Consumer spending worldwide on game consoles and related services in 2017 reached its highest point since 2011, according to a report from IHS Markit.
Last year was also the first to see a year-over-year (YoY) increase in consumer spending since 2014. Overall, consumers spent $41 billion on hardware, games content, and services in 2017, representing an 18% YoY increase from 2016. For context, spending reached $46 billion in 2011.
Nintendo’s strong performance in 2017 was a major force in driving growth in the gaming market. Nintendo captured a 22% share of the gaming market in 2017, up from 9% in 2016, largely driven by the breakout success of its latest hardware release, the Switch hybrid console, which saw 12.8 million sales during the year. Sony led the pack with a 53% share, down from 57% in 2016. Microsoft saw its share drop to 25% in 2017 from 31% in the prior year.
Here’s a breakdown of consumer gaming spending in 2017:
Spending on game consoles grew 33% YoY in 2017. Consumer spending in this category reached $14.1 billion in 2017. During the year, leading players like Nintendo, Sony, and Microsoft launched new consoles — Nintendo Switch, Sony SP4 Pro, and Xbox One X, respectively — at price points higher than existing consoles.
Subscriptions to gaming platforms jumped 11% YoY to reach $3 billion in 2017.Subscriptions to gaming platforms, including Xbox Live Gold and PlayStation Plus, are attractive to companies because they generate steady revenue. Rather than having to rely on the sporadic purchasing behavior of gamers, subscription revenue is generated on a regular basis. Nintendo’s upcoming subscription service, Nintendo Switch Online, should bolster subscription spending in 2018.
Game content spending captured the largest share of the gaming market. This category grew 12% YoY to reach $23.6 billion in 2017. Gaming content accounted for over 57% of the market. This category includes spending through all forms of distribution channels and refers to game sales and paid downloadable content.