Gamescom: billions of dollars in play | Business| Economy and finance news from a German perspective | DW | 16.08.2016
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Gamescom: billions of dollars in play

Virtual reality is set to launch the massive computer game industry into the next dimension. But some companies just hope it will keep them in business. DW previews the world's biggest video game trade fair.

Gamescom 2015 set visitor records. 345,000 people crowded Cologne's Koelnmesse exhibition hall over the five-day fair. Many came in costume, but one in every 10 came for business.

This year, Gamescom hopes to keep the growth going, and given the recent course of events in the tech world, its chances are good. Last year, virtual reality (VR) headsets were in development. Now they're market-ready.

Virtual hopes

In the past 12 months, three major electronics manufacturers - Oculus, HTC and Samsung - have put VR headsets up for sale. Sony will soon be following suit with a VR set for its popular Playstation console.

This has brought to life new ideas for games and usages. The motto of this year's Gamescom, "Heroes in New Dimensions," shows the industry's hope to push digital entertainment into the next realm.

"Producers have to think about new ideas," said Hartmut Gieselmann from the German computer magazine ct. "So far we have seen a lot of experimental games. Now it's all coming to the mass market, and the productions are becoming bigger and more professional."

Computer games, sport broadcasts and pornography are commonly listed among the businesses that have helped lead to the technology's breakthrough. "Virtual reality was invented by the gaming industry, but it has increasingly been adapted by others," said Maximilian Schenk, director of the Association of the German Games Industry (BIU), which organizes the event.

He pointed to the results of a recent survey of 2,000 internet users in Germany. "40 percent of them can picture picking out their vacation on the basis of virtual reality experiences in the near future," Schenk said. "You can experience the beach in Italy or that café in Paris beforehand."

Virtual reality software has plenty of potential. But it will depend on whether consumers are willing to buy the necessary hardware in advance, which can cost from 80 to 900 euros ($90 to $1,015), depending on the model.

HTC's Vive VR headset is the most expensive on the market, an attempt to compete with Facebook's Oculus Rift. For HTC, success in the emerging VR market is a matter of survival. Until now, the Tawain-based company has been mostly known as a smartphone producer. But it has rapidly lost market share. Its stocks have lost around 90 percent of their 2011 value.

Billion-dollar industry

The amount of VR games relative to the entire gaming market will however "remain marginal in the near future," according to a recent report by the industry information service Newzoo. But this should come as little surprise - it's a huge market, after all.

Newzoo expects computer game software alone to bring in nearly $100 billion worldwide this year, up 8.5 percent from the year before. While the market for consoles and PC games lags, games for smartphones and tablets are booming.

"A lot of computer game players have since migrated to cell phones, playing for free or with in-app purchases," said ct's Gieselmann. "The number of new console or PC game titles has dropped markedly in recent years. Some developers are only releasing one big title a year."

The Newzoo analysts estimate that game sales in Germany this year will total $4 billion. The Association of the German Games Industry expects much lower revenue, given that the Nuremberg-based Society for Consumer Research recorded 2 billion euros in sales in 2015.

The difference stems from the counting method, especially in regard to increasingly important in-app purchases, through which players can buy additional abilities, for example, within games that are usually free at first to download.

Germany's game sales are the fifth-largest in the world, according to Newzoo. China has overtaken the US as the largest national market. Almost half of the worldwide game revenues is made in the Asia Pacific.

This corresponds to the list of the world's biggest game producers. Chinese company Tencent ranks on top, followed by Japan's Sony, then Microsoft and Electronic Arts out of the US.

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