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Ad revenue fuels US video game and esports industry growth, report says

So-called social and casual game apps generate the most ad revenue, but even traditional PC and console games are starting to open up to ads.
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Video games and esports found some new audiences in the early days of the pandemic, and the industry has ads to thank for its continued growth in the US, according to a report from PwC.

Revenue in the sector was up 2.4% year over year to about $54 billion in 2022, and is on track to increase at about a 6% compound annual growth rate to $72 billion by 2027, per the report. The industry’s advertising revenue is projected to nearly double between 2022 and 2027, ​​CJ Bangah, a principal in PwC’s customer transformation practice and author of the report, told Marketing Brew.

App ads: The biggest chunk of revenue in the US video game market came from “social and casual gaming,” per PwC. This includes gaming apps on smartphones, tablets, and browsers. While those games sometimes generate revenue from in-app purchases and subscription fees, the largest source of revenue came from in-app ads, the report said.

  • In-app games ad revenue accounted for more than half (52%) of social and casual gaming revenue last year, or $19.3 billion.
  • Some of those ads can be of the “lead-gen” variety, Bangah said, like banners or popups that prompt players to enter information in exchange for in-game rewards.
  • Last summer, Marketing Brew reported that several major publishers were buying ads like these in an apparent effort to boost traffic.

OG gamers: There’s also traditional gaming, which PwC defines as play that happens on PCs and games consoles like PlayStation and Xbox. This segment “has long been eclipsed by the rapid growth of social and casual gaming,” accounting for just over a quarter of total video games and esports revenue in the US last year.

  • That type of gaming has traditionally not been as friendly to advertising, according to Bangah.
  • That could begin to change. “One of the tipping points that we’re starting to see…is even those types of games are starting to embrace advertising,” she said.

+1…or more?: PwC’s 62-page report also dives into other entertainment and media channels, including TV, live music, podcasts, and the metaverse.

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