Above: Season Five of Call of Duty: Warzone arrived August 5.

Gaming Gets COVID Boost as Players Seek Escape from Boredom

Dean Takahashi has written a lengthy article this week for venturebeat.com about the phenomenal growth of the gaming industry as it relates to the COVID-19 pandemic. And the numbers in the article are mind-blowing, to put it mildly. In the article, Takahashi includes a boatload of companies and highlights their growth numbers after 6 months of the country being in lockdown.

Part of the huge growth is the absolute lack of other diversions and accessible entertainment being. “Not” showing movies at theaters and no live sporting events have left people searching for other amusements. The growth in VR/AR industries has been covered in several recent stories here at Seeflection.com.

Second-quarter earnings results from major game companies over the past two weeks demonstrate how gamers are responding to the pandemic. The big question is whether the gains are temporary or permanent, as that will determine how much bigger the $159 billion game industry will become.

“We won’t know exactly for a while, but we have more evidence for both arguments with the Q2 calendar financial results that came in from Electronic Arts (which gained tens of millions new players in Q2), Activision Blizzard (which gained 21 million players in the quarter), Take-Two Interactive (whose 7-year-old game Grand Theft Auto V sold 5 million copies in the quarter), and Zynga (which bumped its expectations upward for the year by $360 million).”

As mentioned, the numbers are very good, but not all numbers have even come in to be analyzed yet. But with every upside to an issue, there is also a downside.

As deaths and unemployment rise, it’s unclear how long gamers will be unaffected. Nexon noted that “harsh conditions in the business environment” are expected to continue, noting “concerns of an economic downturn due to the sharp decline in consumption attributable to the COVID-19 pandemic while the end of the pandemic is still nowhere in sight.”

Those are scary words to see in an official earnings report, and they’re a reminder that our world is fragile and that no company or industry can stand up to forces that are bigger than they are if all goes to hell. However good the game industry can feel about dodging a bullet, it’s hard to shake this feeling about so much uncertainty.

Nexon CEO Owen Mahoney said at our conference in April, “I think we’ve all gotten a lesson on what we don’t know, in the economy and science. We’re living in crazy times. I think it’s an important time to take stock of what we don’t know.”

How high can this market go?

In a survey of 13,000 people in 17 countries in May and June, strategy and marketing firm Simon-Kucher & Partners found that COVID-19 led to a 39% increase in monthly video game spending. This increase is expected to stay 21% higher even after all lockdowns have lifted. Overall market growth is expected to be 12% to 15% in 2020 to $170 billion, compared to a previous estimate of 9% growth above 2019’s $148 billion.

On top of that, the percentage of players who became “serious gamers” rose from 63% to 82% during the lockdowns. That is expected to settle at 74% after the lockdowns. That’s a permanent shift of the gaming population to those higher gaming segments.

One lesson: game companies can’t expect to be handed growth. They can’t stand still. Game companies that don’t release any new games during the pandemic may see some growth, but the ones that do release hot games will run circles around the slower companies.

If this boom in player behavior is with us for good, that’s not a problem. But if it’s temporary, then a kind of land grab is happening now. Grab those new players while you can, because they may go back to other things, and you may lose a historic opportunity.

This writer will admit the last time I played a video game was probably in a fern bar and the game was probably a commercial PacMan. But the numbers of growth and profit that Takahashi has included in his article prove that gaming is a powerful attraction for young people.

However, the pandemic has no end in sight as of yet, and until such time as a vaccine is available, the growth in homebound sports and gaming systems depends on income as much as supply.

read more at venturebeat.com