Update

Reports Highlight Strong Growth and Investor Interest in China, U.S. Game-based Learning

Ask developers or investors if there is more money pouring into or being generated by learning games and the answer is a definitive yes. Ask how much and the answers get a bit more complicated.

For years, market watchers and learning game advocates have sought that magic number – learning games are now an X million a year industry – but the difficulty of coming up with it has a lot to do with definitions.

One recent report put out a recent projection for serious games that showed the market should reach $5.4 billion by 2020. Markets and Markets said their analysis of the entire area of video games – from corporate training to educational games – would grow at about 16.3 percent for 2015-2020. The report focuses in particular on the expanded use of serious games by “corporate, education, and media & advertising” verticals. The full report has much more, but we don’t have the $4,650 to splurge for the full thing.

Still, the authors have a word of advice:

For a serious game to be successful, the game designer needs to accomplish a balance between the fun element and the main purpose of the game. Moreover, the designer needs to understand the customer needs while designing a game. Serious games are being used for training, marketing, sales, product development, emergency services, recruitment, and support.
— Markets and Markets report on Game-based Learning.

Perhaps the other major group tracking the industry is Ambient Insight research.

Their reporting has become almost the gold standard in the learning game industry for its clarity of methodology and consistency of reporting.

One thing to note about Ambient Insight is it has decided to track game-based learning as a branch of the education field rather than analyzing it as a part of the video game industry. That market, according to one recent report, is slated to top $70 billion this year, but Ambient has instead focused on the more specific game-based learning market.

According to their analysis, worldwide sales of game-based learning products hit $1.7 billion in 2013. Ambient Insight sees a more modest growth rate of about 6.7 percent compared to Markets and Markets’s 16 percent (both projections are CAGR, FYI) but Ambient still sees the overall industry reaching $2.4 billion by 2018.

Yet a third report, from Research and Markets, released late last year projected a healthy growth 8.5 percent in the global game-based learning market, with one of their analysts pointing to yet another driving force in the sector, saying, “One major trend emerging in this market is the growth of the gamification market. Several gaming enterprises in the Education sector are realizing the importance of rewards and incentives, and are incorporating engagement programs into their games.”

But no matter how people slice the learning games market a clear growth pattern emerges in all of their analyses. Markets in North America and Asia both show continued growth and much of the expected interest is in the expanding world of mobile.

And although you can quibble with methodologies and definitions around what is or is not a learning game, one thing has become clear in the last 18 months, investment is flowing to the learning game sector.

In addition to projecting the industry growth, Ambient Insight has also been tracking a number that needs no projection – investment in the learning games sector. And here, the numbers are clear.

“Investments made to learning technology companies across the globe reached an astonishing $1.12 billion in the first quarter of 2015; this is the first time in the history of the learning technology industry that investments topped the $1 billion threshold in a single quarter,” Sam Adkins, chief researcher, wrote in a report last month.ambient-investment

The number is particularly impressive given that last year the total investment in this space reached just north of $2.4 billion for the entire year.

In particular, Adkins pointed to the activity in China as driving much of the excitement in the first three months of 2015.

“The major patterns in the investment activity in China are the funding going to new Mobile Learning companies and the investments flowing into traditional online learning companies that intend to use the funds to expand their catalog with Mobile Learning,” he wrote. “Investors are particularly attracted to companies that develop mobile English language learning apps and mobile edugames for young children.”

The market and its possibilities will be the subject of a two-day, invite-only summit hosted by Tyton Partners in New York that “brings together entrepreneurs, venture capitalists and private equity investors, company and foundation executives, and institutional leaders from across the global knowledge markets to engage in meaningful discussion about the mission-critical issues of today.”

We will be there and will let you know what we learn and hear at @gamesandlearning on Twitter.

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Lee Banville Lee Banville is editor of Gamesandlearning.org. He is also an Professor of Journalism at The University of Montana. For 13 years he ran the online and digital operations of the PBS NewsHour, overseeing coverage of domestic and international stories.