Recovery Economics Games Sees Temporary Bounce but Should Prepare For Decline
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The 20,000 Foot View: The effects of the coronavirus-induced crisis unfolded in multiple stages, each with its own characteristics. During the early outbreak and strict lockdowns, games engagement benefited greatly. The cessation of out-of-home entertainment gave games a boost with less competition. As lockdowns ease, the recession will kick in and consumers will start to feel the full effects of diminishing disposable income. Games companies will be negatively affected, unless they are adequately prepared. Any temporary short-term surplus should be harnessed to pave the way for what lies ahead. One of the key opportunities for games is the emergence of digitally-delivered live entertainment.
Key Insights
- Lockdowns were imposed before consumers felt a financial hit (i.e. the recession)
- Curbed out-of-home entertainment enabled consumers to reallocate spend and engagement, resulting in a temporary boost for games of consumers in the US said they spent more time playing online games in March 2020 during lockdown
- The 2020 recession will push down disposable income and overall entertainment spend
- As lockdowns are lifted, out-of-home entertainment will again compete for spend with digital propositions including gaming
- Games streaming subscriptions will pick up, as they will be viewed as ‘saving money’ among gamers
- Majority of the current engagement boom is driven by existing users – super-serving them will be a priority for building future loyalty
- Games companies have a unique opportunity to provide a lifeline to the struggling live entertainment industries, in the form of digital ‘live entertainment venues’
Companies and brands mentioned in this report: Amazon, Fortnite, Travis Scott, PS Now, Xbox Game Pass, Google Stadia, Project Tempo, Netflix