Gaming – the holy trinity of emergent technology, entertainment and data
With the world sheltered away, limited in movement and physical activity, digital industries have seen a boom in participation. In particular, the gaming sector has been a refuge for active minds seeking some form of mental stimulation and escapism (the WHO has been encouraging gamers to prevent the spread of COVID-19 with the #PlayApartTogether). At True, we focus on shifts in consumer behaviours to guide our investment activities and collaborative innovation work with some of the world’s leading brands across the retail and consumer sector. Here we share our thoughts on the rapid rise of gaming, the impact that lockdown has had and the potential future implications and opportunities for the consumer sector as a whole.
Gaming is here to stay
Whilst the current pandemic has supercharged the gaming industry, boosting numbers of gamers, time played and amount spent on new games and in-game purchases, the gaming industry has been growing at an incredible rate for quite some time. Around the world, there are 2.7 billion unique gamers, or 35% of the world’s population, all contributing to an industry generating revenues that have grown from $53 billion in 2012 to $150 billion in 2019 (larger than the film and music industries combined). These figures seem outlandish at first as we all tend to instantly (and forgivably) race to the gamer stereotype that sits in our minds – the male teenager, sitting in his room with the curtains drawn playing Call of Duty, shouting down the mic at another 15 year old male somewhere else in the world.
In reality, the demographic set of gamers is a lot more diverse: the average age of a gamer globally is 30 and, since 2014, the gender split has been around 50/50. In the U.S., this is even more pronounced with adult females being a larger proportion of gamers than teenage males. The disconnect here is that many of us do not classify ourselves as gamers. Many of us will have a game (or games) on our phones that we only play for a few minutes a day whilst waiting for a train. Mobile gaming has expanded the market in a way hitherto undreamt of (games like Words with Friends, The Sims Mobile, and Hay Day have a majority 18-55 year old female player base) and the next great expansion is seemingly just around the corner. Cloud gaming will allow any player to play any game anywhere without having to own the previously necessary hardware.
Esports has similarly become a huge growth area within gaming. Teams of well-funded gamers compete for huge cash prizes (the prize pool for a recent Dota 2 tournament was $34m, for comparison The British Golf Open has a prize pool of $10.75m) and the chance to receive sponsorship from some of the world’s biggest brands. Indeed, it was recently announced that David Beckham’s Guild Esports will launch globally, adopting the football academy model to cultivate top-tier esports talents. The involvement of one of the worlds foremost sporting talents only lends further credibility to this exciting industry.
Brands like Louis Vuitton, Gucci and MAC have woken up to the huge opportunity that gaming represents through sponsorships, collaborations and more. The current pandemic has also situated gaming as a flexible alternative to cancelled events: True’s portfolio company, Zwift has partnered with the organisers of the Tour de France, ASO, to offer a virtual alternative with pro cyclists riding their bikes at home whilst attached to advanced turbo trainers on a computer-generated track.
The current pandemic has clearly had a significant impact on consumer behaviour and whilst some of these new behaviours will be temporary and quickly revert post lockdown, we believe that the accelerating shift to gaming and esports is here to stay. So what does that mean for brands and the consumer industry as a whole? Below are our thoughts on how companies can take advantage of this exciting and growing segment.
Sponsorship: The top gamers are increasingly taking on the mantle of celebrity and their influence reaches around the world. The top 10 gaming content creators have a collective 94 billion YouTube views. Not only can brands benefit from the visibility sponsorship of these gamers presents, but content created could be used on product description pages and brand-owned sites to drive engagement
- Head & Shoulders hired Russian gamer Roman ‘RAMZES666’ Kushnarev as a brand ambassador in late 2018
- Kellogg’s have signed a three-year deal with Major League Soccer’s eSports division through which its brands have become the league’s official snacks and Kellogg’s have received digital marketing assets in-game that allow them to advertise virtually in a similar fashion to real-life advertisements in football stadiums
In-game Events: Fortnite is well-known for having in-game events such as concerts from famous artists (Marshmello & Travis Scott) or by creating game modes to promote films (Avengers: Infinity War). The limited nature of these events creates an aura of exclusivity even though they are open and accessible to all
Playable Adverts & Games: By utilising gaming as a marketing channel, many brands are able to communicate key brand messaging in a targeted manner that turn traditionally one-way experiences into interactive and responsive activities, generating far higher levels of consumer engagement than via traditional advertising media:
- Burberry successfully launched B-Bounce in late 2019 in which players can skin the playable character with different versions of the Monogram Print Puffer Jacket (RRP £1,290)
- Gucci is no stranger to gaming, having Gucci Arcade games on the Gucci App. It has taken this one step further, partnering with Tennis Clash to offer exclusive in-game items and game modes such as the ‘Gucci Open’. Players can make Gucci outfits for their characters and then access the Gucci website through the game to complete purchase of these items
- Warby Parker created the game ‘Worbs’ in 2014 aimed squarely at working professionals that needed to break up their day. The game takes on Warby Parker’s colourful aesthetic to promote its range of eyewear
New Revenue Models
In-game Items: ‘Skins’ for in-game characters are becoming more and more popular. Once the in-game item has been designed it can be sold over and over without any additional costs, representing pure profit
- Louis Vuitton has a fruitful partnership with Riot Games that has seen new physical lines aimed at gamers as well as in-game virtual lines for League of Legends players characters and items. This initiative was headed up by Nicolas Ghesquière, Creative Director for Louis Vuitton
- Moschino created a bundle of in-game items for the Sims 4 starting at £9.99. The Sims has a largely adult female player-base and Moschino recognised the ability to connect with its target demographic through gaming, spreading brand awareness and generating revenue
- True’s portfolio companies Zwift and Ribble have partnered to offer Ribble bikes in the Zwift virtual world. Players can earn enough in-game currency, called ‘drops’, by playing the game and purchasing better items
Game-linked Offers: Brands and retailers can take advantage of the hype around gaming by introducing purchase-linked offers that can help players in-game (limited items) or allow them to access premium content online via mechanisms such as Twitch Prime Subscription gifts. As monetisation within gaming grows, there is a risk retailers that do nothing could lose out on consumer spending that is transferred from traditional retail goods to game-linked digital items such as in-game currency especially around the holiday gifting period
Insight: Gamers make for a highly engaged audience. According to a recent Newzoo study, only 2% of gamers are likely to be multi-tasking whilst playing compared with 55% for television consumption. This creates the opportunity to gain insights through surveys and other forms of insight-driven questions to gain rapid feedback on new products or ad campaigns
- Education: Training new skills can be a costly exercise that is perceived to be a boring exercise by employees. By gamifying this process, retailers can redress this important activity as fun and rewarding
The key to successfully tapping into the gaming industry as a brand or retailer is an understanding of what games your target customers are playing, how they are accessing the channel, and the best route for you to create value for your brand (be it marketing, sponsorship, or a new revenue model). The current pandemic may have brought gaming even more to the worlds attention, but it was already a huge, growing and diverse industry that is a rich and fertile ground for forward-thinking brands to engage with their customers.
True sees huge opportunity across the gaming spectrum both from an innovation and investment perspective. The increased adoption of gaming reinforced by fast-paced and continuous technological development is a trend that has been accelerated by the current climate and one that we feel is here to stay. The retail and consumer industry stands to benefit hugely by access to this vast pool of engaged, diverse audiences. At True, we are excited to continue to invest behind consumer behavioural shifts like gaming and guide our partners and portfolio along this ever-changing landscape.
Unity: The 2020 Mobile Game Monetization Report
Unity: Covid-19’s impact on the gaming industry: 19 takeaways
Newzoo: Global Games Market Report 2019
Ofcom: Online Nation 2020 Report
Global Web Index: The world of gaming: An exploration of how the gaming landscape is rapidly levelling up
Entertainment Software Association: 2020 Essential Facts About the Video Game Industry