It certainly is an exciting time for the gaming industry – a slice of the entertainment sector that continues to prove its resistance to the wrath of COVID-19. With less reliance on the physical model, the likes of free-to-play gaming, online streaming and cross-platform functionalities have continued to provide engagement for consumers since spending more time at home. There is no doubt that behavioural changes and increased uptake experienced now will continue into the ‘new norm’, opening further revenue streams and opportunities for the sector moving forward.
So, what exactly is it that enables gaming to continuously innovate? Below are 5 key aspects of gaming that are enhancing the consumer experience and enabling brands to take up a larger share of the entertainment wallet.
The growth of the gaming sector has predominantly stemmed from its ability to maintain relevance across all age groups. This is due to the significant uptake in smartphone usage, incorporating the snacking mentality of gaming that has spurred an appetite for ‘casual play’ away from the core user base. As referenced in our recent article, an older audience and the ‘rise of the grey gamer’ are rediscovering or experiencing gaming for the first time on their mobile, reaching for Candy Crush Saga or similar hyper casual games when they need a quick entertainment fix. With movement restrictions, time-rich retirees are isolated and using mobile games as a substitute for meeting up with friends. Smartphones already soar above gaming PC and consoles when it comes to global installed base, and it is this element of multi-purpose screen play that will continue to improve post-pandemic.
While physical and digital game purchases used to be the main driver for gaming spend, in-game purchases via downloadable content is now the main source of software revenue. When we look at how this downloadable content breaks down, we can see a colossal shift in monetisation within gaming. Gamers are purchasing additional lives, going ad free, upgrading player skills and purchasing new clothes and equipment. This level of control that gamers crave is driving a new level of personalisation, with aspects such as in-game cosmetics and additional game content being an area that will flourish moving forward, and have far reaching effects on driving revenues and profit margins.
The overall advertising income model is changing, with less linear, scheduled content being consumed. The younger generation are spending 50% of their time on at least three platforms simultaneously, and we are starting to see similar habits reflected across an older demographic, who are now reliant on less traditional platforms like linear TV. With this in mind, gaming content has opened a new window for advertisers to use CGI to place easily updatable adverts within games itself – subtly placed on billboards or signs that do not distract or interrupt the user flow, and can even provide a more personalised or localised gaming experience. This form of passive dynamic in-game advertising is on the rise and is something that sits at the heart of the wider gaming ecosystem.
The Gaming industry has successfully created partnership opportunities with figures and brands that sit outside of the gaming remit, enabling musicians and other TV personalities to further endorse their own content. Travis Scott for example, used the ever-popular Fortnite to host a virtual concert that was viewed by over 50 million users as it was taking place, and resulted in a 40% rise in subscribers to his social media channels. With social distancing measures in place worldwide, Fortnite is uniquely positioned as one of the biggest events spaces currently in operation, an asset perhaps more valuable than its direct revenue sources. In addition, gaming has effectively created celebrities in its own right, with Esports celebrity Ninja (with a net worth of $20 million) now becoming a sponsor for many non-endemic brands, such as Adidas and Uber Eats. While these partnerships have no direct correlation with gaming, the popularity of Ninja’s exposure has offered further success to such brands, with Ninja’s limited edition Adidas trainers selling out in just 40 minutes. Looking towards the repositioning of gaming media services, Twitch has also become a home to streams related to food, music, casual conversation and crafting, with streamers leveraging Twitch to foster fan engagement in a time where physical meetups are impossible.
While the ubiquity of smartphones, smart TVs and other connected devices have allowed music and video to shift to OTT models, game subscription packages have seen more limited uptake. With publishers increasingly assessing D2C possibilities within gaming, and the advent of cloud gaming becoming a mass market proposition, the tides are expected to change. The reason why we believe this will be the next battle taking place is that gaming allows increased retention for super aggregator services, whilst also enabling potential for add on services beyond content, including access to data-centre processing power. Referring back to the point around personalisation, there is the possibility to create a unified approach to deliver or recommend a multitude of services for an individual. This will also enable more data to be captured under the one account for companies to profile individuals in a more targeted way.
For further information around the suite of gaming services we provide, including our upcoming ‘Global Gaming Unwrapped’ report, please contact Kailash Morjaria via firstname.lastname@example.org
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