Gaming industry thriving during COVID-19 lockdowns

During the COVID-19 pandemic, many consumer-focused industries have taken a hit. Gaming, however, is expected to continue to increase.

2019 was a record-breaking year for the industry, with gaming software generating $143 billion in consumer spend, and this trend is set to continue into 2020, according to Futuresource Consulting's Global Gaming Hardware Report.

According to the report, entertainment spend overall is set to increase. Music achieved a market value of $24 billion in 2019, while the TV and video markets saw a total of $290 billion during the year, with both forecast to grow over the next five years.

Meanwhile, gaming expanded from a 31% share of entertainment value in 2019 to 36% in 2023. This increase comes down to the age bracket of gamers expanding and new games being released, the report highlights.

Furthermore, Futuresource states the COVID-19 related lockdowns will also contribute to more people gaming. The analysts find that penetration of gaming into emerging markets and older age brackets via mobile gaming, combined with significant upgrades to dedicated gaming hardware, is a significant growth driver for gaming content spend globally.

Worldwide, the market is expected to grow by 40% over the Futuresource forecast period, achieving $200 billion by 2024.

Lockdown in China for the virus coincided with Lunar New Year celebrations, which the analysts state is a key period for games marketing and usage.

Futuresource research shows that mobile and PC gaming spend significantly increased during isolation, driven primarily by popular titles like the Chinese esports game Honor of Kings

This resulted in billions of yuan being spent on a daily basis at the peak of the initial outbreak. As a result of these conditions, mobile gaming spend is expected to increase by 12% worldwide in 2020, a 5% increase relative to previous forecasts.

At the same time, Futuresource finds that Western markets are seeing growing demand for games featuring a social element, including Animal Crossing: New Horizons and Call of Duty: Warzone, with lockdown conditions promoting strong userbase engagement.

Call of Duty Warzone has seen particular success. This comes down to its free-to-play access and cross-platform social functionality, the analysts find. The title has already reached 50 million active users within a month of release.

Futuresource Consulting research analyst Morris Garrard says, "Gaming is no longer just child's play. For decades, we've seen gamers grow up and carry their passion with them as their lives unfold.

"Meanwhile, younger generations continue to feel the craving for gaming. And these segments have been joined by a new demographic of older users, who are rediscovering casual gaming or experiencing it for the first time, reaching for Candy Crush Saga or similar hyper casual games when they need a quick on-the-go fix.

Interestingly, there has also been a rise in what Futuresource is calling 'the grey gamer' - that is, retired people turning to gaming.

Garrard says, "With movement restrictions, time-rich retirees are isolated and turning to mobile games. It's a substitute for meeting up with friends and playing games face-to-face. In China we've seen a significant increase in engagement, with virtual versions of traditional table-top games.

"Mah-Jong, a tile-based game popular among elderly Chinese people and often played in groups of four, has had a pronounced gaming boost.

Smartphones are also contributing a significant piece of the gaming pie, with improvements in technology and more options resulting in users opting for mobile games.

According to Futuresource, there are currently 4.1 billion active smartphone units as of 2019. The industry continues to transition to a digital reliant ecosystem, with digital downloads making up 80% of full game purchases, and in-game DLC spending progressing at an 8% value CAGR from 2020 to 2024 according to Futuresource forecasts.

Futuresource finds that mobile connectivity, combined with the expected increase of cloud gaming services such as Google Stadia, will allow consumers to access the latest AAA titles without having to purchase gaming PCs and consoles.

However, cloud gaming services have seen slow initial uptake, with subscription revenue expected to account for less than 1% of gaming software spend globally in 2020.

On the long term uptake is expected to build, developing alongside infrastructure and consumer acceptance of subscription-based entertainment, Futuresource finds.

The increase in mobile gaming will also be prompted by 5G penetration, according to Garrard.

He says, "The growth of these services will also change the composition of titles available on mobile platforms. We'll see an increased alignment of mobile with console and PC platforms, rather than the traditional arcade-style, short-form content currently associated with mobile gaming.

"This will help to stimulate the growth of mobile gaming worldwide, with the segment forecasted to progress at a 7% 2020 to 2024 value CAGR," he says.