Covid pushes UK video games market to record £7bn – but games sales fall | Games

The UK video games market hit a new record of £7.16bn last year as the pandemic continued to fuel an unprecedented boom in home entertainment, with gamers rushing to stock up on new consoles and virtual reality kit even as overall sales of games fell.

Lockdown conditions have made gaming one of the biggest pandemic winners with the value of the UK market now a third higher than in 2019 before the coronavirus crisis hit and worth more than the music and video streaming markets combined.

The amount spent by gaming fans – on everything from new consoles, software and mobile games to themed events, toys and magazines – rose 1.9% year on year beating expectations that the market would slide following the gaming gold rush at the height of the pandemic in 2020.

The overall market rose despite a 6.3% fall in the sale of video game software to £4.28bn, with the most popular titles including Electronic Arts’ Fifa 22, Activision Blizzard’s Call of Duty: Vanguard and Take-Two Interactive’s Grand Theft Auto V.

“The important story here is how much of the lockdown related boost seen in 2020 has been successfully retained during 2021’s ‘year of correction’,” said Steven Bailey, a senior analyst at Omdia.

The attractiveness of the gaming market – which is worth almost £1.8bn annually more than 2019 – has sparked a wave of consolidation with US and Chinese gaming companies splashing out more than £2bn on British video games makers over the last two years.

The growth in the market last year was underpinned by continued strong demand from gamers for new consoles, the PlayStation 5, Xbox Series X/S and more recently the Nintendo Switch OLED edition, which grew by a third to £1.13bn.

There was also significant growth in virtual reality hardware, such as headsets, with sales up 42% to £183m as gamers increasingly embrace new technologies.

Revenue from mobile games maintained its pandemic lockdown level remaining flat at £1.46bn while licensed toys and merchandise grew 34% to £159m, largely thanks to the popularity of Pokemon.

“The UK is a nation that loves its video games and we should be proud of the positive contribution that this sector makes to the economy, our culture and to wider society,” said Jo Twist, the chief executive of the UK gaming body Ukie, which publishes the annual report.

The lockdown boom in video games has sparked a wave of consolidation with the success of British games makers making the UK a prime target of foreign buyers with deep pockets.

In December 2020, California-based EA paid £945m for Southam, England-based Codemasters, the maker of the Formula One series of racing games.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Six months later China’s Tencent paid £919m for the Sheffield-based, London-listed video games developer Sumo Group.

And in March last year, Epic, the maker of the global hit Fortnite, acquired the UK-based Mediatonic, the creator of the lockdown smash hit Fall Guys.

In January, Microsoft crowned the latest round of consolidation with a $70bn (£53bn) deal to buy Activision Blizzard, the publisher of mega franchises including Call of Duty, World of Warcraft and Candy Crush, in its biggest-ever deal and the largest-ever takeover in the tech and gaming sectors.

Top 10 selling video games in the UK in 2021 (physical and digital copies combined)

1. Fifa 22

2. Grand Theft Auto V

3. Fifa 21

4. Mario Kart 8 Deluxe

5. Call of Duty: Black Ops Cold War

6. Spider-Man: Miles Morales

7. Animal Crossing: New Horizons

8. Minecraft

9. Red Dead Redemption 2

Source: Entertainment Retailers Association