German market for computer and video games
The German games market’s sales revenue record in 2020 was immediately followed by another record-breaking year in 2021. The industry achieved total sales revenue of approximately 9.8 billion euros from computer and video games and associated hardware, meaning that sales revenue grew by 17 per cent within one year. The demand for games hardware, particularly for video game consoles (+23 per cent) and accessories for gaming PCs (+22 per cent), as well as in-game and in-app purchases (+30 per cent), was the biggest driver of growth.
The German games market remains the largest in Europe and the fifth-largest in the world by global sales revenue. Games, games hardware and charges for online services: all three market segments posted growth once again.
Sales revenue from games hardware grew by 18 per cent overall to about 3.6 billion euros. Video game consoles were in particular demand in 2021: although retailers were often sold out of some models, sales revenue still managed to increase by 23 per cent to 808 million euros. Without delivery bottlenecks, this growth likely would have been even more significant. Approximately 1 billion euros were generated from sales of gaming PCs – both desktops and laptops. This is an increase of 10 per cent compared to the previous year. More and more video game players are also investing in accessories to make their experience even better. Demand for graphics cards, keyboards, mice, monitors and VR headsets for gaming is especially strong. Sales revenue from purchases of gaming PC accessories grew by 22 per cent to about 1.5 billion euros. In this segment, too, supply could not always match demand, particularly for graphics cards. Many items were available for purchase, but the price was generally far above the manufacturer’s suggested retail price. Sales revenue from accessories for video game consoles increased by 11 per cent to 306 million euros in 2021.
In 2020, online services for gaming were among the top drivers of growth in the overall games market, with growth of 50 per cent. This level remained consistent in 2021. Sales revenue in this segment increased by a further 4 per cent to a total of 720 million euros. Gaming subscription services such as the Xbox Game Pass, EA Play and Ubisoft+ made a key contribution to this growth, with their sales revenue increasing by 22 per cent to 220 million euros. With these services, subscribers pay a monthly fee for access to large libraries of games that they can either download or play as a stream without installing them, depending on the service in question. Purely cloud-based gaming services, on the other hand, experienced a decline of 13 per cent to 63 million euros. One of the reasons for this is the fact that some cloud gaming functions have been integrated into other services free of charge, meaning that no independent sales revenues are generated for these functions. On the whole, this relatively young market sector still seems to be in flux. For example, there are significant differences in the scope of services offered by the individual cloud gaming providers. Some of them only provide gaming-capable hardware in the cloud, whilst others serve as a platform where games have to be purchased on an individual basis. Other services in this sector are based on a subscriber model: for a fixed monthly price, subscribers can access an extensive library of games. At the moment, it’s impossible to predict if one of these models will eventually outlast the others – and if so, which one. Other major companies, on the other hand, are just getting started with cloud gaming. Amazon, for example, launched Luna in early 2022; the service is not yet available in Europe. Sales revenue from online gaming services also fell by 2 million euros, to 437 million euros. These services are frequently offered for various games consoles and include – depending on the specific offer – free monthly games, games discounts, the ability to play online, or even cloud storage for saved games. Examples include PlayStation Plus from Sony Interactive Entertainment, Nintendo Switch Online or Xbox Live Gold from Microsoft.
Sales revenue from purchases of computer and video games grew by 19 per cent to about 5.4 billion euros in 2021. However, the individual segments of the sector developed very differently. Sales revenue from one-off purchases of games, for example, fell by 9 per cent to about 1.1 billion euros. Sales revenue from monthly subscription charges for individual games – a model that is common among online role-playing games such as ‘World of Warcraft’ from Activision Blizzard or ‘Final Fantasy XIV’ from Square Enix – also fell, by 11 per cent to 145 million euros. In-game and in-app purchases, on the other hand, were once again among the strongest growth drivers: sales revenue in this area grew by 30 per cent to about 4.2 billion euros.
The growth in sales revenue from computer and video games reflects a number of different developments: for example, larger games companies are publishing fewer titles in total, not least because developing new AAA games is much more expensive (as a result of the significant technological investment required) and, consequently, much riskier. However, for successful games that already have a community to build on, companies today tend to provide updates and new content for much longer. Added to that is the continuing trend towards free-to-play games. If these titles are accepted by the community, they also receive new content for much longer periods of time; this content is sold within the game or within the app. And this content is no longer mere cosmetic items for a few euros. The sharp increase in sales revenue from in-game and in-app purchases is a result of increasingly larger content packages being sold within the titles. Examples of these content packages include battle passes or season passes containing numerous cosmetic items lasting for several months, or sometimes even whole new single-player campaigns for hours of enjoyable gameplay.
Mobile games also hold a particularly large share of the in-game and in-app purchase submarket. Be it casual puzzle games, familiar PC and console games adapted for mobile use, or location-based games like ‘Pokémon Go’ or ‘Jurassic World Live’, the popularity of game apps is undiminished. Sales revenue from these games for smartphones and tablets continued to grow in 2021, by 22 per cent to approximately 2.8 billion euros. This growth is a continuation of the impressive trend in recent years, as sales revenue in 2020 had already risen by 23 per cent.
In-app purchases continue to drive revenue growth in the mobile games market, accounting for approximately 99 per cent of total sales revenue in this segment in 2021. This submarket enjoyed yet another year of significant growth, increasing by 22 per cent from about 2.3 billion euros in 2020 to nearly 2.8 billion euros in 2021. Sales revenue generated by game apps offered for purchase, on the other hand, continued to decline, amounting to just 7 million euros in 2021. Subscription fees for apps like the Apple Arcade and Google Play Pass services generated 12 million euros in sales revenue, an increase of 200 per cent compared to the previous year. The success of in-app purchases in mobile games is largely due to free-to-play games. The low barriers to entry make this form of monetisation ideal for smartphones and tablets – players can download and use game apps at any time. And if the players enjoy the game, they can buy additional content such as extra levels and new skins for their own avatars.
German mobile games market grows by 22 per cent
Sales revenue for app purchases, in-app purchases and subscription fees for apps in Germany
Another development that began during the first year of the Covid-19 pandemic stabilised during the following year: following a sharp increase in 2020, the share of games purchased as downloads remained essentially the same in 2021. The share of all PC and console games sold in Germany that were purchased as downloads increased by just one percentage point to 59 per cent. This means that roughly 6 in 10 computer and video games were once again purchased as downloads last year.
There were major differences in the share of downloads for different platforms and price categories, with downloaded games making up a particularly large percentage of the lower-priced titles. Approximately 8 in 10 games priced up to 30 euros were purchased as downloads. Higher-priced titles were more likely to have been purchased on physical media, with players buying 68 per cent of all games costing over 30 euros on physical media from online shops or bricks-and-mortar stores in 2021. Players of PC games, in particular, again relied on downloads from portals such as Origin or Steam. As a result, downloads accounted for around 93 per cent of PC game sales. Nearly two thirds (64 per cent) of all games for video game consoles such as Nintendo Switch, PlayStation and Xbox, on the other hand, were purchased on physical media. Thanks to their excellent accessibility, download purchases have largely established themselves as the preferred choice of many players.
The German games market added another impressive chapter to its success story in 2021. After historically strong growth in 2020, an equally impressive 17 per cent increase in sales revenue followed in 2021. Once again, in-game and in-app purchases were major drivers of growth in the games market. The strong growth in games hardware is a particularly encouraging trend. No matter whether they are using video game consoles or gaming PCs, Germany’s video game players once again invested considerable sums in their equipment to ensure that they would be able to continue enjoying their games in the best possible quality in future. In fact, demand in some cases exceeded supply, meaning that an even greater increase in sales revenue would have been theoretically possible.