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Konvoy Ventures is a thesis driven venture capital firm focused on the video gaming industry. We invest in infrastructure technology, tools, and platforms.

$57B in US Video Gaming Sales (+27% y/y)

Exclusive content and the incredible growth of the American gaming market

Why Exclusive Content Matters

Over the last few years, we have seen many startups try to build the “Netflix of Gaming”, which focuses on offering gamers access to a library of games through a subscription service (primarily on PC). Many of them have tried to create another online storefront through which studios can distribute their games (i.e. competing with Epic Store, Steam, Origin). In our opinion, this idea is flawed from the start because exclusive content (something these startups cannot afford) is what differentiates large platform subscription offerings like Google’s Stadia, Microsoft’s Gamepass, and Sony’s PS Now.

This can be clearly seen in the failure of new entrants that lack exclusive IP versus the success of the Nintendo Switch that has 79 exclusive titles. Even the success of the original Xbox in 2001 can be largely attributed to the success of its exclusive flagship IP, Halo (Bloomberg).

As of December, the Nintendo Switch has sold over 70 million consoles worldwide. Most thought the smartphone was the death of handheld consoles, but Nintendo launched the Switch to global success. As of September 30th of last year, 9 Switch games have sold more than 10 million copies (Nintendo). It’s also worth noting that Nintendo could have avoided producing their own proprietary hardware with the Switch by releasing it on mobile within Apple or Google’s “walled garden”. However, given their exclusive content, they decided to pursue a larger revenue opportunity by providing their exclusive content within proprietary hardware. This worked out well for them.

The Nintendo Switch offers 79 exclusive titles compared to 73 for Playstation 4 and only 11 for Xbox One. The exclusivity of games for the Nintendo Switch has propelled sales to one of the best selling game consoles of all time, in just under 4 years. In short, exclusive content will be the core driver of platform success in video gaming (just like we saw in OTT).


US Gaming in 2020: $57B (+27% y/y)

Per a report from NPD Group, the video gaming industry in the United States had a record year in 2020. Below are a few highlights that Mat Piscatella (Executive Director at NPD Group) highlighted today via Twitter:

  • Full-year spending in 2020 set a new record, totaling $56.9B (+27% y/y)
  • December 2020 consumer spending across video game hardware, content, and accessories reached a December record $7.7B (+25% y/y)
  • Hardware sales reached $1.35 billion in December 2020 (+38% y/y), the highest total for a December month since the $1.37 billion achieved in December 2013.
  • Hardware sales totaled $5.3 billion in 2020 (+35% y/y) and the most since $5.6 billion was reached in 2011.
  • Nintendo Switch was the best-selling hardware platform in units and dollars for both December and the 2020 year.
  • PlayStation 5 finished 2020 as the #2 best-selling console.
  • Call of Duty: Black Ops: Cold War was the best-selling game of both December as well as 2020, while Call of Duty: Modern Warfare was 2020's 2nd best-seller. Call of Duty ranked as the best-selling gaming franchise in the U.S. market for a record 12th consecutive year.

These numbers are impressive and expanding quickly. In the United States, it’s hard to find entire industries that thrived in 2020, much less by a growth of 27%.