State of play for the video gaming industry in 2020
The software side of the industry makes up the majority of the total addressable market, totalling USD 165bn, and has seen double-digit growth over the past five to six years, the specialist explained. He then detailed the major developments within the four main segments of the video gaming market: platforms, geography, intellectual property (IP) and business model shifts.
The latter category has undergone a huge transformation in recent years and “free-to-play is now the dominant business model.” This shift to what is essentially SaaS could influence how the industry makes money. Although there are fixed upfront costs, such as advertising and creating content, “the incremental marginal cost is zero for each additional unit that’s consumed”.
COVID-19’s impact on video gaming includes accelerating trends that were already taking place. Although “most developers and game companies have found that their production has been able to continue at pace on those franchises that are alive or are well on their way”, there could be negative repercussions in future. Innovation needs to have several kinds of teams in physical contact in order to properly brainstorm ideas.
Other topics on the agenda included whether cross-platform franchises could result in cannibalisation, the potential for augmented and virtual reality, and the rise of e-sports.
To access all the human insights from Third Bridge Forum’s Video Game Industry Update – 2021 Strategy & Growth Outlook Interview, click here to view the full transcript.
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