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How can you make planets? Is it hard
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PwC’s annual Global Entertainment and Media Outlook 2016-2020 states that the total games market in the US is about to grow by a 3.6% CAGR to reach $20.28 billion in 2020. As for the consoles, total revenue is said to grow from $10.33 billion in 2015 to only $11.28 billion in 2020.
There are a number of reasons for this relatively low growth. The largest component is physical console games sell-through revenue, which was already in decline in 2015, and that decline is accelerating as viable subscription and digital offerings become more compelling.
Revenues declined from US$7.60bn in 2015 to US$6.23bn in 2020 (at a -3.9% CAGR). In some ways it’s surprising that physical game disks will continue to be a major force by 2020, but the US has one of the most mature console markets globally, supported by a good retail presence (including Gamestop and Best Buy), pre-order offers and – most importantly – a vibrant second-hand trading market. While this last element does not directly contribute to revenue, it makes new games appear more affordable if consumers can count on getting some money back on trade-in.
Digital is said to be around a third of the console game revenues in 2020. This sector is growing rapidly though, with more than 12% CAGR. Still, the report states there could be a better growth with a proper pricing – there should be different pricing policy for digital games.
Microtransactions continues to be the fastest-growing part of console-related traditional gaming, rising from US$720mn in 2015 to US$1.45bn in 2020.
PwC also stated that PC games revenue will grow from $3.53 billion in 2015 to $4.78 billion in 2020, with a 6.3% CAGR. Physical PC games sell-through revenue is said to fall from $231 million in 2015 to just $164 million in 2020.
Digital PC revenue will continue to grow to reach a point of $735 million in 2020 at a 6.4% CAGR.
It is also worth mentioning that according to the latest report VR won’t see a growth until 2017 or 2018.
In contrast, VR on mobile devices will really go mainstream in 2016 with cheap headsets that can be slotted into a phone. Google and Samsung (along with others) are selling or giving away an adapter, which means anyone with a new smartphone and even a passing interest in giving mobile VR a try has an opportunity to get on board
The experiences on offer for these mobile headsets will be limited compared with Rift or Vive, but VR video and simple gameplay still work surprisingly well (although battery life, overheating, connectivity and the ‘lag’ associated with ‘VR nausea’ are still problematic).