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European video games

The games industry is a rare example of a sector set for a good crisis.

With billions of extra leisure hours available daily and quick adjustment to distributed working, many games developers and publishers are seeing strong revenue and margin growth.

In this report, we compare business models across geographies and look at how different segments of the market may be affected by the COVID-19 pandemic.

The general pre-crisis backdrop was a sector forecast to grow at c 8.4% (2019–22), reaching a total market size of $190bn by 2022. Mobile gaming offers a low double-digit revenue CAGR, while PC and console gaming offer single-digit growth as we move towards console transition this year.

In the first few months of the year, business disruption was mainly confined to China and the Far East, with concerns over supply chains and stock levels to the fore in the West. Since then, the reality of a global COVID-19 pandemic has emerged, with more than a third of the global population in lockdown today. The transition from offices to remote working has caused significant business disruption, but for most games companies the disruption has been effectively managed with business continuity plans now largely implemented.

Looking ahead, we expect consumers will be isolated from normal activities and other forms of entertainment for at least three to six months; while it lasts, this period will provide a substantial benefit for games companies.

Although the virtual reality industry might suffer supply issues and console launches will be softer (initially), the net effect of the pandemic is set to be sector positive.

The small-cap European games sector offers exposure to a number of well-run, innovative businesses, with recurring revenue models that will benefit from increased consumer demand fulfilled digitally.

The following companies are featured in the research:

11 bit studios, Astralis, Bigben Interactive, CD Projekt, Codemasters, Digital Bros, Embracer, Focus Home, Frontier Developments, G5 Entertainment, Gfinity, MTG, Nacon, Paradox Interactive, PlayWay, Remedy Entertainment, Rovio Entertainment, Starbreeze, Stillfront Group, Sumo Group, Team17 and Ubisoft Entertainment.