By James Manning Smith Futuresource ConsultingThe video gaming industry has risen to new heights in 2020, with prevailing market conditions stimulating consumer demand and console lifecycles coming together to create an environment of opportunity. According to Futuresource research, by the end of this year the gaming software market will be worth U.S. $154 billion, and gaming hardware will end the year at U.S. $15 billion, with 51 million consoles shipped.There’s no doubt that COVID-19 has had a positive impact on the gaming industry. Households in lockdown have gravitated to gaming as an immersive and escapist form of entertainment, an ideal antidote to a troubling situation. As a result, not only have existing gamers been able to spend more time gaming, others have rediscovered gaming, and some people have engaged with gaming for the first time.As well as the upward pressure applied by COVID-19, 2020 also marks the arrival of next generation games consoles, with both Sony and Microsoft tipped for launches in Q4. What’s more, both will offer an all-digital version, devoid of a disc drive, spurring further digitalization of gaming content access. Nintendo is also expected to have a strong year due to less competition from Sony and Microsoft in the first three quarters, as consumers eagerly await the PS5 and Xbox Series X. In addition, there has been a strong response to the latest must-have title “Animal Crossing: New Horizons” and its timely launch at the beginning of the pandemic. The title has found success through its appeal across demographics, appealing to young gamers and families, as well as the franchise’s nostalgic older fanbase, offering the perfect escape from a difficult year.Beyond the consoles, mobile gaming has maintained its position as the fastest growing segment of gaming software spend, predominantly due to rapid growth in emerging regions. This year, mobile gaming will account for 50% of total gaming software spend, bolstered by idle thumbs throughout periods of social distancing, and is forecast to increase its share to 52% by 2024 due to its popularity and accessibility in emerging markets.See related Apple Moves to Secure Greater Slice of the Smart Speaker PieWith rising interest in gaming comes an increase in accessory purchases. Headsets have seen a notable boost, with Futuresource forecasts pointing to a market value of U.S. $1.7 billion by the end of 2020, and 37 million units shipped. With friends and relatives being forced apart due to social distancing measures, multiplayer games such as Fortnite, PUBG and CoD: Warzone have all seen a boost in popularity, not least due to the ability to play with friends online. But it’s not all about play; gaming headsets have also benefitted from an increase in remote working. With education office headsets in short supply, consumers and businesses alike have purchased gaming headsets for use in teleconferencing.Traditional audio brands are also entering the gaming headset market. With the gaming industry increasingly focused on providing a high-quality audio experience, traditional headphones manufacturers can leverage their expertise and brand to gain a slice of the lucrative market. Although some entrants lack the specialist gaming knowledge and branding to compete with market leaders such as Logitech, HyperX, Turtle Beach and Razer, we expect this segment to become much more competitive as the future unfolds, with the promise of large margins on gaming branded products spurring further interest in the market.Moving forward, our research reveals a longer-term trend towards feature-laden, premium-priced gaming headsets. With rising demand for wireless connectivity, detachable microphones and surround sound or spatial audio rendering, traditional gaming headphones will be a thing of the past. Following the proliferation of True Wireless in the traditional headphones market, we are also beginning to see True Wireless penetrate the gaming headset segment as well. Despite current issues surrounding latency and Bluetooth connectivity, rigorous innovation programs and a new Bluetooth protocol (Bluetooth LE) are expected to mitigate the problem. This will open the floodgates for a new era of gaming-specific True Wireless ear buds, as well as traditional audio brands incorporating gaming optimizations or gaming modes into their standard ear buds.