Gaming in the Time of Corona
Adaptability and resilience of the gaming industry
Ah, the year 2020. Semi-jokingly crowned as the worst year in history that started with an escalation in the Middle East serious enough to threaten us with World War III, the focus quickly turned to a new virus spreading through China like wildfire. The high infectivity mixed with a long incubation period and a relatively high percentage of deaths related to the virus led to a worldwide pandemic. The harsh but important measures were undertaken by most countries including lockdowns, quarantines, and serious business downtime.
Although calling current times unprecedented might be an overstatement, the pandemic has put practically every industry to the test effectively creating a global economic downturn. Many people in bigger companies were let off, some small businesses built around freedom of movement (tourism, logistics) had to close their doors, and the majority of the service companies were forced to move fully to remote leaving their offices empty.
However, just as hard times create strong men, they can create strong companies or entire branches of industry. Today, we’ll take a look at one of the rising business champions, the gaming industry.
Hard times breed creativity
While it doesn’t always have to be true and it is possible to work out a situation in every party gains something, the past three months for the entertainment industry fit this proverb quite well.
Lockdown forced practically all restaurants, clubs, cinemas, theaters, etc. to close their premises. That means no parties and no evening relax at the local pub. No concerts, no movies, and no performances. No music festivals.
Although some straightly offline businesses simply shut down all their operations, others, being cut off from the source of income, has started a digital transformation looking for new online opportunities. In general commerce, the idea is rather simple — move the offline day-to-day trading into an eCommerce platform. After all, people sit at homes with their money ready to be spent.
For the entertainment and leisure industry, it was not that simple. The number of businesses that could effectively undergo a digital transformation, for example, musicians playing live on stream or online theaters, is much smaller. Some of the F&B oriented companies started offering takeaways for the first time in their career. Others simply shut down, cutting the losses short. Same with SPA centers, gyms, and any business related to bodily contact. All in all, the projected recession for advanced economies formed by the World bank in the year 2020 may reach 7 percent, which in turn will most likely have an impact on the growth rate of the developing economies.
However, as they say, one man’s loss is another man’s gain, which is definitely true for digital entertainment built around the gaming industry.
Gamers, rise up!
In contrast to most other branches of economy, the gaming industry has proven to be much more resilient. Moreover, you can say that certain niches of that industry have grown due to the widespread movement control orders.
In its core, it is a very simple and logical correlation. People stay at home and cannot go outside, so they play more games. They have all that unspent budget that ideal for the newly released game. Moreover, even though global game production went a bit down due to remote working conditions not being the best fit for every game studio, the sales went drastically up.
Lockdown did not hinder almost any marketing efforts. Even though most of the industry offline events such as The Taipei Game Show, Gamescom Europe and Asia events, or Paris Game Week were canceled due to obvious health issues, the target audience spent even more time surfing on the internet where most of the marketing budget is spent anyway. This lead to one of the best years when it comes to game sales. For example, Doom Eternal had the best opening week out of all previous entries in the series.
Gaming, becoming a natural go-to past-time lockdown activity, also had a massive impact on streaming services. It’s much easier to tune into your favorite Twitch Streamer in the background during a remote work session than in the office under the attentive manager’s eye, even if it doesn’t really affect your productivity.
Still, homo sapiens is a social beast — therefore a spike in activities around multiplayer games was noted. After all, if we can’t go to movies or catch a beer in a pub, a round of Call of Duty: Warzone with your friends will have to suffice.
Esports revival
A very interesting aspect of the gaming industry closely related to streaming services and online entertainment is esports. While professionalized video gaming had already left the kindergarten, the COVID-19 lockdown blew a new gust into the esport sails. Gaining much more traction and interest from both old and new fans, esports has become not only more popular but underwent a process of normalization. It’s no longer belittled by the fans of conventional sports as “silly games”. It’s a legitimate sport. One that can still be transmitted and played under lockdown.
One of the biggest esports events of the first half of 2020 for Counter-Strike: Global Offensive, Rio Major 2020, had to be postponed. Luckily, we’re talking about digital entertainment — Esports went fully online.
ESL quickly transformed their Season XI finals into an Online-only event. BLAST followed suit with some awesome spectacles. Valve decided to change the qualifying system for the Rio Major into a series of 3 online tournaments held across 3 different organizations. This change definitely helped smaller esports organizations keep a stream of income that might’ve otherwise been closed.
Moreover, all gaming industry niches closely related to esports grew together with it. Previously mentioned streaming services such as Twitch.TV or YouTube gained new users and noted record watch times and the number of concurrent users. Likewise, businesses dealing in game-related digital goods trading have noted a rise in users and transaction volumes.
A safe bet
From the investors’ point of view, the most important aspect in all of this is that it wasn’t just a temporary shift, thus a one-of-a-time opportunity. It is safe to assume, that at least part of the new, “accidental” gamers will remain as such. Moreover, almost unhindered production of new titles and skyrocketing sales have served a good money influx for developers and publishers. When the entire real world stops, gaming can go on.
Considering how well the gaming industry behaved under the pandemic and the possible projected second peak in the latter half of 2020, investing in the gaming industry is a pretty safe bet. Big spenders seem to think the same.
Some time ago, Spotify, one of the big players in the audio streaming services, was rumored to sign up Dr. Disrespect, a very popular streamer that has left Twitch.tv to their service. That would suggest Spotify working on a video-game streaming platform. After all, they already have most of the environment up and working. Although we must note that it’s an extremely unsubstantiated rumour.
Moreover, many gaming-related businesses are the rising stars of the stock market, for example, CD Project Red, developer a of the Witcher 3 and the upcoming Cyberpunk 2077, has recently become the second most valued gaming company in Europe, right after Ubisoft worth around $9.6 billion.
Game on
The stability and growth shown by the gaming industry make it a pretty safe bet for investors. Some might even say that now may be the best time to go for it.
On one hand, it’s a proven, resilient market that performs well under pandemic circumstances. On the other hand, everyone has seen that, so at this point, it’s general knowledge. Although you could theoretically start thinking about this later, it might be simply too late to find a good gaming-oriented investment opportunity that can offer some serious returns. The game is already on, so don’t miss your shot!
