COVID-19: A Boon or Bane for the Gaming Industry?
The popularity of the video gaming industry is soaring higher than ever. Especially when the world is gripped in fear of Covid-19, gaming platforms have sought to entertain the world population sitting at home as people deal with social isolation and limited commercial activity. Since social distancing and stay at home policies began early this year, the gaming industry has seen a tremendous spike, both in-game time and revenue, despite the widespread economic disruption caused by the novel coronavirus. Gaming is the ultimate entertainment and fun for people as they make their way through 2020 without social contact.
The global digital gaming market is predicted to be worth $159 billion in 2020, with Asia-Pacific as the highest revenue generating market as the region holds almost 50% of the games market by value. Earlier gaming revenues were directly influenced by customer demand and spending, but the business model has seen a significant change in recent years. In today’s world, gaming enthusiasts purchase fewer games than earlier times, but what saw a remarkable shift is the amount of time spent on those few games. With consumers spending a longer time on a few games, the industry left behind its single-unit business model. It shifted to the recurring revenue generated from a base of active users. As a result, the gaming industry is now laser-focused on increasing engagement per user.
Gaming in India during Covid-19
The outbreak of Covid-19 started to be felt in India in early 2020, especially following the lockdown that began in March. And this is when virtual games started seeing their best moments as the most natural impact of the lockdown is the hike in traffic on gaming apps and websites.
The number of gamers has spiked up, and enthusiasts are spending more time playing online games every day. At a time when venture investments are drying up, multiple gaming start-ups have attracted capital funds. Publicis Groupe India reported that gaming saw a 41% increase in time spent since the first lockdown in India. According to KPMG, gaming is valued at just under $1 billion, growing at 41% a year. By 2024 it is estimated to be worth $3.75 billion in India, with subscriptions, in-app purchases, advertising, and platform fees comprising the revenue streams. And as gamers and investors grow, the sector will create more jobs in the country as well.
The impact of COVID-19 on gaming has been a massive enlargement of the audience available to publishers. Gaming is typically an at-home activity, and a steady stream of studies and headlines has shown that it is flourishing at an astonishing rate during the pandemic. Paytm’s games vertical Paytm First Games saw its user base increase three times in March when the lockdown was imposed. While their significant user base is in big cities, the company also observed that lower-tier cities and rural India also contributed more traffic during the lockdown than before. Paytm First Games’ platform includes casual games such as Rummy, Ludo, Pool, and Snake Wars. In the mobile gaming scene, Houseparty, an app that allows people to video call and game simultaneously, has had over 2 million downloads within a week in April.
Further, Asian gaming giants, Nintendo and Tencent, saw sales increases during the first quarter of the year when the pandemic gripped the world. The former sold almost half of its games digitally, a record that helped increase profits by 41%, while Tencent’s revenue from year-on-year online games increased by 31%.
Gaming is not just Entertainment.
But gaming is not limited to merely displacing other forms of entertainment during these days of social isolation. It provides digital three-dimensional set-ups and environments where people can interact freely, develop content, and pass on information and knowledge in new ways. Though built by a creative class of coders to play, these rapidly growing platforms shape the future of the virtual world and virtual economy.
During the lockdowns worldwide, gaming platforms have been thriving as venues for all kinds of activities and events. Savvy teachers are holding online classes on platforms that their students are already spending their time on– game-focused sites like Twitch and Discord. People have even held beach weddings inside Animal Crossing and concerts inside Fortnite. So much so that students at the University of Pennsylvania, the University of Chicago, and other universities built 3-D replicas of their school settings inside Minecraft, and some held their graduation ceremonies.
How the Gaming Industry is aiding the need of the hour.
Coming to social actions, like many companies, the gaming industry is supporting community initiatives to mitigate the effects of the novel coronavirus. These include charitable pledges worth millions of dollars, the donation of surplus computational power to help researchers better understand the virus and its impact, and solidarity response funds to support medical workers, children at risk, and employees who have been adversely affected.
Local governments also joined in the gaming bandwagon, such as the Kerala state government, which launched a coronavirus-themed mobile game. On April 28, 2020, Kerala’s health department, in partnership with a gaming development company, introduced COVID Run mobile game to raise awareness among the populace about the COVID-19 pandemic. It should be noted that there is no single dedicated piece of legislation and no specific statute in India in regards to video games’ content. Therefore, the pandemic sets the stage for more favorable coverage and economic benefit of the gaming industry, which the Indian government might find appealing.
However, this doesn’t mean gaming is immune to the coronavirus. Esports, with its reliance on live events, has been one of the significant parts of the industry to be affected. Most esports events have been canceled or postponed while others are taking place without audiences. If restrictions on mass gatherings continue, Esports related income would undoubtedly see a heavy fall. But considering that these competitions account for less than 1% of the gaming market, this would not represent an existential threat to the broader industry.
What’s in store after the pandemic?
Despite the alarming number of cases, deaths, and socio-economic problems in India, one can’t deny that the COVID-19 pandemic has also created an avenue of opportunities for the country’s gaming industry. On the other side of the novel coronavirus, we can expect a world to see the gaming industry increase its partnerships with other entertainment sectors. Some video games assimilate so much into people that they spill over into cultural discourse. The most recent example is Fortnite, which has impressively imposed itself on music, sports, and television. The online video game has hosted live concerts, premiered new albums by significant artists, and even featured movie directors’ content. And during the pandemic, it took gamers’ expectations a notch higher and hosted a live rap concert, attracting almost 30 million viewers.
Finally, the pandemic will hopefully lead to the normalization of esports. More exposure and awareness about video games and Esports to the general public could lead to the mainstreaming of India’s industry. The most recent proof point is the state of Nevada, which legalized betting on competitive gaming just two weeks into confinement measures in the US.
At the very least, the pandemic has reminded media companies and brands that there remains a robust and addressable market of highly engaged consumers, and recent developments will likely inch the digital gaming platform towards the mainstream.