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How The Pandemic Unexpectedly Showed That Video Games Are Recession-Proof

Jared Polites
·3 min read

Amazon.com’s (NASDAQ: AMZN) Jeff Bezos said in April, “If you cannot afford to be misunderstood, then ... don’t do anything new or innovative.”

Technology is the one industry where operators must move at breakneck speed, and that includes the $151 billion global video game market. (The U.S. market is estimated at $60 billion.) The pace of change leads to missed assessments as to where gaming is headed and what opportunities lie ahead for game studios, publishers, console makers, service providers and video platforms.

COVID Is Positively Affecting The Gaming Industry

Gaming’s wide adoption and many uses beyond entertainment have established more favorable views of the technology. Other applications include education, military and vocational training, and even psychological therapy. 

More recently, the pandemic has transformed the category into an essential product for all generations to stay entertained. For some, consoles and mobile games are a way to restore sanity during forced lockdowns.

Gaming entertainment surged to all-time highs at the peak of shelter-in-place, according to Nielsen’s June 2020 research. A whopping 82% of global consumers said they played video games and watched gaming content this year. The increase in engagement was highest in the U.S. (46%), France (41%), U.K. (28%) and Germany (23%).

However, with a vaccine around the corner, business leaders should also think strategically. New customer acquisitions must be converted to long-term players to sustain the momentum. 

Though lockdowns have significantly lowered customer acquisition costs, the question is, will these new users come back post-COVID?

It’s no surprise that another consequence of the pandemic is the necessity of remote development teams. According to PwC’s June 2020 survey, 50% of business executives say they anticipate an increase in long-term remote work. This year, gaming companies have had to scramble to implement work-from-home (WFH) practices for software engineers and programmers.

“It’s important to see around corners, anticipate trends, and innovate business practices to gain a competitive advantage,” said Jacob Hawley, founder and CEO of game and entertainment development firm TLM Partners, in a recent interview. “A few years ago, we hired and groomed remote development teams which served us well this year.” 

The firm makes Hollywood effects appear realistic in games and is currently working with Warner Brothers on the new “Batman” franchise, as well as new “Call of Duty” for Activision Blizzard, Inc. (NASDAQ: ATVI). 

To disrupt the industry, firms like TLM will need to obtain long-term, recurring revenue from a legion of new players on other platforms. For example, Facetime games on the App Store are seeing a 2,476% increase in demand during the pandemic according to research firm Glimpse, while Minecraft is up 82% and TikTok is up 531%.

Disclaimer: the writer does not have any relationship or vested interest in any companies mentioned in this article. This article is for educational purposes and does not constitute financial advice.  

 

 

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