The video game industry is expected to reach 256.97 billion dollars in profitability by 2025. With technological progress and the emergence of platforms, game companies around the world play an important role in this industry and its impact on modern entertainment and cultural events. By offering creative games and new experiences, these companies have attracted large audiences of different ages and tastes. Some game studios, by combining artistic creativity, innovation, and especially commercial intelligence, have been able to create influential works that have not only gained global popularity but have also captured a significant share of the 185 million dollar video game market. This note provides an analysis of the performance and achievements of the game-making giants over the past 5 years.
The most successful game studios in the world
The strategies of game companies in making and selling games have been highly influential and map out their path to success in the future of the video game market. The world's most successful game companies are:
Tencent
Tencent, with a value of more than 500 billion dollars, is among the world's most successful game companies. This Chinese holding company has, with revenue of 24 billion dollars over the past 5 years, become the world's largest game company. This company's successful strategy has included developing popular mobile games such as Honor of Kings as well as extensive investments in Western game companies such as Riot Games (the maker of the well-known game League of Legends). Tencent has also attracted many players globally through a policy of combining free-to-play games with business models based on in-app purchases (microtransactions).
Microsoft
Microsoft is one of the world's largest digital technology companies, whose game division is known as Xbox Game Studios. This American conglomerate, with a value of more than 2.5 trillion dollars (related to Microsoft Corporation), has one of the most powerful backings in world game-making. By focusing on subscription gaming services such as Game Pass and Xbox Cloud Gaming, Microsoft has been able to attract a large number of users and generate stable revenue through this model. The Xbox Game Pass service had about 34 million subscribers by the end of 2023, which was a 36 percent increase relative to Microsoft's figures from two years earlier. The acquisition of major game companies such as Bethesda (ZeniMax Media) and Activision Blizzard has also affected Microsoft's value and share in the games market.
Sony Interactive Entertainment
Sony Interactive Entertainment is one of the key divisions of the Japanese company Sony and is responsible for developing and building PlayStation consoles and their video games. The global success of Sony's consoles and the sales of exclusive games such as God of War, The Last of Us Part II, and Spider-Man have helped increase this company's growth, and its value is currently estimated at about 100 billion dollars. Sony's subscription gaming service, PlayStation Plus, is another of Sony's revenue arms, whose audience reached 47.4 million users by the end of 2023.
NetEase
This Chinese company, which initially began as an email sending and receiving platform, gained a large share of the video game market during the 2000s and became one of China's most successful game production and publishing companies. Major games such as Fantasy Westward Journey and Westward Journey Online have been the result of this company's making and development, and with 14.4 billion dollars in revenue it has become another successful game company at the global level. The use of artificial intelligence and a turn toward cloud gaming have been among this company's key strategies for remaining competitive and increasing user engagement.
Nintendo
Nintendo is still recognized as one of the world's oldest and most popular game companies. With titles such as The Legend of Zelda: Breath of the Wild and Animal Crossing: New Horizons, as well as the success of the Nintendo Switch console, this company has had revenue of nearly 12 billion dollars. Nintendo's success strategy has been based on innovation in game design and loyalty to nostalgic characters while maintaining engagement with new players. Sales of 250 million copies of Nintendo games by 2023 are solid evidence confirming the success of this company's strategies.
Electronic Arts
Electronic Arts, with 7.6 billion dollars in revenue through the end of last year, is recognized as one of the leading game companies in Europe. With a special focus on sports franchises such as FC and Madden NFL, this company holds more than 20 percent of the video game market share. In these years EA has also focused heavily on live-service games based on in-app payments, such as Apex Legends, and by using advanced technologies and partnering with international sports leagues, it has been able to maintain its position among players.
Epic Games
In recent years Epic Games' successes have been proven to users with the launch of the Epic Games Store platform. Epic Games' value in 2023 was estimated at about 29 billion dollars. This American company's revenues in 2023 were also generated mainly through the game Fortnite and the Epic Games Store. The Epic Games Store has more than 75 million monthly active users, and players spend about 950 million dollars a year on various purchases in this store.
Bandai Namco
By releasing popular titles such as Tekken and Dark Souls and combining them with virtual reality technologies, Bandai Namco generated about 7.2 billion dollars in revenue by the end of 2023. This company has also helped maintain the popularity of its games by using diverse advertising strategies and holding global eSports tournaments. For example, the game Elden Ring became one of the year's best-selling and most acclaimed games and sold more than 20 million copies by the end of 2022.
Factors in the success of game companies over the past 5 years
In general, the framework and marketing development strategies of game companies in the East and West of the world differ. For example, Japanese companies use popular anime and manga series such as Dragon Ball, Naruto, One Piece, and Gundam to develop their video games. In recent years, major Chinese companies have made a notable leap in the video game industry and, through share purchases or partnerships in game companies such as Riot Games and Supercell, have been able to gain access to global markets.
Sales planning in the West is carried out with a focus on developing digital and online games, livestreaming services and esports, as well as in-app purchases and live-service games such as Call of Duty: Warzone and World of Warcraft. Launching game stores and large-scale strategies in the sales sector are among the other success factors of Western game studios. For example, Epic Games spent 310 million of its 950 million dollars in sales in 2023 on purchasing games produced by other developers.
Modeling in sales strategy
The importance of the "sales model" also reveals another part of the classification of game companies' sales strategies. Epic Games and Tencent use the Free-to-Play model and in-app purchases, while Activision Blizzard and Sony rely more on selling exclusive content and subscription services. Sony and Nintendo also focus on exclusive titles and their own hardware, while Tencent tends toward investment and expansion in global markets.
The impact of game companies on the growth of the video game industry
It is estimated that the video game industry will reach a value of more than 230 billion dollars by 2024. Successful game makers have undoubtedly played an undeniable role in the growth of this figure. Thanks to the release of free-to-play games and live-service titles in developing countries, the growth of the video game market is more open to assessment than before. Successful game makers draw on new business models such as in-app purchases, digital content sales, and advertising. In online games and eSports developed by companies such as Activision Blizzard and EA, large revenues are generated through advertising and online broadcasts of competitions.
The video game industry also plays an important role in creating employment in diverse fields such as programming, design, marketing, and content production. Successful game companies, by establishing new studios and expanding their activities, help attract large investments from around the world. According to a report by the Entertainment Software Association (ESA), the video game industry in the United States alone employed more than 273,000 people directly and indirectly in 2021.
Average revenue of the PC and console games market in 2023 reached 92.3 billion dollars, indicating a 12 percent increase relative to 2022. Entertainment analysts have identified game companies' investment as an important factor in this progress. For example, EA and Ubisoft are among the companies that, because of investment in global markets, have created many job opportunities that played an important role in increasing the size of the video game market to a value of 347 billion dollars in 2023.
The best-selling video game genres among major game companies
Action/Adventure genre
Rockstar Games
The game Grand Theft Auto V is one of the most successful games in Rockstar's history in this genre and, with sales of more than 180 million copies by 2023, has become one of the best-selling games of all time. This game's revenue has reached more than 6 billion dollars, and the profitability of its online segment continues after 10 years. The game Red Dead Redemption 2 has also, with sales of more than 55 million copies by 2023, achieved major success in this genre.
Naughty Dog
The Last of Us Part II, in 2020 and with sales of 4 million copies in only the first 3 days after release, experienced the fastest sales in the history of Sony games and won numerous awards, including Game of the Year. Uncharted 4, with sales of more than 16 million copies, has also performed well among adventure titles.
Sports genre
Electronic Arts (EA)
The FIFA and Madden NFL game series are among the oldest sports games. The title FIFA 22 sold more than 325 million copies worldwide and also generated high revenue through in-app purchases in the Ultimate Team segment. Electronic Arts also generated more than 7 billion dollars in revenue in fiscal year 2022, a large part of which was related to these same sports titles.
2K Games
NBA 2K, with more than 130 million copies sold by 2022, is one of the best-selling basketball series among sports simulation games. NBA 2K21, with sales of more than 10 million copies, had a successful performance in this series' history, and its popularity in the MyCareer segment and in-app purchases has generated high revenue for 2K Games.
First-Person Shooter genre
Activision
The Call of Duty franchise is among the most iconic games in the first-person shooter genre. The Call of Duty: Modern Warfare version of this game in 2019 sold more than 30 million copies, and revenues from spin-off games such as Warzone and in-app purchases helped increase this company's profit. Call of Duty: Warzone had more than 100 million monthly active players in 2023.
Electronic Arts (EA)
The Battlefield series from Electronic Arts is another of the best-selling franchises in the first-person shooter genre. Battlefield 1, despite being released in 2016, is still one of the most popular games in this series and had about 150,000 monthly active players as of 2023.
Role-playing genre (RPG)
CD Projekt Red
The Witcher 3: Wild Hunt has been among the successful role-playing games, selling more than 50 million copies by 2023. This game has consistently ranked among the best RPG games in history and is a trump card in CD Projekt's successes.
Bethesda
The Elder Scrolls and Fallout series are among Bethesda's landmark and enduring role-playing games. The Elder Scrolls V: Skyrim, released in 2011, had sold more than 60 million copies by 2023 and is still recognized as one of the best-selling role-playing games in history.
Fighting genre
Bandai Namco
Bandai Namco is known for the Tekken franchise. Total sales of the Tekken series through the end of 2023 have been reported at more than 50 million copies worldwide. The seventh version of the game, released in 2015, is considered one of the best-selling titles in the Tekken series, and more than 10 million copies of this version have been sold in various stores to date.
NetherRealm Studios
The Mortal Kombat series from NetherRealm Studios has sold more than 80 million copies worldwide by 2023 and is recognized as the best-selling fighting game series in video game history. Among them, Mortal Kombat 11, with more than 15 million copies sold, is the most successful game in this series and has generated more than 500 million dollars in profit.
Strategy genre
Paradox Interactive
With the release of games such as Crusader Kings III and Stellaris, Paradox is recognized as one of the most creative game companies in the strategy genre. The game Crusader Kings III had sold more than 2 million copies by 2022 and, with numerous updates, is still played on personal computers.
Firaxis Games
The Civilization and XCOM franchises from Firaxis Games have had major commercial success over the past 10 years. The Civilization series has sold more than 57 million copies worldwide by 2023 and is recognized as this studio's most successful title and also one of the largest strategy games in history.
Which countries have a larger share of game companies' success?
In the past 5 years, various countries have performed well in game development and have helped develop and release highly successful games at the global level. These companies, based on sales figures and game popularity, are:
China
Tencent and NetEase, as China's largest game companies, have injected high video game revenue into this country's economy. Tencent, with games such as Honor of Kings and PUBG Mobile, has an important share of the mobile game market. NetEase has also achieved many successes with games such as Knives Out and Fantasy Westward Journey. China, with 45 billion dollars in revenue from the video game industry in 2022, was considered the world's largest video game market.
United States
In 2023, video game industry revenue in the United States reached 106.8 billion dollars. Companies such as Activision Blizzard, Electronic Arts (EA), and Microsoft are among the most prominent game companies based in the United States. The various segments of the video game industry in this country also include physical game development, software production, consoles, and accessories. Online game development in the United States in 2023 also experienced significant growth with revenue of 57.2 billion dollars, which increased relative to 56.6 billion dollars in 2022. This increase in revenue was mainly due to high spending on digital content, including downloads and subscriptions, which alone accounted for about 48 billion dollars of total revenue.
Japan
Japan has always been referred to as the cradle of the video game industry. For about half a century, the growth and expansion of video games have been prevalent in this country, and the number of its game companies had reached about 1,000 by 2023. Japan is among the world's most established game-making countries and, with companies such as Nintendo, Sony, and Bandai Namco, has played a key role in the development of video games. In 2023 Japan held about 18 percent of the global video game market. Video game market revenue in Japan that year was also estimated at about 16.5 billion dollars.
South Korea
In 2023, South Korea was recognized as the world's fourth-largest video game market, and this country's share of the global video game market was about 5.4 percent. South Korea, because of the development of massively multiplayer online role-playing games (MMORPGs) and mobile games, is one of the leaders of this industry. Companies such as NCSoft and Joymax have had many successes in the global games market. South Korea's video game market revenue that year reached about 12.4 billion dollars, and this amount is forecast to increase to 32.2 billion dollars by 2030.
Final word
Creative business models and sales strategies have a direct impact on game companies' performance and their success in the video game industry. Major game companies in the first half of 2023 had a striking 54.4 billion dollars in revenue and helped their publishers capture 30 percent of total market revenue for the whole of 2023. Attention to consumer behavior and the model of game adoption by players is an important success factor that successful game makers have been able to identify relative to other parts of the world.
Given the growing leap of game studios and their maximum use of the world's latest technologies, it is forecast that factors such as the use of artificial intelligence, virtual reality (VR) and augmented reality (AR) technologies, cloud-based games, and also social interactions will be seen more in the development and making of future games.
Sources used:
builtin.com/articles/gaming-companies
statista.com/statistics/1263585/top-video-game-genres-worldwide-by-age/
Machine-translated from Persian by Namafar; the Persian original is authoritative. Read the original in Persian