According to recent statistics, roughly 3.1 billion people enjoy virtual gaming on a regular basis. That’s about 40 percent of the global population with China and the U.S. leading the way. Given the constraints and fears evoked by COVID-19 this year, it’s not surprising that many choose this virtual escape. With social distancing measures in place, and unemployment rising, many are choosing virtual gaming for entertainment and socializing. But at the same time, these evolving developments are having major impacts on the gaming industry itself.
It’s quite evident that some businesses have thrived during the COVID-19 pandemic. The unique circumstances created by lockdowns, social distancing and remote work have fueled tremendous success for some. The same is thus true for the virtual gaming industry. Some companies are experiencing incredible growth as players engage in a virtual escape from this COVID-19 nightmare. But others have not been quite as fortunate. Examining how the gaming landscape is transforming is therefore quite educational in nature. And it will likely help predict where virtual gaming may go in the neat future.
“At a time like this, where people are housebound, being able to escape into the digital world and have these kinds of fun, imaginative experiences with a friend, is very, very relevant.” – Craig Donato, Chief Business Officer, Roblox
The Big Keep Getting Bigger
Industry experts have suggested that the overall virtual gaming industry will grow nearly 10 percent in 2020 alone. Naturally, this boost can be attributed to the pandemic with people being forced to spend more time at home. Therefore, it’s not surprising well-known games have been the most frequently used by many people as a virtual escape. For example, Nintendo’s Animal Crossing: New Horizons has seen an incredible increase in users. It reported a whopping 428% increase in operating revenue during a single quarter as a result. Likewise, Activision’s Call of Duty: Warzone some sizable increases as well. These popular virtual games were the “go-to” when the pandemic struck.
The lure of these games was not only their immediate entertainment value of the virtual games themselves. The other feature that attracted users was its capacity to engage others in a social way. Unable to see friends and family in-person, this virtual escape was a way to interact with others. In essence, this was not different than using Zoom or Microsoft Team to engage coworkers remotely. It was simply a different way to play with others. Major companies like Take-Two Interactive, Nintendo, and others already established naturally enjoyed rising popularity during the pandemic.
“One of the big trends we’re seeing in player behavior through the pandemic is that video games have become one of the primary ways friends and family have stayed connected.” – Mat Piscatella, NPD Group video game industry analyst
The Woes of the Small Developer
While the larger virtual gaming companies have benefited significantly from COVID-19, smaller companies have not. Cancellation of major developer conferences have caused some of the smaller virtual gaming companies to struggle. A lack of networking opportunities and the chance to showcase their products account for some of this. Without an ability to easily reach their audience in lockdown, startups and independent game developers are limited. Even the capacity to connect with venture capitalists and funding supports have been constrained in this pandemic climate.
Other smaller companies have had different struggles with the pandemic. For example, Jackbox, a small virtual gaming company with 45 employees, wasn’t prepared for the boom. Jackbox typically provides popular party pack games where individuals share a screen but at in-person. However, when lockdowns occurred, remote gaming boomed overnight as users sought a virtual escape from boredom. Unfortunately, this created bandwidth and platform security issues for the company. But despite intermittent downtime and streaming lags, Jackbox was able to recover. Compared to other small virtual gaming companies, Jackbox seems to have weathered the storm well.
“We can certainly anticipate a few big holiday weekends each year and we can prepare infrastructure for that increased traffic. But what we didn’t anticipate was daily traffic that was going to be at that level.” – Mike Bilder, CEO, Jackbox
Pooling Talents for Bold Success
One emerging strategy that looks to be ideal for platforms and developers alike is a collaborative one. Developers have been able to earn income from sites like Fortnite, but others are taking this to a new level. Roblox, which has boomed in recent years, offers developers a 50-50 split. Launched in 2006, Roblox now has over 164 million users. Roughly three-quarters of all kids from 9 to 12 years have also played on the platform. And with over 2 million partner developers, Roblox boasts that 345,000 of them are profitable. Some are even earning more than $500,000 annually at this point in time.
Roblox has been valuated at more than $4 billion at this point in time. It remains a private startup at this point, but its potential looks to be tremendous. The business strategy it is pursuing in the virtual gaming industry is an attractive one. Roblox is able to provide users new forms of a virtual escape releasing more than 20 million new games each year. More importantly, it is creating a marketplace where developers can launch a business or their career. This approach offers a win-win situation that enables even small developers an opportunity to compete.
Post-COVID Predictions in Virtual Gaming
While virtual gaming offered a virtual escape from lockdown boredom, its appeal will likely persist after the pandemic. Mobile apps are becoming more popular, and users increasingly enjoy remote socializing opportunities. While these sites have thrived because of the pandemic, they were already seeing steady increases in popularity. What’s more intriguing is the dynamic between developers, users, and platforms that is evolving. In this regard, COVID-19 has definitely been more of a catalyst for change.
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