UK games market up 10% year-on-year to hit a record-breaking £5.7bn – but not everyone will be celebrating

The UK games market has grown over the last 12 months to record size. It grew from £5.11bn in 2017 to 5.7bn in 2018, a rise of 10 per cent. The figures were revealed by UK trade body Ukie today to coincide with the start of the London Games Festival.

The annual figures showed growth across the two key categories: Software sales were up by 10.3 per cent to just break through the £4bn barrier for the first time. Hardware growth almost exactly mirrored that growth, up 10.7 per cent to £1.57bn, another record. While the far smaller game culture category shrunk slightly from £117m to £109.6m this year.

Behind those upbeat headline figures, though, there are both winners and losers.

Retailers of physical games had a tough time, as boxed software saw a 2.6 per cent dip, despite the stellar fortunes of Red Dead Redemption 2 and numerous Switch titles at retail. While competitively-priced digital sales look to have been the main cause of slashing pre-owned sales by a massive 30.8 per cent. Worrying, given that such sales are a big earner for bricks-and-mortar retail particularly.

On the flipside of the physical-digital coin, digital and online sales are booming with a rise of 20.3 per cent on the previous year, and accelerating from 2017’s 13.4 per cent growth figure. That figure supports both the growing popularity of digital stores for console games and the further growth of incremental income from specific titles, namely Fortnite.

Mobile games also grew by 8.2 per cent, up from 7.8 per cent last year and showing that while the huge boom years may be over, there’s still lots more potential in the sector.

Moving onto hardware the Switch’s first full year on sales helped console hardware figures rise by a tidy 6.5 per cent. While that’s well below last year’s bumper 29.9 per cent growth figure, it’s a good result at this stage in the hardware cycle – with no new hardware launched in 2018.

Those figures were also boosted by strong growth in the PC hardware market of 18.4 per cent. VR hardware sales slumped by 20.0 per cent, though new hardware from Oculus might turn that around in 2019.

Event revenues were up as well, as both community and showcase events such as EGX, and esports-specific events grew, with the segment up 5.5 per cent in total.

So while digital shift will continue to worry some sectors, the industry as a whole had a great 2018 with booming revenues overall. While the advent of game streaming, subscription models and new console hardware will bring a less predictable future, none of those should dampen overall growth in the sector.