Factors are Social, Platforms, Technology, Monetization, and App Stores

5 Factors that will change the Future of Games

Image for post
Image for post

What is the future of games?

One thing we know: it’s going to be lucrative. The top 25 public game companies generated over $100 billion in revenue last year, according to a recent story on VentureBeat featuring data from Newzoo.

The largest, Tencent, had almost $20 billion in estimated game revenue. Sony, Microsoft, Apple, and Google are on the list. Activision hauled in almost $7 billion, and names like France’s Ubisoft, Korea’s Netmarble, and Japan’s Square Enix all generated more than a billion in 2018 revenue.

To state the obvious, games are a big deal.

But what’s changing in gaming in recent years and what is the future of Games?

#1: Social Games at scale

We’re seeing more and more games with social experiences at scale. HQ Trivia showed us that a year ago in a non-traditional category. Fortnite, which has hit an astonishing total player count of over 250 million people, has hit almost 11 million concurrent players.

That’s social, and that’s scale.

A few months ago, Unity’s chief marketing officer Clive Downie added that Unity powers half of the games on the planet, and it’s building tech to scale to 50 million concurrent users. In a few years, that’s likely to be hundreds of millions, and eventually, it will be planet scale.

The massive benefit of social at scale?

When a game succeeds, it becomes a social phenomenon. That has huge new user acquisition benefits, thanks to incessant coverage in the media and social media conversations, but it also has huge player retention benefits: friends who game together, stay together, you might say. And they often stick to the same game, too.

2#: Connected Platforms for Games

In Ready Player One, Wade Watts (AKA Parzival) didn’t need to enter different apps to join other gunters in a racing game, or dance in a club, or chat with his huge robotic friend Aech is a first-person shooter. He just entered different experiences in the Oasis, a global VR universe.

We’re not going to see the Oasis anytime soon.

But we might see some components of it.

Think: why do you have different identities in every game, even games by the same publisher? Why can’t you have a shared wallet, maybe transferable XP between games, and shared friend groups? To go a little crazier and cross-game publisher boundaries, why can’t you take your friends from Fortnite to PUBG?

For players, there are huge potential rewards: faster onboarding, richer experiences, more fun in more environments, and a more social gaming session.

For publishers, there’s easier cross-promotion, faster player onboarding, and potentially longer engagement via more owned platforms, leading to increased brand connection and better monetization opportunities.

Of course, there are caveats.

Game publishers still need to enable super-fast on-demand experiences for the minute-to-kill, I’m just waiting-in-a-line-at-the-coffee-store moment. Anything that increases login and set-up time is a risk.

But if publishers can find a way to mitigate that, they have the opportunity to build connected universes inside mobile apps, and with coming smart glasses and 5G, the possibilities are incredible to imagine.

#3: Technology driving everything, everywhere, in real-time

We’re seeing that hit games are increasingly multi-platform: mobile, console, desktop, even web.

That might be native versions like Minecraft or Fortnite, or it might be via emulated technology like Bluestacks, which showed up in Singular’s recent ROI Index. And they might even migrate from console to mobile, like Call of Duty.

Increasingly, we’re seeing noise around streaming too.

Thanks to Google Stadia, streaming console-level games is now possible with sub-25-millisecond lag even for titles like Assassin’s Creed. (Note: here’s the required grain of salt.) Competitors are legion and massive: Microsoft xCloud, Nvidia GeForce Now, Valve Link Anywhere, PlayStation Now, plus a rumored Amazon product.

In other words: there’s a lot of money and big-company corporate cred jumping into streaming, so something very interesting is likely to happen here.

Possible downsides include that the costs of computation for games might now fall much more heavily on the game publisher since instead of the lion’s share of computational cost falling on a distributed network of millions of devices (gamer’s phones, consoles, computers), it all falls on a server farm.

And someone has to keep those lights on.

On the upside, gaming experts have told me there’s a higher monetization opportunity because there are now lower risks of trying a game, thanks to there being no large upfront cost. That leads to a larger userbase, potentially. And of course, streaming is custom-made for a subscription model, which means a longer payback period.

(Frankly, an ad-supported model makes a ton of sense here too.)

#4: Monetization Evolution

Game monetization is changing exponentially.

A few years ago, it was all in-app purchases. In 2016, for instance, 94% of the revenue generated on the U.S. iOS App Store came from the top 1% of publishers who had paid apps or IAPs … and IAPs generated 20 times more revenue than paid apps.

More recently, in-app advertising has moved into the leadership position in terms of mobile app monetization.

But subscriptions are just starting to grow as well. GameMine is having success with this model, offering access to its entire portfolio for one price. And some streaming games will likely be subscription-based.

eSports is also offering new monetization opportunities.

It’ll cost you a cool $25 million to buy a franchise in the new Call of Duty professional league, and then you’ll be able to sell tickets, viewing, ads against viewing, sponsorships, broadcast rights, and maybe even new models of joining, helping, or learning from your on-screen heroes.

#5: Decreasing the power of app stores

App stores like Apple’s and Google’s are tremendously important and will continue to be so. At the same time, however, we’re seeing ways in which their power is being reduced.

The first visible crack in the wall might have been Fortnite moving off Google Play for Android.

Since Fortnite is a global phenomenon on consoles, mobile (including iOS), and desktop, Epic Games could do what most game publishers couldn’t. Massive games with their marketing momentum can save the 15–30% store cut of in-app purchases and subscription revenue by moving off-platform. Just as clearly, that’s much harder for new, unknown games.

Also, this works on Android, where you can side-load apps. Not so much on iOS.

Also, new technology such as streaming, which we’ve already talked about, reduces our overall dependence on app stores.

If I can just stream a game to my mobile or desktop browser, I don’t need a native app from a platform landlord. That opens up all kinds of possibilities — and dangers — because Google and particularly Apple closely police what games and apps are allowed on their platforms.

It also means marketing a game just changed significantly.

There are also regulatory challenges to the way that app stores operate as bouncers at the app nightclub. Apple, for instance, is facing three separate antitrust actions in Europe from Spotify, Kaspersky, and The Netherlands.

Whether those cases have merit or not is an open question, but we have seen the EU take a leading role in limiting the power that larger U.S.-based multinationals have. And any judgments might impact how Apple polices its App Store and what third-party game publishers can produce, offer, and monetize.

Wrapping Up

Games are an increasingly large part of our lives, thanks largely to mobile. But how we making, distributing, and monetizing them is changing.

Smart publishers will continue to find ways to out-grow the competition. And ScaleTech will be there to help them … on mobile, on the web, on IoT, on streaming media, or wherever the industry moves.

Thank you for reading the post. Also feel free to connect with me via Website, Twitter, Linkedin, Angel or Quora.

Written by

We engineer the solutions to the problems that our customers want to address with their unique products/services.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store