Predictions for the Future of Media: Video Games Will Surpass Pay TV as the Largest In-Home Entertainment Market

With remarkable speed, the COVID-19 pandemic has accelerated select investment themes across a number of industries. Nowhere is that truer than the media and entertainment sectors where technological advances and work-from-home trends are rapidly changing the landscape.

According to Nathan Meyer, Equity Investment Analyst at The Capital Group, video games should enjoy at least another decade of demographic tailwinds generated by young people playing and spending more, and older people continuing to stay in the game, so to speak. Dramatic advancements in graphics quality, increased access to cloud-based gaming platforms, and the further adoption of in-game monetization efforts should allow video games to continue taking time and wallet share from traditional pay TV companies.

Pandemic-related lockdowns over the past year allowed the gaming industry to shine like never before. Console makers Microsoft (Xbox), Sony (PlayStation) and Nintendo (Switch), as well as game developers such as Activision, Electronic Arts and Take-Two Interactive, experienced huge increases in engagement and revenue as homebound consumers turned to video games for interactive fun and perhaps some degree of escapism.

In Nathan’s estimation, the $130 billion video game industry should be able to sustain a 5% annual growth rate over the next decade. On that path, video games will eventually surpass the $200 billion pay TV market that is growing at just 1% to 2% per year.

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