How the Gaming industry has been catapulted by COVID-19?

What does one do when they are not allowed to venture out, stay under lock down, practice social distancing and at the same time have to keep themselves occupied with something? They will either stream shows to watch or play video games.

Gaming industry has become the best pass time for a significant percentage of population looking to distract themselves from the ongoing news of gloom and doom regarding coronavirus pandemic and global recession as its consequence. Even though there has been a significant deterioration in the economic prospects and disruption in the income of many households, Gaming industry is on a boom. With the new practice of avoiding social gathering and staying secluded with minimal physical interaction Gaming has emerged as the favourite business with sales and engagement going up significantly.

The business model of gaming revolves around increasing engagement and building a recurring revenue model around it. The more engaging the game, the more time people will spend playing or interacting with it, which might also be a good opportunity to introduce some kind of value-added services or in-game monetization to add to the experience of the user. This value-added additional offering can be new features, tools, characters or expansion opportunity etc. The industry has also benefited from the already existing streaming speed due to introduction of mobile broadband and hardware developments that are available. It has made good use of the pre-existing technology setup to zoom across the turf. Mobile gaming now accounts for almost half of total gaming revenue worldwide.

The global video game industry is expected to be worth $159 billion in 2020, which amounts to around four times movie industry revenue and three times music industry revenue. Asia-pacific accounts for almost half of the total market value and North American accounts for a quarter of it. 

The first quarter of 2020 saw a massive jump in sales. Nintendo sold almost half of its games digitally increasing profits by 41% while Tencent's online gaming revenue increase 31% year on year (YOY). Sales across fifty key markets rose by 63% according to the report by Gamesindustry.biz and Comcast's data shows new game downloads increased by a whopping 80%. Since most of the downloads are free it does not reflect in the sales data. Monetization comes later. The few constrains the industry faces right now is the shortage of hardware due to factory closures and supply chain disruptions throughput the world. Also, the efficiency has taken a beating since most of the developers are working remotely at home causing a delay in updates and customer service etc.

Going forward there would be a few changes in the operational side of business while consumer preferences keep shifting more towards mobile and cloud-based gaming. Cloud provides a great platform for gaming companies to offer subscription-based services to their customers who can access games right on their mobile and play. This would lead to less dependency on expensive hardware. Data suggests there is already a marked shift towards mobile gaming, while cloud bridges the gap. Cloud also helps in streaming the games across devices letting the customer choose and play on whatever device one seems fit while present in different surroundings.

The monetization scenario also seems shifting towards subscription-based models while entry barriers are reduced by free downloads and free-to-play models. Free-to-play concept would be the thing to watch out for, it has the capacity to revolutionize the industry by introducing potential customers who are otherwise not comfortable getting on to gaming platforms due to front loaded cost issues. This model sells in proxy by upselling and cross selling upgrades and expansion packs. Such buffet model encourages consumption.

Conclusion:

The gaming industry is the new star emerging out of the coronavirus pandemic. Much like the streaming services, it is a breakout industry due to the lifestyle changes introduced in people's lives by the pandemic and the consequential lockdown. Even before the pandemic, consumer preferences were shifting towards gaming specially the Gen Z generation but the pandemic has acted as a catalyst in high rate of introduction and an even higher consumption. Existing games are moving on to our handheld devices and front-loaded costs are being replaced by subscription and free-to-play based models relying on upselling add-ons. The demand for good conceptual games is increasing by the day that can engage customers and keep them interacting with it. The next level of games would introduce a new set of challenges on the front of internet broadband speeds and hardware compatibility which is sure to bring many ambitious enterprises together towards solving it.