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The 2018-2023 Global Game-Based Learning Market: The Worldwide Serious Games Industry is in a Boom Phase - Sam Adkins

I will provide key findings from Metaari new market report distributed by the Serious Play Conference called “The 2018-2023 Global Game-based Learning Market”. This report maps product revenue forecasts to Metaari’s Game-based Learning pedagogical framework. The framework identifies eleven unique types of educational games. The educational game framework provides suppliers with a precise method of tapping specific revenue streams and a concise instructional design specification for the development of effective and profitable educational games. I will identify primary revenue opportunities in specific regions and buying segments and discuss private investment activity.

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The 2018-2023 Global Game-Based Learning Market: The Worldwide Serious Games Industry is in a Boom Phase - Sam Adkins

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  1. The 2018-2023 Global Game-based Learning Market: The Worldwide Serious Games Industry is in a Boom Phase Serious Game Revenues More than Quadruple by 2023 Serious Play Conference July 11, 2018 Presented by Sam S. Adkins, CEO, Metaari sam@metaari.com

  2. About the Analyst Sam S. Adkins is the Chief Researcher at Metaari. Sam has been providing market research on the learning technology industry for over twenty years and has been involved with electronic training for over thirty-five years. • Sam was the co-founder and Chief Research Officer for Ambient Insight between 2004 and 2016 before rebranding as Metaari in early 2017. • Serious Gaming Cluster in Helsinki, Finland September 2016

  3. About Metaari (formerly Ambient Insight) Metaari is an ethics-based quantitative market research firm that identifies revenue opportunities for advanced learning technology suppliers. www.metaari.com We track learning technology in 122 countries. We have a breathtaking view of the international learning technology market. ▪ Metaari focusses solely on advanced learning technology including psychometrics, game mechanics, robotics, cognitive computing, artificial intelligence, virtual reality, and augmented reality. ▪

  4. Agenda ▪ Key Findings ▪ Metaari’s Learning Technology Research Taxonomy ▪ Primary Catalysts Driving the Booming Market ▪ Global Forecasts by Seven Regions ▪ Global and US Forecasts by Eight Buying Segments ▪ Quantifying the Revenues: The Pedagogical Framework ▪ Q&A

  5. Key Findings The five-year compound annual growth rate (CAGR) is very high at 37.1% and revenues will surge over four times by 2023. Global, regional, and country market conditions are now extremely favorable for serious game developers. The worldwide educational game industry has entered a boom phase.

  6. Key Findings: The 2018-2023 Global Game-based Learning Market The new report has 347 pages, 105 forecast tables, and 18 charts. ▪ There are three sections: a detailed analysis of the catalysts, a demand-side analysis, and a supply-side analysis. The demand-side analysis provides revenue forecasts for seven regions, thirty-nine countries, and eight buying segments. ▪ The top buying countries are identified in each region: three in Africa, nine in Asia Pacific, six in Eastern Europe, six in Latin America, four in the Middle East, two in North America, and nine in Western Europe. ▪

  7. Longitudinal Analysis: Global Five-Year Compound Annual Growth Rates (CAGRs) for Game-based Learning Products Five-year CAGRs for Last Thirteen Forecast Periods 40% 35% 30% 25% 20% 15% 10% 5% 0% Forecast Periods

  8. Key Findings: The 2018-2023 Global Game-based Learning Market ▪ Africa has the highest growth rate for Game-based Learning at 60.1%. ▪ Asia Pacific and North America combined accounted for 80% of all global revenues in 2018 and will still account for 71% of all global revenues by 2023. ▪ The supply-side analysis provides five-year revenue breakouts for eleven game categories as defined by Metaari's pedagogical game framework.

  9. Comparison Between the 2018-2023 Global and the US Growth Rates by Three Game-based Learning Products and Services Global US 100% 88.6% 90% 77.0% 80% 70% 60% 50% 45.2% 42.2% 40.4% 36.5% 40% 30% 20% 10% 0% Packeged Retail Content Custom Development Services Authoring Tools and Delivery Platforms

  10. Metaari’s Advanced Learning Technology Research Taxonomy

  11. Metaari’s Definition of Game-based Learning ▪ We categorize serious games as a subset of the learning technology industry not as a subset of the video game industry. ▪ Game-based Learning is defined as a knowledge transfer method that utilizes "game play" comprised of some form of competition (against oneself or others) and a reward/penalty system that essentially functions as an assessment method to quantify mastery. ▪ All educational games are designed for behavior modification, pedagogical intervention, and/or cognitive remediation. The first two are well known but the third is relatively new.

  12. Metaari’sAdvanced Learning Technology Research Taxonomy Seven International Regions Latin America Western Europe Eastern Europe North America The Middle East Africa Asia Pacific Have Six Buyer Segments Higher Education Corporations - Businesses State - Local Government Federal Government Consumer PreK-12 That Buy Seven Types of Advanced Learning Technology Products Location- based Learning Game-based Learning 5G Mobile Learning Educational Robots AI-based Learning Cognitive Learning Mixed Reality Learning From Five Types of Suppliers AI and Robotic Components Custom Content Authoring Tools & Platforms Packaged Content Value Added Services Metaari Tracks the Learning Technology Markets in 122 Countries

  13. Primary Market Catalysts and Product Trends The global Game-based Learning industry is in a period of exponential innovation. This is perhaps the largest factor contributing to the current boom market.

  14. Primary Catalysts Driving the 2018-2023 Global Game-based Learning Market Exponential Innovation in the Global Industry Online Marketplaces Selling 3D Objects, VR Spaces, and Pre-trained AI Models Historic Levels of Investment Flowing to Game-based Learning Companies Surging Global Revenues for Game- based Learning Products and Services Growing Availability of Easy-to-Use Development Tools Large Scale Global Distribution Agreements and M&A The Booming Global Consumer Demand for Mobile Serious Games Native AR, VR, and AI Support in OSs, Game Engines, and Devices The Rapid Uptake of Game-based Learning in the Corporate Segments

  15. Primary Catalysts: Innovation Driving the Boom Market ▪ The global Game-based Learning industry is in a period of exponential innovation. ▪ These innovations coincide with the extraordinary advances in AR, VR, Mixed Reality, location-based intelligence, and artificial intelligence (AI). The innovations are also integrating data from psychometrics, neuroscience, behavioral science, cognitive learning, and educational psychology.

  16. Augmented Intelligence Human in the Loop Cognitive Computing Artificial Intelligence Machine Learning Machine Centric Deep Learning Metaari'sArtificial Intelligence (AI) Array

  17. Smart Serious Games That Learn: Artificial Intelligence is a Game Changer ▪ Pearson, Apple, Blackboard, Sesame Street, and Houghton Mifflin Harcourt are building new products on IBM’s Watson. ▪ CogniToys' Dino robot for kids 5-9 is built on IBM’s Watson. ▪ In February 2018, IBM and Unity launched the IBM Watson Unity SDK ▪ In April 2018, Google launched two AI-games: Talk to Books and Semantris that tests word association skills. ▪ Hong Kong’s Artha sells a learning game for kids called Little Dragon that uses Affectiva’s “emotional intelligence” platform. CogniToys Artha

  18. Primary Catalysts: Historic Levels of Private Investment ▪ Historic levels of private investment flowing to global Game-based Learning companies. ▪ The investments have increased every year for the last eight years and dramatically increased in the last three years. Over $1.7 billion in funding flowed to educational game companies in 2016 and 2017.

  19. 2010-H1/2018 Global Private Investment in Game-based Learning Companies (in US$ Millions) Deal Totals in US$ Millions $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2010 2011 2012 2013 2014 2015 2016 2017 H1/2018 $797.3 Million went to 121 Game-based Learning Companies in 2016. $948.2 Million went to 150 Game-based Learning Companies in 2017. $749.2 Million Went to 84 Game-based Learning Companies in First Half of 2018.

  20. Primary Catalysts: Global Distribution Deals Dramatically Expanding the Reach ▪ The number of large-scale distribution agreements spiked in 2017 and 2018. Educational games now reach billions of new users. ▪ In February 2017, Mattel struck a deal with Babytree to develop and sell early childhood learning games. Babytree has over 200 million unique monthly visitors and reaches over 90% of parents in China. ▪ In March 2018, Pearson and Denmark's Labster Labs announced a distribution deal that will distribute Labster’s STEM games to millions of students. In May 2018, Labster announced a distribution deal with Google. ▪ In early 2018, China’s Tencent (with over two billion users) announced that they were formally expanding into serious games with "positive social values“ that entails licensing third-party games (LEGO, Age of Learning, etc.). Essentially, the world's largest video game company just entered the Game-based Learning market.

  21. Primary Catalysts: Large Technology Companies Validate the Market ▪ Large global technology companies are entering the Game-based Learning market via M&A and effectively validating the industry. ▪ In just the first year, Microsoft licensed Minecraft: Education Edition to over two million users across 115 countries. ▪ Take-Two Interactive Software acquired Mexico's Monkey Squad in May 2017. Monkey Squad had sold over two million copies of their popular Kerbal Space Program game at the time of the acquisition. ▪ China’s NetDragon acquired US-based JumpStart, (Math Blaster) in July 2017 and the best-selling Sokikom math game in January 2018.

  22. Primary Catalysts: Early Childhood Learning Games Generate the Highest Revenues ▪ The global growth rate for early childhood learning games is a robust 33.2% and revenues will more than quadruple by 2023. ▪ Learning games designed for early childhood education are the top revenue opportunity for serious game developers throughout the forecast period. ▪ The revenues for early childhood learning games in the US will surge over four times by 2023.

  23. Injini, Strong Mind Puzzles, Super Speak, SideKicks Games for Kids With Special Needs Tynker, Toca Builder, TinyTap, CodeMonkey, Microsoft, Apple AR and VR-based Games Coding Games for Kids Minority Media, Nival, Cerevrum, Osmo New Early Childhood Learning Trends Social and Emotional Learning Games Artha, SmilingMinds, Splingo, Schell Games Sphero, PrimoToys, CongiToys, Kamibot Smart Robots STEM Evolves into STEAM Brain Trainers for Kids Kiko Labs, Kidzoom, Kidaptive, C8 Sciences Toca Boca, DragonBox, BrainPOP, PBS KIDS, PlayKids

  24. Primary Catalysts: Pre-employment Games Gain Rapid Adoption in Corporate Segment ▪ There has been a history of resistance to education and training games in the corporate segment. The inhibitors are now fading fast with the rapid adoption of pre-employment assessment games. ▪ Suppliers sell packaged pre-employment games for soft skills, provide custom game development services for vertical skills (coding, etc.), and license the platforms for internal use. The global corporate segment now has the highest growth rate for serious games at 53.4%. The US corporate growth rate is 63.7%. Arctic Shores

  25. Primary Catalysts: Native Support for Mixed Reality, AI, and Location Intelligence ▪ The new Apple ARKit and the Google ARCore SDKs released in 2017. AR will be native to billions of devices by 2020. ▪ Microsoft's Windows Mixed Reality launched in the 2017 Windows 10 Fall Creators Update. ▪ In February 2018, IBM and Unity launched IBM Watson Unity SDK. ▪ In March 2018, Google announced a new SDK for Google Maps for Unity. "It will allow game developers to incorporate Google Maps data into their game worlds with existing game engine tools."

  26. Metaari’s Mixed Reality Immersion Spectrum Biophysical Environment Augmented Objects (Triggers) Augmented Environment Semi-Immersive VR in 2D Four Degrees of Freedom VR Six Degrees of Freedom VR

  27. Primary Catalysts: The Proliferation of New Tools and Online Marketplaces ▪ A significant catalyst is the availability of easy-to-use authoring tools and well-stocked marketplaces selling premade objects. ▪ The suppliers are marketing to non-specialists and pricing the products at relatively low price points. ▪ Growing number of online marketplaces selling premade digital 3D models, VR environments, and pre-trained AI models. ▪ Premade objects allow developers to rapidly create learning games. It is also a new revenue model for developers that want to sell objects.

  28. Key Findings: Regional Overviews of Game-based Learning

  29. 2018-2023 Game-based Learning Growth Rates by Seven Regions 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Africa Asia Pacific Eastern Europe Latin America The Middle East North America Western Europe

  30. Top Fifteen Countries with the Highest Growth Rates for Game-based Learning in the 2018-2023 Market 70% 60% 50% 40% 30% 20% 10% 0%

  31. Regional Key Findings: Africa Africa has the highest growth rate in the world for Game-based Learning at 60.1%. Revenues in Africa will surge over ten times by 2023. ▪ Seven of the top fifteen countries with the highest growth rates in the world include Uganda, Senegal, Nigeria, Rwanda, Kenya, Tanzania, and Angola. ▪ The revenues are heavily concentrated in Nigeria, South Africa, and Kenya, and to a lesser extent in Uganda, Morocco, Senegal, Rwanda, Tanzania, and Angola. ▪ Via Afrika Xander

  32. Regional Key Findings: Asia Pacific The growth rate for serious games in Asia Pacific is 27.0% and revenues will more than triple by 2023. The revenues are heavily concentrated in China and India. ▪ Revenue forecasts are also provided for Bangladesh, Myanmar (Burma), Cambodia, Vietnam, Nepal, and Thailand. ▪ Getting into China: In February 2018, LEGO and Tencent made a deal to develop and distribute educational games in China. ▪ In April 2018, Tencent announced a similar deal with US- based Age of Learning (ABCmouse). Tencent has almost two billion users on the QQ and WeChat platforms. ▪

  33. Regional Key Findings: Eastern Europe Eastern Europe has a high growth rate for Game-based Learning at 42.8% and revenues will spike more than six times by 2023. The revenues are heavily concentrated in the Russian Federation. ▪ Revenues are provided for the Russian Federation, Ukraine, Georgia, Kazakhstan, Belarus, and Azerbaijan in the report. ▪ Developers need to develop in Cyrillic. English is not in wide use. ▪ In October 2017, the Kazakhstan government announced that the Kazakh language will change from Cyrillic to the Latin script by 2025. ▪

  34. Regional Key Findings: Latin America The growth rate for educational games in Latin America is 39.8% and revenues will surge over five times by 2023. ▪ The revenues are heavily concentrated in Brazil and Mexico and to a lesser extent in Colombia, Argentina, Perú, and Chile. ▪ PlayKids Brazil’s PlayKids is the best- selling early childhood learning game in the region and popular across the planet. Yogome Mexico’s Yogome has raised $36.5 million since 2016. They have over six million active users across 50 countries.

  35. Regional Key Findings: The Middle East Revenues for serious games will more than triple in the Middle East by 2023. ▪ Revenues are concentrated in four countries: Turkey, Egypt, the Kingdom of Saudi Arabia (KSA), and the United Arab Emirates (UAE). In 2017, 26% of all serious games revenue in the region was generated in Turkey. ▪ Turkey, Egypt, Saudi Arabia, and the UAE have embarked on extensive academic digitization efforts that include distributing massive numbers of tablets in the schools. ▪ Educational games in Arabic are still rare in the region. Lamsa is in Arabic and designed for kids between 1-8. It is sold as a subscription by the MNOs Ooredoo (Qatar), Etisalat (UAE), Saudi Telecom, and VIVA Bahrain. Lamsa

  36. Regional Key Findings: North America The North America region is the most mature market for Game- based Learning, but still has a healthy growth rate at 46.1%. Consumers are the largest buyers in Canada and the US. ▪ The growth rate in Canada is a robust 28.1% and revenues will more than triple by 2023. ▪ The growth rate in the US is 47.6% and revenues will surge over six times by 2023. ▪ The highest growth rate in the US is in the corporate segment at a breathtaking 63.7% and revenues will spike over eleven times by 2023.

  37. Regional Key Findings: Western Europe The growth rate is very high at 50.2% in Western Europe. ▪ Revenues are concentrated in the UK, Spain, France, Germany, and the Netherlands. ▪ The Nordic Cluster ▪ The Nordic Cluster is comprised of Denmark, Norway, Sweden, Finland, Iceland, and Greenland. The education ministries in all the Nordic countries promote the use of games in the schools, particularly in the early grades. ▪ Lightneer Rovio (Angry Birds) closed down their education division in late 2015. The executives went on to create serious game startups in Helsinki. Lightneer launched in November 2015 and Fun Academy launched in January 2016.

  38. Key Findings: Trends in the Eight Buying Segments

  39. 2018-2023 Global Game-based Learning Market by Eight Buyer Segments 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Consumer Preschool Primary Education Secondary Education Tertiary and Higher Education Federal Government State, Provincial, and Local Government Corporate

  40. 2018-2023 Global Game-based Learning Market by Buyer Segment Global Five Year CAGR 2018-2023 US Five Year CAGR 2018-2023 Game-based Learning by Buying Segment*** Revenues Concentrated in: Consumers Preschools 31.9% 47.7% 34.1% 39.5% 45.7% 40.6% Mobile early childhood learning games and language learning games Primary Education Secondary Education Tertiary Education Federal Government 43.9% 32.8% 43.4% 51.5% STEM-based serious games on PCs/laptops 41.7% 43.1% Immersive MR role playing games for security & public safety Agencies State & Local 43.4% 47.7% Government Agencies Corporations Assessment games 53.4% 37.1% 63.7% 47.6% Total *** Mobile and Non-mobile Edugames Combined

  41. Quantifying the Revenue Opportunities: Metaari’s Pedagogical Educational Game Framework The educational game framework provides suppliers with a precise method of tapping specific revenue streams and a concise instructional design specification for the development of effective educational games.

  42. Quantifying the Revenue Opportunities: Metaari’s Pedagogical Framework for Game-based Learning Products Metaari forecasts revenues for eleven types of educational games based on the content domain and the primary knowledge transfer method. Cognitive Fitness Games and Brain Trainers Artificial Intelligence Educational Games Knowledge- based Edugames Virtual Reality Educational Games Skill-based Educational Games Pedagogical Framework for Eleven Categories of Game-based Learning Products Assessment, augmented reality, and virtual reality educational games are new on the market and rapidly gaining traction. Augmented Reality Educational Games Language Learning Educational Games Location- based Educational Games Early Childhood Learning Games AI-based educational games hit the market in 2017. Assessment and Evaluation Educational Games Role-based Educational Games

  43. 2018-2023 Growth Rates for Eleven Categories of Educational Games Global Five- Year CAGR 2018-2023 27.9% 26.8% 32.9% 40.9% 33.2% 46.2% 43.3% 42.4% 34.6% 55.9% US Five- Year CAGR 2018-2023 30.5% 25.9% 40.8% 29.9% 33.4% 55.5% 60.4% 56.7% 63.2% 67.2% Global Versus US Game-based Learning Growth Rates by Educational Game Type*** Cognitive Fitness Games and Brain Trainers Knowledge-based Educational Games Skill-based Educational Games Language Learning Games Early Childhood Learning Games Assessment and Evaluation Games Role-based Serious Games Location-based Learning Augmented Reality Educational Games Virtual Reality Educational Games Artificial Intelligence-based Educational n/a n/a Games Total 36.5% 40.4% *** Mobile and Non-mobile Educational Games Combined

  44. Location-based Learning: Proximity Triggers Knowledge Transfer in Space and Time Proximity Perimeter (4D Location Sphere) Location- based Learning Triggers LBL Markers and Anchors 4D LBS Sensors Presence: Location in 3D Space and Time Location- based Learning Objects Indoor Positioning Systems (IPS) Evolving Fast

  45. Location-based Learning is by Definition Mobile ▪ First-generation Location-based Services (LBS) emphasize the position of the object tagged with triggers, markers, beacons, and anchors. ▪ Second-generation LBS emphasize the position of the user located via GPS and smartphone sensors. Sensors include the gyroscope, compass, altimeter, and the accelerometer. ▪ Metaari defines three modalities of Location- based Learning: proximal, virtual, and temporal. Animal Trackers Tennessee Aquarium

  46. LBL in Physical Space Location of User in Location- based Learning (LBL) LBL in Virtual Space LBL in Time

  47. Q&A You can contact Sam S. Adkins at: sam@metaari.com

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