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Gaming Boom in COVID-19 times: Analysis & Insights

videogamingstore by videogamingstore
October 31, 2020
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October 31, 2020
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In an attempt to curb the spread of the novel coronavirus, several countries around the world restored to lockdowns in early 2020. These lockdowns meant confining millions of people to their homes, closure of businesses and imposing restrictions on various day-to-day activities.

The ceasing of almost all of the economic activity during the initial lockdowns has pushed the global economy into recession. According to the International Monetary Fund, the global economy is expected to shrink by over 3 per cent in 2020 – the steepest slowdown since the Great Depression of the 1930s.

Despite the widespread economic disruption caused by the coronavirus pandemic, the global video games industry is thriving. This is because, in the age of social distancing where consumer and business activities have reduced to a minimum, gaming has provided an engaging distraction for people seeking social interaction.

Here is an article that takes a look at how COVID-19 is boosting the growth of the global video games and esports industry. 

 

The changing business model

The video games industry is tapping into global consumer demand for interactive, online entertainment, which has led to an unprecedented fan base and record-breaking revenues. In 2020, the global video games industry is projected to reach $159b in revenues, which is almost three times the music industry revenues and around four times box office revenues. The biggest market by revenue is Asia-Pacific with almost 50% of the games by value. The United Kingdom also accounts for a major portion of the revenue.

Gaming revenues are mostly driven by consumer spending, but the business model has evolved significantly over the past few years. Earlier, video games were based on the traditional business model, known as “game as a product”, where game publishers developed a game and then sold it to the consumer for a single, revenue-generating fee. After the consumer bought the game, the video game publisher had to develop another game or add-on to generate additional revenue from that consumer.

Nowadays, game publishers are embracing new business models like the “game as a service” to maximize revenues. Here, instead of a one-time transaction, video games are monetized using various building mechanisms to keep users playing and paying for as long as possible. This leads to the expansion of a game’s lifespan into something more closely resembling a service.

 

COVID-19 has boosted engagement with video games

COVID-19 has made a dramatic increase in the audience available to publishers, and all the giants of the video games industry – including, Microsoft, Nintendo and Twitch – have thrived in the conditions created by the pandemic.

According to The Washington Post, the number of subscribers for Microsoft’s Game Pass service passed 10 million in April 2020. Among these subscribers, Microsoft reported a 130 per cent increase in multiplayer engagement across March and April.

Nintendo and Tencent also saw an increase in sales during their first quarter. The former experienced around 41% increase in profits, while Tencent’s year-on-year online games revenue increased by 31%. Even games released during the pandemic have performed well, with titles such as Nintendo’s Animal Crossing: New Horizons and id Software’s Doom Eternal breaking records after launching. In fact, Nintendo has sold more than 22 million copies of Animal Crossing: New Horizons since its release in late March.

The same is true of engagement numbers. Twitch, the most popular video streaming platform with 15 million daily active users and 3 million monthly creators, saw 3.1 billion hours watched in Q1 2020 – a 24% increase since Q4 2019. Steam, a popular PC gaming platform, experienced its all-time high concurrent user count at over 20 million people in March. Overall, video games sales approached $1.6 billion in the month of March, representing a 35% year over year increase, according to NDP.

 

The surge in online casino gaming and fantasy sports betting

Besides the video games industry, online casino gaming and fantasy sports betting have also experienced tremendous growth during the COVID-19 pandemic. This is because the brick-and-mortar gaming venues across the globe were closed to limit the spread of the virus. Also, all the major sporting events were postponed or cancelled for the same reason.

So, the majority of casino players and sports bettors shifted to online casino gaming and fantasy sports betting to quench their gambling needs. This crossover has seen a major boost in the user base of popular gambling sites in the United Kingdom. The major online casinos have seen an increase of about 25% in people trying online slots, and it has increased by over 38% when it comes to playing poker. Also, fantasy sports betting experienced a 30% increase during the first couple of months of the COVD-19 crisis.

The above-mentioned stats have been cross-verified with the data provided by major UK online casino operator TheOnlineCasino.co.uk, who have verified the same with some of their analytics data. We took an input from Aayush who is chief editor at TeenPatti.co.in an India based gambling information site and they confirm the same in the boom in Indian market in the COVID times.

 

The impact of COVID-19 on Esports

While video games and online casino gaming have experienced tremendous growth during the COVID-19 pandemic, the gaming industry is not completely immune to the virus. Esports, which take the form of multiplayer game competitions, has been one of the first parts of the gaming industry to be affected. Most esports events around the world have either been cancelled or postponed, though some are taking place without audiences. As most of the esports revenue comes from advertising and broadcasting, the esports side of the gaming industry has certainly experienced a downfall.

Despite this, esports may be growing in prominence as a result of the coronavirus crisis. This is because sports leagues across the globe have turned to the sector to find new ways of engaging with fans. Also, several esports competitions are now being shown on live TV, as broadcasters look to fill hours of scheduled sports content that were cancelled. So, even though esports revenue may have declined, the value of the sector has risen due to the low-cost marketing it has benefited from during the COVID-19 pandemic.

 

Long-term transformation 

There are several takeaways from the recent surge in gaming that indicate the future transformations in the thriving industry. Let’s explore them in detail one by one. 

Increased spending on mobile games 

The greater interest in gaming may accelerate a shift towards the delivery of games via mobile. In fact, mobile gaming has already seen an increase in engagement and revenues as a result of the COVID-19 measures, and mobile games are estimated to generate a massive revenue of $77.2 billion in 2020, according to Newzoo. 

There are a few reasons as to why mobile will experience more growth than both PC and console gaming. First, mobile gaming has the lowest barriers to entry – over 44.85% of the world’s population owns a smartphone and most mobile titles are free to play. Next, the mobile development process is less complex and needs a smaller amount of investment as compared to the PC platform. Then there’s the convenience factor – unlike PC gaming, mobile players can easily play their favourite mobile games anywhere, anytime. 

PC and console are still on a track for healthy growth

Although mobile gaming is all set to experience tremendous growth in the coming years, PC and console gaming aren’t going anywhere. Driven by its 1.3 billion players, PC gaming will grow +4.4% year on year to $36.9 billion in 2020, according to Newzoo. Meanwhile, console gaming will grow +6.8% year on year to $45.2 billion, boasting over 729 million players. 

Engagement and revenues for console gaming are set to grow due to COVID-19 restrictions, but the pandemic is also having negative effects on it. As you might know, things like physical distribution and massive company collaboration are a major part of the console game development process, and they may result in game delays in the future. These delays will also have an impact on the games scheduled to accompany the launch of next-gen consoles. That being said, the early launch on next-gen consoles and their associated content is essential for continued growth in the console gaming segment. 

As for PC gaming, the growth can almost be fully attributed to the lockdown measures due to COVID-19. The reason for this is that unlike console gaming, new PC game releases rarely reach revenues that can significantly change the market’s outlook. Many of PC’s most popular titles have been in their place for at least three years, with some retaining their popularity for over 10 years. So, as it seems that the pandemic will not end anytime soon, PC gaming is likely to experience healthy growth, at least in the near future. 

Cloud gaming has the potential to transform the video games industry 

The video games industry is looking up to a future where the requirement for complex hardware will no longer be a necessity. Cloud gaming is here and it’s going to change the way we look at video games, as the technology will allow players to access any high-end gaming title with just a basic machine. All you need to have is a stable internet connection with a certain minimum bandwidth requirement.

The concept is catching up in developed nations like the UK, where high-speed internet connectivity is a norm. It’s estimated that the global cloud gaming market will reach a market size of $3.17 billion by 2024, with the casual gamer making up a major chunk of it. 

 

Conclusion

Given the situation where it may take a while for the pandemic to end, we can expect the video games industry to continue its upward growth trend. In short, the gaming community is looking at a post-pandemic gaming world with a steady flow of new titles and competitions.

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