Report written by Belén Agulló García.
The gaming industry accounts for 26% of total revenue in the media industry (which includes pay TV, box office, OTT services, and games), and it is projected to increase to USD 196 billion by 2022 (from USD 152 billion currently). The geographical distribution of current revenues gives us an idea of where the gamer base is located. Asia-Pacific is the biggest market, representing 47% of total revenues, followed by North America (26%), Europe, Middle East and Africa (23%), and Latin America (4%). Traditionally, games have been primarily developed in English or in Japanese since the United States and Japan are the main game exporters.
Pre-sales operations usually have a higher localization budget compared to post-sales operations (such as player support). In the post-sales scenario, some companies may look for solutions that help them reduce localization costs, such as enhanced machine translation (MT) solutions for customer service.
The purpose of this report is to provide a comprehensive picture of the total addressable market (TAM) for multilingual user-generated content for player support in the gaming industry.
In order to provide this data, Nimdzi Insights has carried out comprehensive market research, explained in the methodology section and developed throughout the rest of the document. The main highlights of this study are:
For this market-sizing study, Nimdzi Insights combined top-down and bottom-up approaches in order to validate the obtained data. For the top-down analysis, Nimdzi analyzed more than 40 gaming companies to understand the size of the current market. This initial market analysis was complemented by insights from an enterprise survey carried out with a targeted panel of localization decision-makers in the gaming industry over a period of 15 days. Nimdzi Insights prepared 10 targeted questions aimed at uncovering insights related to the current trends in user-generated content localization in the gaming industry, understanding the value it holds for gaming companies, the management of multilingual player support and the role of machine translation in this area, the localization budget specifically addressed to the localization of user-generated content for player support, and the potential impact of the COVID crisis in user-generated content within player support. The resulting sample size is 8 respondents from some of the most relevant gaming companies in the world. The results from the survey, which have been validated by game localization key players as well, have provided solid data to complement the top-down market analysis. Additionally, Nimdzi arranged briefings with localization decision-makers in the gaming industry in order to verify conclusions brought by the quantitative data and complement them with deeper insights into topics that may be of relevance.
Newzoo estimated that the global games market would generate USD 152 billion in revenue by 2019, a 9.6% increase compared to 2018. With a compound annual growth rate (CAGR) (2018-2022) of +9%, they also estimated that this market will grow to USD 196 billion by 2022. The current geographical distribution of such revenue places Asia-Pacific in first position (see Figure 1). This makes sense considering that the top 5 gaming companies in terms of revenues in 2019 are mainly from China and Japan, as shown in Table 2.
Mobile gaming is the strongest segment for 2019 and it is projected to keep growing in the upcoming years. At the moment, mobile gaming accounts for 36% of total revenues, followed closely by console games, PC games, and to a lesser extent, tablet games and browser games (see Figure 2). In Q3 2019, mobile app consumers downloaded more than 12 billion games and spent nearly USD 16 billion in games, according to App Annie. Downloads for mobile gaming apps entailed a 40% of the total downloads across Apple Store and Google Play, and the consumer spend in mobile games was over 70% of the total app spend for the same period.
Innovation and technology will have a significant impact in the future development and growth of the gaming industry that cannot be completely foreseen at the moment. In particular, it is expected that 5G will reshape the gaming industry as we know it. This technology will enable two of the main disruptors that have been simmering for a few years due to the limitations of the current bandwidth and technology:
Cloud gaming is a service that allows users to play games on any device without requiring any specific hardware or a local copy of the game. Cloud gaming is like the Netflix of games. You pay a monthly subscription and you can access a catalog of games that can be played from any device (smartphone, TV, computer, etc.). Some companies have already started to work in the future of gaming. For example, Google Stadia was launched in November 2019 and NVIDIA’s GeForce Now service has been publicly available since February 2020. Other competitors are entering their respective betas, such as Microsoft’s xCloud Project and Tencent’s two cloud-gaming services (Start and WeGame). Newzoo offered three possible global cloud-gaming market-cap forecasts, which vary depending on the user reception and the technology adoption speed:
|USD 459 million
|USD 5.1 billion
|USD 356 million
|USD 3.2 billion
|USD 187 million
|USD 1.5 billion
Virtual Reality and Augmented Reality
Players love games because they feel immersed in the stories being told, and they can interact with the surroundings through the eyes of the main characters of their favorite games. The immersiveness of games has reached a new level thanks to new technologies such as virtual reality (VR) and augmented reality (AR). VR has suffered from slow adoption due to the discomfort and complexity of the current technology (the VR glasses are too heavy, too difficult to set up for an average user, etc.), the lack of quality of certain content due to bandwidth and latency limitations, and the high costs of the equipment as well. However, the potential of this technology is there, and as soon as the technological advances provide better and more affordable equipment, as well as faster interaction thanks to 5G, this technology will likely start to take off. AR is another story. The technology required is different, and it can be easily enabled on any smartphone. One example is the success story of Pokémon GO. When the game was first launched in 2016, gamers went crazy going outside catching Pokémons on the streets thanks to the AR technology that the game implemented. This is an example of how this technology can boost once again the mobile gaming market, and with the faster bandwidth brought by 5G, the possibilities are boundless.
The COVID crisis has had a significant impact on the gaming industry, in particular, the mobile gaming segment. According to App Annie, the weekly mobile game downloads increased 50% during the COVID crisis compared to Q4 2019. Some significant data:
Further analysis will be necessary over time to determine whether this contextual situation will have a lasting effect on the mobile gaming industry or not. However, early data obtained in our briefings indicate that support tickets have increased by at least 20%, especially in Europe.
Our estimation is that the current total localization spend in the gaming industry is between USD 750 million and USD 1.2 billion, based on our market-size analysis. With a CAGR of 9% for the gaming industry, this number will significantly increase over the next five years to between USD 1.1 billion and USD 1.8 billion in 2024.
The top language service providers (LSPs) in the gaming industry are Keywords Studios and Pole To Win, followed by Transperfect and Lionbridge. Some other LSPs offering localization services in the gaming industry include (but are not limited to):
|Pangea Translation Services
|President Translation Service Group
|International Co., Ltd.
|Round Table Studio
|Linguitronics Co, Ltd
Keywords Studios not only offers localization, but also Player Support services, and their revenues for this line of business were USD 39.1 million in 2019. According to Keywords Studios Player Support experts, only 30% of game developers offer multilingual player support, even if their games are localized into more languages. They also pointed out that around 50% of developers may include FAQs and knowledge base for their games.
According to Pole To Win (the biggest gaming testing company in the world), “business experienced ongoing growth in the global social games market and demand expanded for testing in multiple languages, localization and for customer support amid the rising popularity of smartphones and tablets.” According to this company, the customer support area experienced growth in 2019.
|Total revenues 2019 (USD)
|Estimated game loc revenues 2019 (USD)
|Pole To Win
|President Translation Service Group International Co., Ltd.
|Linguitronics Co, Ltd
|Pangea Translation Services
|Round Table Studio
There are four main CRM companies operating in the gaming market:
|Riot Games: https://www.zendesk.com/customer/riot-games/
|Electronic Arts: https://www.salesforce.com/eu/customer-success-stories/electronic-arts/
|Several clients (Epic Games, King, etc.): https://www.5ca.com/customer-support-industries/video-game-support/
|Several clients (Zynga, Next Games, etc.): https://www.helpshift.com/solutions/gaming/
Apart from the player support area, there are other categories in the gaming industry that also involve user-generated content, such as:
Electronic Arts MT specialists have recently published an article in MultiLingual magazine about MT in their organization, and they categorized the localized content and the type of MT that they were applying as follows:
Source: Multilingual / Electronic Arts
This information might be of interest to understand what type of content in the gaming market is currently machine translated.
We have carried out a comprehensive market-sizing analysis, which included a total of 42 gaming companies. After the analysis, we can state that around 45% of their total revenues come from international sales and, therefore, localization is an essential part of their market strategy. Nimdzi estimates the size of the game localization market between USD 750 million and USD 1.2 billion.
We assume that post-sales operations, such as player support, are allocated a lower budget compared to pre-sales operations, as it occurs in many other industries. Based on that assumption and the data that we have gathered as part of this analysis, we can estimate the current Total Addressable Market for user-generated content localization in the player support area in 2020 between USD 100 and 180 million. Considering a CAGR of 10% for this segment, the TAM will range between USD 161 and 289 million in 2024.
In April 2020, following phone interviews with localization decision-makers in gaming companies, Nimdzi conducted a survey with eight individuals to obtain more nuanced information about their buying behavior. In this section, you can find the results from the survey:
The results of the survey further validated the results that we obtained during the market-sizing exercise. The surveyed gaming companies stated that they use either human translation or post-edited machine translation to localize player support content. Five out of eight respondents replied that they only cover certain languages with native speaker agents even if they have players in more territories. Only one respondent stated that they currently use MT for player support. One respondent indicated that they cover all languages with native speaker agents who communicate directly with players. Enhanced MT solutions could be used by that majority of companies not being able to offer multilingual player support at this moment.
Furthermore, one respondent stated that one of the main challenges they encountered when managing multilingual player support is related to low coverage for small languages and the risk of long response times for those languages. This may seem another opportunity for MT solutions. As we could see in the replies from the companies surveyed, the budget allocated for this type of localization is not higher than USD 10 million per year, and most of the respondents replied from USD 0 to 5 million or from 0 to 5% of the overall localization budget.
During the briefings, some companies stated that, in order to release their products in a certain territory, they need to make sure that they can cover all the aspects for an extremely satisfactory player experience. That includes having the resources to fully localize the game, offer player support in the native language of the players with native speakers, or have local teams that monitor the player community. Gaming companies with high-quality standards for user experience would rather use human translation for localization or native speakers for player support when possible because the quality of MT output is not considered good enough for their current standards.
For other companies, multilingual player support is not always available for their players, especially for small territories or languages. In order to face that shortcoming, they have put in place MT technology to help the player support team to deal with requests in a language other than their own. With this system, they can understand the issues that players are experiencing and provide a solution. MT solutions have also proven to be helpful when the quantity of player support tickets significantly increased due to a given circumstance (a new release, a marketing campaign, COVID-19, etc.).
Some companies have tried to apply MT to localize other types of user-generated content such as player-generated tutorials or gameplays. However, the quality was not as expected, as the QA effort was sometimes more time-consuming and expensive than localizing with human translators, so the strategy was redefined again. For some companies, MT has been successfully applied to localize player feedback in online stores. The technology helped the player support team provide feedback for all players no matter their language, improving the companies’ online reputation.
As explained through the report, the different methodological tools have allowed us to estimate the TAM for user-generated content localization in the player support area, which is between USD 100 and 180 million. With a CAGR of 10%, the TAM is expected to increase up to between USD 161 and 289 million by 2024.
Mobile gaming is one of the most thriving segments at this moment, and Asia-Pacific is the geographic region with the highest revenues. The impact of 5G on the development of the gaming industry remains to be seen, although the assumption is that it will have a positive impact, making this industry grow even more.
For dedicated customer service MT companies interested in pursuing this market, we would suggest looking into companies offering mobile games such as NetEase, Netmarble, Zynga, and Nexon. It would be interesting to target other companies that are already using MT or have shown some interest in this technology, as well as smaller companies or companies that don’t have a big budget (or don’t prioritize the budget) to invest in multilingual player support. Companies that are currently offering cloud gaming services could be an interesting target as well since the cloud gaming segment is projected to grow at a fast pace and their intention is to attract more users who are not currently playing (and, therefore, they may need player support functionalities). We would also recommend contacting game localization companies offering player support services, such as Keywords Studios or Pole To Win.
Finally, companies might like to consider the possibility of offering an MT solution for other types of user-generated content such as the categories listed above.
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