Lights, camera, action! The only thing missing from Sony Pictures Studios in Culver City, Calif. on Wednesday, April 3 was the red carpet. C-level executives and amateurs alike flooded the lot to attend “IP Power Play: Emerging Trends in Gaming,” the second installment of LIMA’s Executive Insight Series.
Just past the Godzilla props and around the corner from the Ghostbusters Ecto-11, gaming industry insiders including Naz Amarchi-Cuevas from SYBO, David Kim from Sony Entertainment, and our very own Kalle Törmä discussed their experiences in the gaming industry with an eye on the future and advice for those looking to plug into one of the U.S.’s fastest growing industries.
The panel opened with a gasp as the audience was presented with the staggering figures around the gaming industry. Did you know that video game sales reached $43.4 billion in 2018? Also shocking, the industry saw an 18 percent increase in sales year over year. That number includes the $7.5 billion earned from hardware (a 15 percent increase year over year) and the $35.8 billion gained from software (an 18 percent increase year over year.)
Second question, can you guess how many U.S. households own a gaming device? Give up? The answer is 97 percent, with 90 percent of owners playing a game in any format.
The video game industry, like a blockbuster film, is hot, star-studded, and has everyone talking. The U.S. video game industry is one of the nation’s fastest growing economic sectors, with education and employment in the industry becoming increasingly available.
The industry supports more than 220,000 jobs across all 50 states, and over 500 colleges and universities in 46 states offer programs or degrees related to video gaming. To summarize, this is the climax and you’d better pay attention.
Two out of three people in the United States play video games with a 50/50 split between men and women. The average gamer is 32 years old, and the audience as a whole is fragmented, meaning that video gaming is one of a handful of pastimes that appeal to all demographics.
For those who’ve seen one too many teen comedies, the panel pointed out that the average gamer is no longer a teenage social outcast living in a basement. Because of softened social divisions and the wide variety of games on the market, everyone from Snoop Dogg to Jodie Foster (according to Business Insider) are plugged in.
The presenters identified six types of video game players*:
- Super Gamers (13 percent) - The super involved, super engaged fans who represent the broadest and deepest gamers in the market
- Console Warriors (14 percent) - Console-centric gamers who keep up with the latest gaming trends and enjoy action-packed multiplayer experiences
- Transitionals (11 percent) - Invested adult gamers whose stage of life means shifting from HD-centric gaming to more flexible mobile gaming
- Easy Accessors (17 percent) - Younger gamers whose choice of platform is constrained by access, leading them to play primarily on mobile
- Daily Dabblers (19 percent) - Older gamers who regularly set aside time to play familiar casual games on PC or mobile
- Incidental Players(26 percent) - right bNon-”gamers” who play mobile games because they are convenient and provide another way to use their device.
*Numbers based on U.S. marketplace
The panel, whose combined experience spans several decades, recalled a time insiders believed that that mobile gaming would surpass console gaming. According to the 2018 NPD Gamer Segmentation Report, 211.2 million gamers play on mobile, and 59 percent are multiplatform, with 90 percent of Americans playing on their phones, tablets or both; 52 percent on computers and; 43 percent on consoles.
Because of the overlap, companies like Nintendo have expand their efforts to mobile, while mobile-first companies like Rovio (the makers of “Angry Birds”) have expanded into consoles. The new goal is to have all gaming groups present across all platforms. As companies like Apple present new visions of streaming based video game play, the omni-platform approach may become standard.
The panel was also excited to discuss video gaming’s emerging “drop” culture. Best exhibited by pop music stars and sneaker brands, video game companies have begun launching titles without notice. The tactic often stirs up social media frenzies and is seen as more exciting to consumers than a the traditional method of announcing plans for a new game, waitlisting users and slowly rolling product out.
By now, the phrase “content is king” is probably stuck in your brain like a theme song. The idea loomed large at the event where the panel focused on the importance of brand building, fandoms and engagement. SYBO’s “Subway Surfers,” one of the most downloaded mobile games in the world offered a prime example of thoughtful branding.
The mobile game, which centers on a group of skateboarding friends, incorporates elements of skateboard culture in its visuals, while its parent company SYBO has participated in streetwear and footwear collaborations and launched an animated series to bring the game’s characters to life. Its success in world-building has positively affected its profits.
“At Flowhaven, we are seeing an increase in the use of licensing business data on day-to-day basis. Users are using this data to manage their licensing programs and to provide data-sets for cross-analytical purposes including comparing marketing activations that affect consumer goods sales,” says Kalle Törmä, CEO, Flowhaven.
The panel also touched on the exciting developments taking place in esports. Platforms like Twitch have courted a generation of players interested in competing against one another and the establishment of professional gaming leagues has built up a following that rivals traditional spectator sports like basketball and football.
Activision Blizzard and Epic Games, to name a few, have successfully created leagues around their marquee games and esports stadiums have begun to pop up around the world. The competitive gaming field has created new licensing revenue streams in the form of esports team merchandise, in-app promotions, live events and more.
Just this year, Blizzard Entertainment’s Overwatch League struck a deal with fan gear retailer Fanatics in a landmark deal that saw the e-commerce platform begin to sell branded merchandise.
While the once underdog gaming industry has found its happy ending, the panel did not shy away from the challenges facing the industry. Much like the struggle taking place in the music industry, the non-paid gaming audience has been hard to convert to paid consumers, since they have grown accustomed to playing and consuming free content on a variety of platforms.
Also challenging, the video game industry is a bit unpredictable. That idea reads like a fun Wild West story to some, but for others, the lack of data and unquantifiable factors make it hard to determine which games will do well at market and which will fail.
The major takeaway? Gaming is a rapidly evolving industry that offers several lucrative opportunities to licensees and licensors. From branded merchandise to collaborations, the industry, which is made up of diverse and young consumers, presents unique opportunities to parties both interested in reviving old products and venturing into something new.
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