Connected TV Video Game Industry Set to Grow

Spending on video games has been lackluster since the start of 2012. Sales of physical software and hardware have both dropped and some analysts attribute this decrease to a lack of must-​have new titles being released. But in one sector, digital, consumers are still buying.

NPD reports that in the second quarter of 2012, consumers paid about $1.47 billion for digital games. This represents a big jump over last year’s figures. And one segment of video games, those that are played on connected TVs, have a particularly bright future. Worldwide, analysts believe this market, currently valued at $88 million, will rise to $1.6 billion by 2016. Part of this growth will be fueled by the rise in connected TVs. Consumers will have the option to play these video games on Internet-​Enabled TVs, Blue-​ray players and over-​the-​top (OTT) set-​top boxes. In addition, video game dependence on dedicated consoles may decrease.

Advances in technology mean that more manufacturers are selling smart TVs. In addition, more content providers are working with publishing networks to make their games available to a wider audience. The other challenge in this market, historically, has been how to manage billing. The research shop IHS acknowledges that a freemium model is the most likely way to monetize this industry.

Piers Harding-​Rolls, senior principal analyst and head of games research at IHS, notes that significant hurdles have been overcome and that ”connected TV devices are now poised to join a competitive mix of games distribution channels in the home alongside dedicated consoles, tablets and smartphones." As this market develops, consumers will be able to access the latest games from a third-​party store directly through their TVs. Content providers and their partners will also be developing ad campaigns to educate consumers and grow the market for a new model of gaming.

[Sources: Video Game Content Spending. NPD​.com. 8 Aug. 2012. Web. 23 Aug. 2012; Kastelein, Richard. Stars Begin to Align for Games on Connected TVs. Appmarket​.tv. 13 Aug. 2012. Web. 23 Aug. 2012] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.