Blog COVID-19

Why Games Could Benefit from Coronavirus

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Photo of Karol Severin
by Karol Severin

Yes, it’s another coronavirus-related one, but this time hopefully a more cheerful story than what we’ve been reading and hearing over the last few weeks – at least for gamers and the games industry.

We know that the effect of self-isolating will lead to increased engagement rates with digital entertainment and media services in the immediate short term, but the key concern remains around the wider economic situation and potentially a not-so-short recession once coronavirus is gone.

Games, however, could be optimally positioned to come out stronger than ever before compared to video, music, and other formats. Here is why:

From the consumer side:

  • Gaming can engage for super-long sessions to help pass time: 52% of console gamers, 44% of PC gamers and 38% of mobile gamers play for six-plus hours every week, compared to just 24% of the consumer average. Particularly PC and console gaming can provide longer sessions than traditional long-form video  to pass the time, which will be increasingly sought-after in times of self-isolation.
  • Gaming can tap into the underserved need for socialising: Similarly, due to the self-isolation, the need to socialise digitally will increase. Gaming sessions are well positioned to become socialising destinations for a part of the population. Not all digital socialising takes place on social media, and games have an opportunity to pick more of this up.
  • Demand for digital entertainment events will pick up: As social gatherings are unadvised or prohibited around the world, many conferences, concerts and other live events are moving online. Games worlds are perfectly positioned to become the newly-forming ‘live online worlds.’ Their knowledge of digital socialising from years of multiplayer games helps. Marshmello and Star Wars in Fortnite were just the start. As tech majors, media majors and telcos start bundling entertainment propositions, pure-play companies like Spotify or Netflix are going to be increasingly forced to form cross-entertainment partnerships to keep a seat at the negotiating table. Games have the infrastructure to host all other forms of entertainment and become a prominent facilitator of cross-entertainment partnerships during this new era.

From the supply side:

  • Production doesn’t have to be ‘on hold’ for games: TV companies and subscription video on demand (SVOD) services have put lots of productions on hold, and music concerts and festivals are being cancelled, but games might not be as affected because the lion’s share of development can be done remotely with the right hardware adjustments. TV might need more than 10 people physically gathering to make it work; games do not necessarily.
  • New market entrants mean higher demand for content in the short term: Amid all this, we are in the middle of a barrage of market entrants in both gaming and video. All of these services are going to need exclusive content. If video productions are on hold, there may be all the more space for games developers to fill. On the one side there will be increased demand for exclusive games content; and on the other, games studios may be hired to create human-less TV productions as TV companies might need to prioritise content that doesn’t need human interaction to be produced.
  • Distribution is easier than ever before: Due to online distribution, self-isolation does not pose a problem for games distribution like it would have 20 years ago. The only part to be heavily impacted is of course the long-struggling high street (coronavirus is likely the last nail in retail’s coffin, but that’s a different blogpost entirely).
  • PC and console might catch up with mobile: With social isolation, mobile gaming loses a significant engagement contributor – the commute. At home, there is always the imminent threat of a PC or console, both of which could gain engagement market share under the newly emerging social dynamics. The mobile gaming opportunity will be in casual gaming and close to social media and messaging platforms, which is where consumers will be spending a significant amount of time during any crisis to stay in touch.
  • The era of out-bundling competition: With film and TV production largely on hold, the differentiation race stops. Further differentiation can thus be created by more aggressive bundles, which are going to be doubly attractive as consumers are forced to make tighter financial considerations due to the recession. Tech majors such as Apple, Google and Amazon (as and when it brings a gaming proposition to market) will be well positioned to gain consumers’ ‘entertainment life market share, particularly against pure-play companies.

The tumbling markets will also open up opportunities in the acquisition space. At the time of writing, EA is priced at $27.8 billion, Nintendo at $39.5 billion, Activision at $42.3 billion, Sony at $67.9 billion, Spotify at $21.5 billion, and Snap at $12.6 billion. Both Apple and Google as well as potentially Amazon could technically afford to buy any of these companies as they unify entertainment into a part of their life-companion ecosystems. Game on.

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