The gaming industry, particularly video game, arguably sits atop the most exciting industries in tech because of its significance to culture, entertainment, and technological advancement. From console (may it be home or handheld) to PC to mobile gaming companies, all are scrambling to use the latest in tech to to bring their games in front of the eyes of the billion people in the world. [For purposes of this article, $150bn offline-and-online casino market and $2.5bn tabletop games are out-of-scope.]
A video game is an electronic game (digital good) that can be played (consumed) on a computing device (tech hardware). Its industry has taken advantage of the potential of digital technology to offer new and compelling forms of entertainment and despite being younger than the movies and music industry in the entertainment sector, it is now by far bigger than both of them combined.
IT’S ENTERTAINMENT-FIRST, fun check
The line between entertainment and tech for a video game company is blurry. Notwithstanding the nature of video game development and the digital transformation in the gaming industry, a game per se is an entertainment-first commodity.
Piers Harding-Rolls, former Head of Games Research at IHS Markit (now merged with S&P Global) said: “The gaming industry has benefited hugely from the mainstream adoption of games apps on smart devices, and the transition from physical distribution to digital distribution in established parts of the market such as console gaming. Games are now truly mass market and a very important part of the entertainment sector.”
He added: “Growth has been fueled by the dominance of free content and in-game monetization, which expands the adoption of games but also removes the cap on spending for those gamers that are really engaged in the experiences. The flexibility of interactive content means it is unique in that it can be monetized in this way, which is an advantage over other forms of entertainment.”
Along the entertainment value the industry provide is the amount of wealth big players amass by participating in and/or dominating the market. Tech giant Tencent, who has a stake in almost everything, is the King of video game companies with its ‘Honor of Kings’ (known as ‘Arena of Valor’ in the West) being the first mobile title to break $10bn in revenue worldwide. And with recent massive billion-dollar deals to acquire Activision Blizzard (by Microsoft), Bungie (by Sony) and Zynga (by GTA’s Take-Two Interactive), the video game industry is expected to undergo further consolidations to broaden their reach and unseat (or keep) whoever reigns the throne, and government agencies should up the ante so monopolization can be prevented.
IT’S A MOBILE WORLD, reach!
In data.ai and IDC’s latest partnered report, the mobile gaming is set to gross $136 billion in 2022 which represent a bit over 60% of the total $222 billion games market.
In 2014, mobile gaming was only around $30 billion annually and almost the same as console’s but slightly more than PC/Mac’s. Growing at $136 billion in eight years (4.5x) is nothing short of spectacular especially when you compare it to console and PC/Mac having grown only by around 0.25x at $42 billion and $40 billion respectively in 2022. It’s a phenomenon and the evident explanation? Reach. Mobile device is relatively affordable and so are mobile games. More importantly, you can play it anytime, anywhere.
Mobile games that defined 2021 are miHoYo’s Genshin Impact (Open World, RPG), Roblox (Creative Sandbox, Simulation), Uma Masume Pretty Derby by Cygames (Idol Training, Simulation) and Garena’s Free Fire (Battle Royale, Shooting) and 2022 new contenders remain to be seen.
AsiaPac, unsurprisingly, continues to see its numbers in an upward trajectory (Despite the video game restrictions, China to persist but ASEAN countries such Indonesia, Malaysia, Thailand, Vietnam, Singapore, and the Philippines are key markets). North America and Western Europe are responsible for half of total mobile gaming spend.
4X and open-world RPGs saw the biggest rise in consumer spend and market share driven by downloads and free-to-play (with microtransactions) model.
It’s a phenomenon and the evident explanation? Reach. Mobile device is relatively affordable and so are mobile games. More importantly, you can play it anytime, anywhere.
DEMOG REVIEW…GenZ next in the driver’s seat
Demographics now shifting, inclusivity growing. Female audiences doubled in the past two years (case in point: Ensemble Stars Music in Japan have 80% of female players whilst Roblox players are 30% more likely to be female in US) [IMPT NOTE: The analysis made was limited to males and females only and was not representative of all gender identities].
GenZ (represents aged 16–24 at the time of writing) is now seen as the most monetizable audience group (Roblox a clear favorite among GenZ in US and UK; Cookie Run Kingdom in South Korea; Uma Musume Pretty Derby in Japan; Brawl Stars in France; State of Survival in Germany). Growth in Older Gamers (Gen X and Baby Boomers), who tend to have more available disposable income and possibly more time if in retirement, on a steady increase (Candy Crush for Boomers is still a force to be reckoned with 10 years after its launch). Meanwhile, Millennials are either streaming in Twitch and other live streaming apps…or participating in eSports!
WHERE DO GAMERS FLOCK?
Gamescom is the biggest video game convention in terms of attendees (2019 pre-pandemic: 373k on-site, 218k sqm exhib space, 1.2k exhibitors). It’s in Germany, the fifth biggest market for video games. China Digital Entertainment Expo & Conference, or ChinaJoy, is a close second in terms of pulling gamers together (2019: 365k visitors).
London’s Informa Tech-owned Game Developers Conference (GDC), the world’s largest and longest-running event serving professionals dedicated to the art and science of making games based in San Francisco, USA, held its 2022 annual event last March 21–25 featuring over 1,000 speakers across over 600 lectures, workshops and roundtable discussions and networking events, physically reuniting the game development community. More than 200 exhibitors showcased their newest technologies, software and services on the GDC Expo Floor, including industry leaders such as AMD, ARM, Google, Nintendo, Unity and more. Amazon and Microsoft encouraged people to build games on their cloud servers highlighting the advantages of group cooperation on complicated projects.
CLOUD GAMING, an emergence
Cloud gaming is where you play video games using remote servers in data centers without the need to download / install games. It’s just like Netflix or any other streaming platform. The only difference is that the server where the video stream is coming from can also pick up and react to your inputs.
In ReportLinker’s Global Cloud Gaming Market 2022–2026 Report, that claims that cloud gaming market is poised to grow by $ 5.73 billion during 2022–2026 decelerating at a CAGR of 31.13% during the forecast period. And while still working out kinks like pricey networking infrastructure, latency issues for more fast-paced games (FPS most especially) and availability of servers, the market is driven by cost savings and quick onboarding, the advent of 5G, and inherent benefits for vendors like Google (although much can be said about Stadia), Amazon, Microsoft, Nintendo, Sony and Nvidia, among others.
Britanny of Fandom Gaming thought that after a week of using NVIDIA’s GeForce NOW RTX 3080 subscription she would be eager to return to her Xbox, but she didn’t. And perhaps, she’ll maximize that subscription while on the go through a mobile device…with a strong data connectivity (if not wi-fi during a stopover).
So..is the ‘cloud’ the next place gamers would flock in?
INTO THE METAVERSE
Neal Stephenson’s Snow Crash book (1992) tells the story of Hiro Protagonist, a katana-wielding hacker who jumps back and forth between dystopian Los Angeles and a virtual world called the ‘Metaverse’. Back then, it was quite a reach. Until Steven Spielberg’s Ready Player One film (2018), based on Ernest Cline’s novel with the same title, set in 2045 where much of humanity uses the OASIS (acronym for Ontologically Anthropocentric Sensory Immersive Simulation), a virtual reality simulation, to escape the real world. Then, it’s something.
And following his Founder’s Letter 2021, MarkZ highlighted that “Gaming is a big part of the metaverse” and that he’s looking forward to seeing games get more interactive and immersive. Meta recently launched Crayta on Facebook Gaming in Western Europe. He’s known to support cryptocurrencies and non-fungible token (NFT) projects within the community and has since started testing in Instagram.
Ethereum’s Vitalik claims that metaverse is not coherently defined. Unity’s CEO John Riccitiello believes it is mostly persistent.. it is the evolution of the internet, it is our future, it should be open, it should be cross-platform… is not only accessible via XR devices but using all kinds of devices (smartphones, consoles, PCs).
Not all metaverse visions are created equal, but outside cryptoverse, Roblox is one of the most successful players in the metaverse world already. Its Chief Business Officer, Craig Donato downplays it by saying we are still in the very early days of the metaverse, and it will be a while before we see things like interoperability between metaverses and full immersion.
The rising popularity of cryptocurrencies gave birth to play-to-earn model games where certain in-game assets are tokenized (i.e., NFT’d) and heavily marketed with game rewards focused on the allure of crypto tokens that can eventually be converted to fiat money or used to buy digital goods from participating merchants. Many believes that cryptocurrencies and NFTs will be fundamental to the metaverse — which is not only a game on its own but for which gaming is a heavy component of it.
Read Yana’s article on how play-to-earn model is spoiling the gaming experience here.
There was a series of sessions about Web3 and the metaverse at GDC 2022 — giving game devs the opportunity to explore the subjects while also shining a light on ongoing issues. Further, WeMade’s Jung Woo-june explained the concept and application of GameFi with Mir4 as an example. Jung explained that ‘GameFi’ is a concept that combined games and finance, and that it’s an economic system that’s designed to prevent the danger of fraud coins, loss of value due to a game shutting down, and to overcome the threshold of a limited domain. There are laws about monetizing game tokens already on the books in South Korea, Japan and China — and in some cases, they are nearly 20 years old — long before the rise of play-to-earn games. However, gamers can easily use virtual private networks (VPN) to access these games and bypass any sort of country-wide block so, yes, ethics, regulations and many other pertinent challenging points are on-going themes for this space just like any other novel technical stuff.
Blockchain Game Alliance exist to raise individual and businesses awareness about how blockchain can transform games and improve or disrupt existing business areas; and accelerate adoption by acting on existing barriers to innovation and by catalyzing efforts into creating actionable industry standards and best practices. How impactful this organization will be particularly with the top NFT game, Axie Infinity, and the entire cryptoverse now on a downward spiral, and specifically choosing how well they will play on matters of ethics and policy-making, only time will tell.
Read Ken’s article on personal finance considerations specifically on investing in NFTs here.
From console to PC to mobile games, industry players are scrambling to use the latest in tech to enhance user experience and bring their games in front of the eyes of the billion people in the world — i.e., provide entertainment value. Fun begets fun! See you in the Metaverse? *checks mobile for any signs of persistence*
At DRDC, we believe that technology and design should seamlessly coexist. Our first Project is a cross-platform 3D open world video game called Spirits of Aporia (SOA). We’re still in Alpha Stage with select members of the community participating in the DevBuild Tester Group. SOA features a world shared by humans and ANIMA — mysterious creatures with unique personalities, traits and appearances — which you will raise, feed, train on your ranch and then face off against other trainers in an online PVP battles as you climb to the top ranks of the Aporia Arena. Read the latest fun here!