Unlocking player lifetime value

The video game market: Opportunities and obstacles amid growth

The video game industry’s market potential is undeniably vast, a fact underscored by the increasing number of Generation Z, millennials and Generation X dedicating substantial time each week to playing games. An increasingly diversified business model, including in-game purchases and the social and immersive experience games provide, has further augmented the market’s value.

• The percentage of people playing games increases with each generation: Generation Alpha (94%), Gen Z (90%), millennials (82%), Gen X (67%), and baby boomers (47%).¹
• In the United States, around 60% of respondents in a Deloitte survey identified as video game players, almost equally split between men and women.²
• The 2024 video game market is projected to reach $282.3 billion in revenues. It is expected to grow at an annual rate of 8.76% between 2024 and 2027, resulting in a projected market volume of $363.2 billion by 2027.³
• The projected market value for in-game purchases is $74.4 million by 2025.⁴
  

Despite the increase in the player population, new obstacles have emerged regarding player spending and behavior.

• Fickle players in an uncertain economy: The 2022 global video game market declined 4.3%, with a 6.4% drop for mobile games. As in-person experiential spending returns after three years of the COVID-19 pandemic, players now have more entertainment options and less money in their pockets due to inflation.⁵
• Churn as a constant puzzle: Players’ limited attention spans are crippled by the abundance of entertainment options out there, and the churn rate in mobile games is skyrocketing. More than half of the costly acquired players stop being active on the same day of game app install, and 75.4% of players churn by day 30 on Android platforms.⁶
• Challenges to realize player value: While the free-to-play model has become increasingly common with major titles, game studios face difficulties fully monetizing in-game purchases—which are connected to a massively untapped potential for in-game advertising. In fact, roughly 299 million players on consoles and 458 million on PCs play but do not regularly spend during their game-play journeys.⁷

To overcome these obstacles and maximize profitability in video games, platforms must pay close attention to player lifetime value (player LTV)—the value a player generates over the course of their relationship with the platform.

Maximizing player LTV in games: Key touch points

The longevity and frequency of a player’s engagement with a game platform directly correlates to the value derived, whether realized through subscriptions, in-game purchases or other channels. To maximize player LTV, it’s essential that game platforms deliver a customized experience across all channels throughout the player’s journey—from acquisition to engagement to conversion and retention.

In today's video game landscape, players connect, interact and transact across a multitude of both traditional and digital touch points. These connections are evolving to include various forms from email and SMS notifications to Discord chats and in-game advertisements. To boost player engagement and mitigate churn, game platforms should focus on or harness these touch points with their gain a deeper understanding of player behavior and provide a more tailored game experience.

After identifying these touch points, build detailed player segments or personas by analyzing these interactions. The data insights gleaned offer valuable behavioral data that can help game studios and platforms understand their players better and anticipate their actions, which can enable them to strategically engage at the right moments.

Figure 1. An increasing number of nonlinear moments are evolving to engage players along their paths to purchase and subscribe, online and offline.

Ready to take player lifetime value to the next level?

Deloitte can help optimize player engagement and enhance player experience through refined player segmentation and AI-enabled 360-degree activation.

Our player LTV offering enables game studios and platforms to aggregate this fragmented first-party data with third-party data, providing a comprehensive view of the player’s journey and behavior. Our end-to-end capabilities allow for a more holistic and targeted approach to player engagement and retention—ultimately driving player LTV in games.

As the video game market evolves, now is the time to discover how tapping into your data can help engage players and maximize player LTV—and boost your profitable growth. Learn more by downloading our full report.

Endnotes

¹ Kevin Westcott et al., 2023 Digital media trends: Immersed and connected, Deloitte Insights, April 14, 2023.
² Kevin Westcott et al., “An introduction to Deloitte’s 2024 Digital Media Trends,” Deloitte Insights, March 20, 2024.
³ Tom Wijman, “Newzoo’s gamers market revenue estimates and forecasts by region and segments for 2023,” Newzoo, February 8, 2024.
⁴ J. Clement, “Video game revenue worldwide 2022-2032, by region,” Statista, March 2024.
⁵ Tom Wijman, “The games market in 2022: The year in numbers,” Newzoo, January 2023.
⁶ Pushwhoosh, Up your game: Growth guide for gaming apps, accessed June 16, 2023.
⁷ Newzoo, Global games market report, 2022.