The positive impact of the Covid-19 pandemic on the Video Game Industry

 

The gaming market is constantly growing and is today estimated at 160 billion dollars (including 60 billion in the USA). In comparison, this is 3 times more than the music industry. Half of this revenue comes from South-East Asia. Moreover, this a fast-evolving market, whereas in 1999 only 20% of the population played video games - who were often men with an average age of 21 years - there are more than 50% today in developed countries with an average age of 40 years and 48% female players. Another element of gaming is e-sport which is also growing. This is estimated at $1 billion in 2020.

Even if this market is experiencing real growth, this article will demonstrate how the Covid-19 pandemic has boosted this market.

 

Although many markets have been severely impacted by the health crisis, such as tourism, restaurants, leisure, etc. One market, the video game industry, has particularly benefited from this global crisis to experience a strong increase.

 

Many governments have imposed quarantines on populations (in total nearly 3 billion people). And as a result, many people have used this free time and the fact of being at home to play more video games or even watch e-sport competitions.

Video game companies have been able to take advantage of this opportunity. For example, in March 2020, Activision Blizzard, inc. released the game "Call of Duty: Warzone" and it was downloaded 6 million times on the first day alone.

According to a survey conducted by Deloitte digital media, during the Covid-19 crisis, 1/3 of consumers either tried for the first time a subscription to a video game service or watched e-sport /sports events online.  Moreover, because of all these sanitary measures, many people also needed social interaction and turned to online video games or went to platforms such as Twitch for example, which saw a 17% increase and a 33% increase in channel creation of gaming content. This has helped to maintain a social link between people sharing the same passion.

 

A closer look at the share values of video games firms such as Activision Blizzard, Electronic Arts, Nintendo, Take-two and TenCent Holdings reveals that their shares fell in March, as they did in almost all sectors due to the uncertainty at the start of the pandemic. However, afterwards, their shares rose strongly.

For example, on the graph below of the Wedbush ETFMG Video Game Tech ETF (which represents more than 80 gaming companies), we can clearly see the prodigious growth that companies have experienced during lockdown.

 

 

As a logical consequence, the revenues of many video game and platform companies increased during the pandemic.  Generally speaking, according to the analysis firm Newzoo, this sector has seen an increase of 9.3% (and 13.3% for mobile video games) this year and should reach $200 billion by 2023. Moreover, the pandemic reportedly had a very positive impact of 2.2 billion dollars compared to forecasts. The Covid-19 crisis has therefore notably accelerated the growth of this market.

 

When we look at a study of the British market, certain factors that explain this growth in the gaming sector can be analyzed.

 

According to Ipsos Mori and Newzoo:

Ø  30% of British gamers said they played on other devices

Ø  40% say they played more than usual

Ø  22% watch more content online (e-sport, twitch)

 

However, even if this crisis has had a beneficial effect on the video game sector, it must be nuanced by the fact that this pandemic has also had negative effects in this sector, especially in terms of hardware and software because of restrictions, for example, on the design and release of console or video games (higher delay). As a result, players are likely to turn more to other kinds of games such as mobile video games which are very popular or computer games.

 

To sum up, even though the video game industry is doing very well and is experiencing strong growth thanks to new technologies and people playing more and more video games, the Covid-19 pandemic has simply accelerated this growth thanks to the acquisition of game consoles, the subscription or the downloading of online games because many people were confined to their homes and this has therefore greatly benefited the video game sector.

However, one question remains to be asked, when this epidemic is over, will the new players continue to play video games (and in this case the gaming industry will have succeeded in building player loyalty) or will they give up video games in favor of outside activities? 

Lucas A