Future of Gaming: How Industry Changes Amid Pandemic

#Article
#AR / VR
#Software Development
#Gaming & Entertainment
May 20, 2020 11 min read

Classified as a pandemic by WHO, the COVID-19 outbreak is currently affecting almost every aspect of life. One of the measures taken to fight off this global crisis is the practice of social distancing, considered as a critical strategy to keep the virus under control. In the course of a few weeks, our daily routines across the globe have drastically changed.

Nevertheless, there are some business sectors that carry on to thrive. The earnings of a $120 billion gaming industry were officially set in motion. Globally, the industry is expected to reach a CAGR of 12% during the forecasted period 2020-2025. It’s drawing in more and more competitors, from Amazon to Facebook, Bytedance to Google.

For instance, Apple is going to list the most influencing vendors of XR games by having spent around $100 million on NextVR. This is a VR streaming startup specializing in creating virtual experiences for live events that has earlier partnered with the NBA, NHL.

As the games business faces perhaps its most unusual year so far, we’ve picked a few insights to shed some light on the future of gaming.

Potential Impact on the Gaming Industry

In comparison to many other economic sectors that are drastically affected by the pandemic, the video game industry appears more resilient. Most video game developers, publishers, and operators have been able to stay afloat with employees working from home to support game development and digital releases.

gaming industry revenue

Who Are the Modern Gamers?

Moreover, with many people worldwide staying at home and unable to work, online gaming has seen the most significant numbers of players during the quarantine. For example, Valve’s Steam platform had a record of 20 million users playing at the same time on March 15, as the virus began to spread more in the US.

gaming demographics

You can see in the picture above, that today, over 4 in 10 internet users are gamers, described as those who have an interest in gaming and who play games on any device. Among them, 63% are male compared to 37% of females. Males dominate as the more common gamers, doing so on almost all devices.

The Rise of E-Sports

There have still been negative consequences like cancellation or delay of the significant trade events. Thus, the inability to hold E3 2020 physically may have impacted relationships between the smaller developers and publishers. This is a big concern for indie developers who use these events for face-to-face meetings with potential partners to get investment and publishing support and possibly caused them to delay or cancel projects.

The Global Gaming Industry Report shows that providers of e-sports and fantasy sites still have their plans in place for the future of gaming. They have secured more funding, which promotes market growth. Roughly one-third of the e-sports fans in the United States (SPY) take part in online amateur tournaments. Because there is enormous potential in this sector, Activision (ATVI) and Electronic Arts (EA) are looking to increase market penetration. Asia and Europe remain a massive market for these companies.

esports revenue

The Newzoo research reveals some data about how e-sports is going to be affected amid the pandemic in 2020. Here are the key insights of the study: 

  • As the global quarantine has led to higher viewership, the new entrants are expected to appear in the market. Thus, team streaming revenues are to increase from $18.2 million to $19.9 million in 2020 and $31.6 million to $34.4 million in 2023.
  • A constant flow of new contenders, titles, and publishers provoked more demand, increasing publisher fees – even in the high-end markets such as North America, Europe, South Korea, and China.
  • As a result, global publisher fees increased to $120.2 million in 2020.

E-sports is undoubtedly one of the most attractive businesses for publishers, and that its growth is believed to be sustainable for the coming years in both developed and developing markets.

VR is the Future of Gaming

Technology is a key growth driver in the gaming industry. Facial and sound recognition, gesture control, virtual reality (VR) have entirely transformed video games and have inspired many people to play such games.

VR gaming growing

With the use of VR, players can enjoy a near-to-reality experience as they are physically active and involved in the game. Currently, several active competitive leagues use VR. Hence, developers are now focusing on AR/VR technology to differentiate games in the market.

By 2020, players are going to spend USD 4.5 billion on immersive gaming. It is 20 times more exciting and convenient than traditional games. Companies like BigScreen VR and AltspaceVR are two of the industry leaders today, accelerating a virtual future perhaps faster than many expect. 

One of the industry giants, NetEnt, has created NetEnt Live Beyond Live, their newest VR Live Casino, which is to roll out over 2020. This is the first VR Live Casino and players can’t wait to see what the company has got up its sleeves.

vr gamers age

VR Benefits for Consumers:

  • Immersive experience. It is VR games, which not only allow to observe the game but to get inside of it. 360-video content and solid graphics give a feeling of physical presence.
  • A new level of interaction. The release of controllers made the interaction within VR surroundings even more enjoyable. Now players can control and alter the game environment at their own will. 
  • Content. VR technology is maturing and promotes creating new gaming content. Genres like adventures, shooters or simulations, became famous thanks to VR. The familiar role of a protagonist is gaining value.

VR Benefits for Business:

  • New experiences to attract customers. Since VR devices are still quite costly, some companies open VR clubs at malls to allow people to try out virtual reality games. As the end-result, it potentially drives more sales.
  • Loyal consumers. As soon as an individual made the first try of VR game, the chances are high for him/her to become your long-term customer. Feeling of presence and new sensations of VR surely intensify gaming experiences.
  • A new marketing tool. Many video games have been interpreted into big cinema screens (Tomb Raider, Mortal Kombat, and others). The Disney and Pixar examples show the reverse interaction. They created a simple VR game to promote the new cartoon, Coco. Probably, we’ll see more of such new marketing ads.

Blockchain and 5G Offer New Opportunities

Not only VR and AR can be considered as the future of gaming. The impact of blockchain technology on games also provides a great perspective on the growth of the industry. Blockchain offers useful tools for players, including decentralized asset exchanges, verifiable scarcity of virtual objects and collectibles, fast and secure payments, and the ability for developers to monetize their games.

Finally, 5G is ready and offers 10x the speed compared to 4G. 5G is going to significantly streamline online gaming, especially when it comes to high loaded live casino streams and playing on the go as lagging and buffering streams can become a problem of the past. Thus far, China, the UK, and the USA are to roll out 5G in 2020, bringing better online casinos and 4K streaming accessible to all.

Growing Internet Engagement Drives the Demand

According to GlobalWebIndex’s data, more than 1 billion people (a quarter of all internet users) watch live streams of other people playing games monthly. The number of internet users in developing markets has grown dramatically in the last years due to the global spreading of Chinese smartphone manufacturers suggesting cheap smartphones and local government investment in mobile internet infrastructure.

Better Bonuses for Players in Online Casinos

In 2019, the UKGC (UK Gambling Commission) seriously took up casino bonuses, their advertising and related conditions. In short, the commission announced new rules for online gambling in Britain to make things fairer, safer, and more profitable for the player.

While some older websites have generally been unwilling to react to this, newer online casinos, and especially bingo sites in the last quarter of 2019, started offering casino bonuses with much lowered or no wagering requirements. Mainly, this has been achieved by offering free tickets or free spins instead of cash bonuses and players are free to make withdrawals as they want.

For 2020, players can expect better casino bonuses that work for them, are easier to understand and can be withdrawn at any point.

Indie Studios are Breaking Through with Innovative Casino Games

Indie studios (independent game development company) have always done their best to get more clients, while the iGaming landscape has been long occupied by a handful of highly successful and mature companies. 

As smaller studios often create bespoke casino titles as well as innovative games, all this can change in 2020. The bigger game publishers started to take the best small studios under their platforms, meaning we can expect to play games from more indie studios.

Industry leaders like Microgaming, Scientific Games, and even NetEnt have started to acquire, partner, or license the game tech and concepts from smaller companies, aggregating their titles under one platform and letting millions of players have access to them. This is amazing for players, who otherwise wouldn’t have the likes of Big Time Gaming’s Megaways (partner of Scientific Games, Megaways is a licensed concept), or Red Tiger’s Daily Jackpots (acquired by NetEnt is 2019 as their first subsidiary studio). But this has also led to players feeling a lack of quality control was in place.

Conclusion

To summarize our predictions for the future of gaming sector, we have identified key trends to expect this year:

  • E-sports is one of the most attractive businesses for publishers. Its growth is believed to be sustainable for the coming years in both developed and developing markets.
  • VR becomes more accessible, attracts new customers, and can be a new marketing tool.
  • Blockchain and 5G offer new opportunities with faster internet, secure payments, ability to monetize games properly, and more.
  • New regulations restrict online gambling setting rules that are more beneficial for players, at least in Britain. 

With the virus influencing many aspects of everyone’s day-to-day lives, it’s also set to influence most business sectors. At Innovecs, we count ourselves lucky. We can keep on working safely from home, so we’re continuing to deliver robust products to our customers and their end-users.

 

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