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Pegged at 159 billion, Covid catalyses the growth of gaming industry

Pegged at 159 billion, Covid catalyses the growth of gaming industry

Published on May 22, 2020

The free time available to people and their need for social interaction due to lockdowns and physical isolation protocols have ended up acting as an enabler for the gaming industry worldwide. The pandemic has driven up the revenue for many gaming companies and platforms.

The constrains in social interaction and people’s need for an undisturbed engaging distraction have powered the gaming industry to thrive, despite the economic disruption caused by the outbreak of the Novel Coronavirus . The global video game market is expected to reach $159 billion in 2020 (Weforum).  

Global video game market is expected to reach $159 billion in 2020

While frontier technologies like data analytics, AI, and machine learning are aiding nation in combating the deadly contagion, here’s a brief overview of how the gaming industry has benefitted during the COVID-19 crisis. 

Covid-19 & the exponential growth of online gaming 

Although the impact of COVID-19 across industries has been adverse and many are scrambling to overcome the consequences of the pandemic, the gaming industry has been fortunate in witnessing the positive impact of the pandemic. Market research during the course of the pandemic reveal people belonging to almost all generations, particularly the Millennials and the GenZs have spent nearly $120 billion on video games, which is 3X the amount spent 15 years ago (The Economist). 

The gaming industry has seen positive stock returns owing to the upsurge in demands. As of April 17, 2020, stocks of the top listed gaming studio in the US like EA Sports, Zynga, Activision Bizzard, etc, gained 7.8% while S&P500 fell by more than 15% in the past two months (Capital IQ). 

Covid-19 & the exponential growth of online gaming 

Source: CapitalIQ

According to research conducted by CNBC and Verizon, the internet traffic in the US has been incremental as of March 19, 2020. The unprecedented surge has been so profuse that the online services of Nintendo, Sony, and Xbox crashed.  

Games do not have a limited run time, unlike movies and streaming shows. This key aspect of games has made the gaming industry see an upswing during the pandemic situation. 

Covid-19 & the exponential growth of online gaming 

Source: Statista

Furthermore, the pandemic has accelerated the per-user spending on games. PUBG is a perfect example for the same. The online multiplayer battle game raked in $232 million which is a three-fold year-on-year increase and witnessed a surge of 21% in March 2020 compared to February 2020. 

On the flip side, the gaming industry is also facing certain challenges  owing to the unparalleled changes and sudden spike in consumer volume. Complications are rising in hardware and software development  due to prolonged lockdowns, posing new challenges to the gaming industry. As factories across the globe are facing supply chain interruptions, game developers are struggling to maintain efficiency and provide regular updates and patches to the games. Nintendo has stated that prolonged teleworking situations are likely to impact its processes. Even Sony, Amazon, and Square Enix are facing similar challenges (The New York Times). 

Will the impact continue in the long-term? 

Looking at the developments in the space, it can be postulated that the momentum created during the COVID-19 crisis can accelerate a shift towards the delivery of games through mobile and cloud-based platforms.  

Some video and mobile games have grown so popular in the course of the COVID-19 pandemic that they have turned into a cultural  phenomenon. Hence, it is most likely that we might see the gaming industry partner with other entertainment segments  aggressively in the future. The most recent and befitting example is Fortnite – the online game hosted a live rap concert that enticed almost 30 million live viewers (Weforum). Other popular games like Roblox, Grand Theft Auto, etc, have used similar strategies in the past.  

Therefore, media companies may most probably refocus on the gaming industry and collaborate with the top-notches in the upcoming years to take advantage of the momentum that the online gaming space has garnered during has garnered during the Coronavirus crisis. In fact, entertainment industry giants like Sony have started building an immersive media team to work on projects around the intersection of music and gaming.