With a predicted compound annual growth rate of 12 percent over the next five years, the global gaming sector is one of the few industries that has plenty to smile about. This is in stark contrast to so many sectors that are battening down the hatches and looking to minimize losses, especially following the unprecedented events of 2020 so far. Here, we take a look at the key factors that are driving this growth, and at how they vary in different parts of the English-speaking world.
Key Factors
1) Changing habits
Even before the world went into lockdown, perceptions of gaming and gamers were changing. With the first generation of gamers now in their 40s or 50s, the pastime has acceptability that transcends the generations and is being viewed on a par with watching TV or listening to music as a way for families to spend leisure time together.
Of course, the enforced changes in habits that hit the world in the first half of 2020 also played their role. Home entertainment became the only available option with cinemas, casinos, and other leisure facilities closing their doors.
2) Mobile tech
Smartphone gaming has gone through the roof over the past two years, to the extent that it now exceeds PC and console gaming put together. It is estimated that around 2.4 billion people play mobile games. That’s almost one in every three people on the planet.
As well as driving growth, this trend is leading developers to rethink how they package and market their games. Console gaming is still seen as the pinnacle, and when the PS5 comes out later this year, it will be accompanied by some long-awaited game releases. But increasingly, developers are getting wise to the fact that unless they also provide mobile versions, they will fail to reach an increasing number of potential customers. For example, last year, Call of Duty made the transition to mobile and was one of the most highly anticipated releases of the year.
As 5G connectivity and unlimited data packages become the norm, mobile domination will only increase.
3) Esport
eSport is another area of gaming that has seen what was already steady growth accelerate significantly over the first half of 2020. The suspension of traditional sporting activity provided an opportunity for people to experience how tournaments could be transferred into the virtual world. Sports professionals turned to cyberspace, with charity FIFA tournaments and a virtual Formula 1 series being notable examples in which some of the world’s top stars participated.
This has had a knock-on effect in promoting a greater interest in what might be seen as more “traditional” eSports such as League of Legends and Dota 2. Any suggestion that this was temporary hype that would diminish when the world returned to normal seems to be unfounded. In fact, first-time downloads of Twitch have continued to rise significantly in the weeks following lockdown.
4) Cloud Gaming
The cloud has revolutionized almost every area of technology, but its impact on gaming is only beginning to be understood. Cloud gaming provides almost limitless possibilities for gamers, as all games are stored on a central server. This is also where all the processing, rendering and streaming takes place. Suddenly, the hardware at the user end becomes less relevant and a whole world of games is accessible to all.
Companies like G-Cluster, Onlive, Gaikai, and StreamMyGame have been early movers in the provision of cloud gaming services. Clearly, this represents a new and significant area of competition for the established market. It is interesting to note that major names like Ubisoft, Sega, and even Warner Bros are hurrying to establish partnerships and distribution deals with these new arrivals.
Geographical trends
1) Australia
Australians have a reputation for enjoying the action. It’s no surprise, then, that even when sitting in front of a screen, they tend to favor the interactive nature of gaming over sitting on the sidelines watching a movie or TV show. It also goes some way to explaining why gaming on the go is such a popular trend here.
AdColony surveyed 1,000 Australians back in March, just as lockdown measures came into effect, and found that more than 57 percent of respondents regularly play mobile games. This was up from 43 percent the previous year. The pandemic clearly played a role here, with 40 percent of active mobile gamers saying they had only taken up the pastime in recent weeks.
2) New Zealand
The New Zealand Games Developers Association (NZGDA) published its annual report in February, showing an incredible rate of growth. The nation’s game industry revenue has doubled in the space of just two years to almost $200 million, despite employing less than 700 full-time staff.
The nation has embraced eSport in a big way. The New Zealand eSports Federation (NZESF) was established way back in 2016 and has mature relationships in place with key sponsors, which has boosted its profile and visibility.
New Zealanders also have a fondness for a wager. Online gambling is one of the country’s most popular pastimes and the numbers are increasing year-on-year. Lately, new market entrants like CasinoBlox New Zealand and many others started listing dozens of well-known offshore sites that welcome players from New Zealand and give them the opportunity to play for real money. This has led the New Zealand government to launch a consultation on whether it is time to open the domestic market up to iGaming businesses.
3) USA
The US remains the largest contributor to global gaming revenue in the English speaking world and is second only to China globally. A survey carried out in March of this year revealed that American gamers spent almost 50 percent more time playing games than the previous week, so the spike due to lockdown restrictions was particularly pronounced here.
However, gaming revenue had been steadily growing in the US long before the extraordinary events in March. For the past four years, the nation has seen year-on-year growth around the 12 percent mark, driven largely by the increased availability of low-cost mobile games and also by the trend towards DLC for much-loved console classics like Grand Theft Auto.
4) Canada
Canada is a hotbed of growth in the gaming sector. Like New Zealand, this has been driven in a large part by the casino sector. Unlike New Zealand, however, Canada has already taken steps to keep iGaming revenue within the country as much as possible, by easing restrictions and facilitating swift and straightforward money transfers.
Canada’s approach serves as a lesson from which many other nations can learn, not just New Zealand. An industry report showed that an incredible 83 percent of video gaming companies and operators in the country are Canadian-owned. This allows the industry to contribute in excess of $15 billion to the domestic economy. On top of that, it plows just short of $9 billion every year into community projects and services.
It proves that gaming is not just a way to kill time. It can also contribute to a nation’s wealth and be a power for social good.
