With much of the world bottled up at home because of coronavirus, getting people to play video games is no problem. Getting them to spend money is another thing.
That’s the challenge facing the video-game industry right now. The good news is more people are getting into gaming — possibly for the first time — and others are playing more than ever before. Hours and hours more. Verizon Communications Inc. has said gaming jumped 75% on its network after people started going into lockdown.
By late March, between 57% and 71% of people surveyed in the U.S., France, Germany and the U.K. were playing more, according to Nielsen. They’re building tropical homes in Animal Crossing: New Horizons or blasting enemy troops in Call of Duty: Warzone. Fortnite has seen record levels of engagement in the past few weeks, according to developer Epic Games Inc.
What many gamers aren’t doing is opening their wallets. They’ve gravitated toward free-to-play games and often avoid in-app buying — say, the purchase of a new weapon or skin for their character. They also don’t engage as much with ads, a key way that companies generate revenue. And with the economy in disarray, that might not change soon.
“You may not see as large an increase in spending as the rise in play times may suggest,” said Lewis Ward, research director of gaming at IDC.
That’s the challenge facing the video-game industry right now. The good news is more people are getting into gaming — possibly for the first time — and others are playing more than ever before. Hours and hours more. Verizon Communications Inc. has said gaming jumped 75% on its network after people started going into lockdown.
By late March, between 57% and 71% of people surveyed in the U.S., France, Germany and the U.K. were playing more, according to Nielsen. They’re building tropical homes in Animal Crossing: New Horizons or blasting enemy troops in Call of Duty: Warzone. Fortnite has seen record levels of engagement in the past few weeks, according to developer Epic Games Inc.
What many gamers aren’t doing is opening their wallets. They’ve gravitated toward free-to-play games and often avoid in-app buying — say, the purchase of a new weapon or skin for their character. They also don’t engage as much with ads, a key way that companies generate revenue. And with the economy in disarray, that might not change soon.
“You may not see as large an increase in spending as the rise in play times may suggest,” said Lewis Ward, research director of gaming at IDC.
Compared with people who were gaming more, Nielsen found that only about half as many were increasing their spending on the pastime.
A similar picture is emerging for ads. When gaming use surged 60% in China, only 15% more people engaged with advertising, according to IronSource, which helps game developers serve up commercials. In the U.S., ad engagement also grew less than half as quickly as game play.
These new casual gamers are looking for cheap pursuits. On Google, searches for free games in March jumped to their highest level in four years. Searches for paid games remained flat.
Of the 10 most downloaded mobile games for the week of March 29, nine were free to play, according to tracker App Annie. That week, people worldwide downloaded more than 1.2 billion games — about 50% more than during an average week.
Even if game companies can coax their new customers into spending more, many users may not hang around after the crisis is over and millions of people go back to work.
For now, though, games are in the spotlight — and there may be an opportunity to turn some of these casual players into more loyal customers.
Call of Duty: Warzone, a free-to-play title from Activision Blizzard Inc., was able to attract more than 30 million players in the first 10 days after its release in March.
Other popular titles during the pandemic include Roblox and Microsoft Corp.’s Minecraft. They let stuck-at-home kids not only play but stay in touch with their friends, said Carter Rogers, principal analyst at research firm SuperData, part of Nielsen.
Fortnite’s record-setting use in recent weeks may be especially impressive, given how popular the game has been over the past few years.
“We’re humbled that players continue to find Fortnite to be a safe, fun, and ever-changing space to connect despite being physically apart during this time,” Epic Games said in a statement.
All that activity is generating an upswing in revenue to the industry, just not as big a gain as the booming use might suggest.
A similar picture is emerging for ads. When gaming use surged 60% in China, only 15% more people engaged with advertising, according to IronSource, which helps game developers serve up commercials. In the U.S., ad engagement also grew less than half as quickly as game play.
These new casual gamers are looking for cheap pursuits. On Google, searches for free games in March jumped to their highest level in four years. Searches for paid games remained flat.
Of the 10 most downloaded mobile games for the week of March 29, nine were free to play, according to tracker App Annie. That week, people worldwide downloaded more than 1.2 billion games — about 50% more than during an average week.
Even if game companies can coax their new customers into spending more, many users may not hang around after the crisis is over and millions of people go back to work.
For now, though, games are in the spotlight — and there may be an opportunity to turn some of these casual players into more loyal customers.
Call of Duty: Warzone, a free-to-play title from Activision Blizzard Inc., was able to attract more than 30 million players in the first 10 days after its release in March.
Other popular titles during the pandemic include Roblox and Microsoft Corp.’s Minecraft. They let stuck-at-home kids not only play but stay in touch with their friends, said Carter Rogers, principal analyst at research firm SuperData, part of Nielsen.
Fortnite’s record-setting use in recent weeks may be especially impressive, given how popular the game has been over the past few years.
“We’re humbled that players continue to find Fortnite to be a safe, fun, and ever-changing space to connect despite being physically apart during this time,” Epic Games said in a statement.
All that activity is generating an upswing in revenue to the industry, just not as big a gain as the booming use might suggest.
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| © Bloomberg Inside The 2017 E3 Electronic Entertainment Expo |
The week of March 15, people spent three-quarters of what they shelled out on games during the run-up to Christmas, according to SuperData. The biggest game publishers could see a 10% to 20% increase in revenue over the stay-at-home period, according to Bloomberg Intelligence.
“Warzone being a new release will benefit disproportionately, but we’ve seen other titles — like Roblox, Playrix’s mobile games and Riot’s new Valorant, which is only in beta — see strong interest,” said Matthew Kanterman, an analyst at Bloomberg Intelligence.
The coronavirus outbreak has also made some video-game hardware, such as Nintendo Switch, tougher to find — at least partly because of supply disruptions. Physical copies of some games, such as Resident Evil 3, also are in short supply.
Cheating has been another issue, made worse by the free-to-play model. Activision recently removed 50,000 accounts from Warzone for not playing by the rules — for example, using so-called aimbots to take out enemies — but many of these users simply created new free accounts and kept right on firing away.
Ultimately, the biggest threat to gaming is a long economic slump. Essential goods and services — food, shelter, utilities — are going to take precedence over virtual loot.
That would make it hard for the industry to sustain any sales gain.
“We are definitely in a period of higher spending, and we could see it continuing for the next two to three months,” Rogers said. “As people have less income, they might cut back on things like entertainment.”
“Warzone being a new release will benefit disproportionately, but we’ve seen other titles — like Roblox, Playrix’s mobile games and Riot’s new Valorant, which is only in beta — see strong interest,” said Matthew Kanterman, an analyst at Bloomberg Intelligence.
The coronavirus outbreak has also made some video-game hardware, such as Nintendo Switch, tougher to find — at least partly because of supply disruptions. Physical copies of some games, such as Resident Evil 3, also are in short supply.
Cheating has been another issue, made worse by the free-to-play model. Activision recently removed 50,000 accounts from Warzone for not playing by the rules — for example, using so-called aimbots to take out enemies — but many of these users simply created new free accounts and kept right on firing away.
Ultimately, the biggest threat to gaming is a long economic slump. Essential goods and services — food, shelter, utilities — are going to take precedence over virtual loot.
That would make it hard for the industry to sustain any sales gain.
“We are definitely in a period of higher spending, and we could see it continuing for the next two to three months,” Rogers said. “As people have less income, they might cut back on things like entertainment.”
See more at: Bloomberg
