Mobile Platforms, Advertising to Expand Games Category, Says Wedbush

The advent of streaming expands the addressable market for games by eliminating the need for a console, Wedbush analyst Michael Pachter wrote investors Thursday in a gaming trends report. May U.S. console and handheld software sales were $190 million, up 19% year on year, beating Wedbush's $173 million estimate, though supply constraints continued to limit sales of PlayStation 5 and Xbox consoles. The analyst expects a dramatic expansion of games platforms similar to Roblox, where creators display content and monetize from interaction with other creators or with users. Advertising will play a larger role in the category as a “dramatic expansion of ad delivery technology” results in more in-game ads, he said. In addition, business models will evolve to incorporate free-to-play, premium and cross-platform play to make games “ubiquitous.” He cited recent acquisitions including Skillz’s buy of Aarki allowing Skillz to combine first-party data with Aarki’s machine learning for targeted ads; Take-Two’s buy of mobile games developer Nordeus with more than 240 million users, and EA’s announced acquisition of mobile games studio Playdemic whose Golf Clash is estimated to generate around $200 million annually.