Long Life to Video Gaming
The article below was written by Reda Bouraoui, an advisor to Kayros Games and co-founder of Magnolia Games
Gaming is revolutionizing the world of entertainment. You must have heard of Fortnite, a very popular multiplayer game among teenagers. It is a battle game where 100 players fight to be the last man (or squad) standing. It is free to download but players need to buy assets such as skins or weapons to advance in the game. Epic games, the owners of Fortnite, make about $5.8 billion per year out of the game.
Overall, the gaming industry will be worth $470 billion by 2030 from $197 billion in 2021. Mobile games (as a game played on smartphones and tablets) will contribute about $240 billion to the total industry by 2030 (Globaldata), a massive step from the $98 billion registered in 2020.
Let Us Rewind:
I shall recall when I was about 5 years old, we had a black and white TV then. My father walked into the house with a strange box under his arm. It was a piece of hardware the size of a record player branded Attari. It was actually a game console, probably the first one going mass market (about 1 million sold). It played only “Pong”. A sort of two dimensions ping-pong game, with a ball being represented by a dot flying from side to side on the TV screen. A few years later came Pacman. The most successful arcade game of all time alongside the development of arcades themselves; areas where the public could play on electronic and slot-operated machines. Pacman still ranks among the top 15 highest revenues generated by a single game in history at about $43 billion. By the end of 1982, arcades were already representing a bigger revenue than the music and film industries combined!
Thank You, Nintendo
Starting in 2000, Nintendo was redefining the world of gaming with the launch of console games and game cartridges. A new experience for the gamer: an immersion in a screen with imaginative games that could become addictive. It generated as well a race for higher processing power. The games were becoming more sophisticated with unique graphics and game designs. The market was growing and requiring more games. In that sense, some won’t hesitate to say that Nintendo created the modern gaming industry. As Nintendo games became successful, people started to buy their consoles, creating the need for more content, and more games. More than what Nintendo could create on its own. They attracted new competitors. Sony launched their PlayStation using CD-ROM instead of cartridges to create more storage capacity. PlayStation 2 shifted to DVD to carry even greater software formats. They sold more than 100 million consoles.
Web2 and Online
The Internet changed the picture again and allowed the exponential growth of the industry. New business models appeared allowing better streamline of revenues. In 2001 Microsoft proposed a monthly subscription fee for online games access. Top games that were traditionally reserved to console owners can now be downloaded from the internet and played on your PC … reducing friction and unlocking access to millions of gamers. A player can pay a subscription of $15 per month to play the catalog on both his PC and Microsoft Xbox, or pay 10$ for PC access only. Companies such as Sony and Microsoft continue to accelerate the development of games from the cloud while launching new consoles. Amazon and Google are also entering the industry. Amazon acquired Twitch (a live streaming service for gamers) in 2014 for $970 million. In spite of a very shy performance, Amazon is not giving up. They are now launching Twitch Prime offering a basket of games (some are coming from smaller studios) as well as equipment and discounts on other big names (League of Legends…)
There are 6.8 billion smartphones active on the planet; which means that roughly 85% of the population owns one. There is a real transition to mobile gaming that is enabled by the release of the App store for IOS and Google Play for Android. An impressive 141 billion App downloads took place in 2021 … out of which 56bn billion are games. Mobile gaming is already bigger than the console and PC gaming markets combined, contributing nearly 57 percent of global video game revenue in 2021, and this dominance is only set to continue. Talking about market size, 2.8 billion people played mobile games in 2021. Try it today, download a game for free from the Play store / App store and have fun! Subway Surfers is the first mobile game to cross the 1bn downloads. It offers high-definition color graphics. The mechanics are what people love; simplicity … just slide your finger across the screen to perform actions. The game is a bunch of cute graffiti artists running and avoiding trains that are coming in the opposite direction. Another sensation in the world of mobile is Candy Crush; it has also crossed the 1bn downloads and inspired so many copycats. It has a constant base of 248 million players at any point in time. And the list goes on with franchises such as Pokemon Go, Clash of Clans …
Gaming is a general phenomenon yet more entrenched in youth. They are more kids joining the industry and they are consuming about 40% more on gaming than with any other media.
"Youngsters are more comfortable in virtual environments, and just over half of them prefer hanging out with friends in a game rather than in person” Bain
One can predict a great future for more immersive environments!
Technology is a big factor in development. The smartphone (5G) is evolving and allowing more prowess in display technology and processing speed. This is opening new avenues for more sophisticated titles with larger virtual worlds and multiplayer facilities. Technology is also becoming more accessible and less proprietary, permitting great graphics at a hand's reach. Impressive graphics won’t be any more a critical differentiator between games. There will be more pressure on the ability of the designers and developers to create better games, better stories; more fun, and more social - not only a download of technology.
Most mobile games can be downloaded for free. The free-to-play model helped enlarged the gaming universe thanks to ad-operated mechanics, largely accepted on mobile and representing already 78% of all game revenue. Professionals predict that the free-to-play model will continue to explode as new revenue channels will come into play (not only advertisement but also commerce, and live virtual events …). New innovative monetization models are emerging. Blockchain technology is enabling the ownership of assets such as characters, skins, or weapons. This market is new and so far reserved for crypto users. We can witness new initiatives like the Kayros Games ecosystem that will further democratize Web3 gaming by facilitating the onboarding and growing the addressable market to non-crypto players.
The future is bright, can’t see a better industry to be in. The key ingredients are there, the consumer wants it and the technology is available to help make it happen.
This article belongs to and was written by Reda Bouraoui and was originally published in his newsletter called Learning Blockchain.
Reda is a technology passionate with a special interest in the gaming industry and WEB3. He co-founded Magnolia Games, a successful hybrid video gaming studio and he is also an adviser to Kayros Games.
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