Three hardware trends that will drive growth in the gaming sector

Some analysts had suggested that the console gaming business would decline as a result of the increasing popularity of free-to-play (F2P) mobile games and digital marketplaces, the growth of which was documented on our blog last month. But sales of Sony’s Playstation 4 tell another story.

The console, which launched in Western markets in November last year and in Japan last month, has sold more than six million units. And with mobile app downloads, console and accessory unit sales all on the increase, we predict that the sector will continue to grow.  Three innovative hardware trends, in particular, look set to drive growth: the Tegra K1 mobile processor, Steam Machine games consoles and 3D virtual reality (VR) headsets.

1. Tegra K1 will allow triple-A gaming developers to bring their titles to mobile

This summer, mobile chip designer Nvidia will release the Tegra K1, a mobile processor capable of higher quality graphics than the PlayStation 3 and Xbox 360. By way of example, the iPhone 5s uses a 1.3GHZ CPU, while the Tegra K1 will be capable of up to 2.3GHz.

Games publishers such as Electronic Arts and Rockstar Games have seen their console games prove to be popular on mobile. EA’s FIFA 14 and Rockstar’s Grand Theft Auto III both went to number one in the charts for paid app downloads on release. As mobile and tablet gaming continues to grow – according to Big Fish Games, 84% of tablet owners mainly use their device for games – technological advancements such as Nvidia’s will allow triple-A gaming studios to bring some of their most popular and graphically demanding console titles to mobile gamers.

2. Steam Machines will continue PC gaming’s return to growth

Last year PC games achieved a record £500m in sales, despite the competition from mobile gaming, PlayStation 4 and Xbox One. While bricks and mortar specialist games retailers are working ever harder to secure gamers’ spend, digital marketplaces such as Steam are showing increasing potential. As of January this year, Steam has 75 million online active users and now PC games developers will be able to target console gamers too, as 14 Steam Machines, which can connect to television sets, are in production.

Competing for the TV set with consoles such as PlayStation 4 and Xbox One may initially seem like a risky strategy for PC games – however, as PC games are typically cheaper than console software, this is likely to be mirrored on Steam Machines, so many console gamers could be won over by the prospect of a more affordable gaming experience.

3. 3D virtual reality headsets will lead gaming’s drive into the wearable tech market

In previous blog posts we have outlined the latest innovations in wearable technology – a market which could record $19bn (£11.4bn) in revenue by 2018. The gaming sector’s involvement in this trend will be driven by 3D virtual reality headsets, after Oculus Rift secured $91m (£54.5m) in funding last year. Oculus Rift is being designed for PC and mobile gaming, although a 3D VR headset is also in development for PlayStation 4.

Sales of games peripherals increased 1% year-on-year in 2013, some of which included 3D glasses and 3D-ready monitors, so demand for new technology should not be a problem. However, for 3D gaming to become the norm, VR headsets will have to be made affordable. Oculus Rift is expected to retail at about $300 (£179) and it will be interesting to see both what price Sony has in mind for its own version, and whether or not Microsoft will follow suit for the Xbox One.