India.
However, Free Fire was banned in India due to geopolitical tensions between China and India (Tencent owns an 18.7% stake in Sea Limited). This ban will lower Free Fire’s long-term growth rates, as India accounts for around a fifth of Free Fire downloads and a quarter of its daily active users.
After the ban, the market value of Sea Limited fell by -16.6%. In its more recent financial report, Garena estimates its net worth for 2022 to be somewhere between $2.9 billion and $3.1 billion – much less than the $4.3 billion in 2021.
Acquisitions will change the market.
Q1 2022 saw the two most significant ever public company acquisitions in the game industry. Take-Two acquired Zynga, and now Microsoft is acquiring Activision Blizzard.
If these acquisitions are not blocked by the FTC, DoJ, or other regulators, they will significantly impact the top 10 in the years to come.
If Microsoft already owned Activision Blizzard and Take-Two, Zynga, the top 10 for 2021 would look like this:
As you can see, Microsoft and Activation Blizzard combined would be the #2 company of 2021 ($21.0 billion), pushing Sony from 2 to 3 and Apple from 3 to 4.
The removal of Activision Blizzard from the top 10 (as a single entity) would have resulted in Nintendo and EA jumping into one position.
Meanwhile, if Take-Two had owned Zynga in 2021, Take-Two would have made the top 10 jumps from 11 to 9.
