In the past few weeks, there have been several media announcements highlighting major changes in the industry. It seems everyone is jockeying for position, trying to acquire adequate content as well as streaming services. Notably, consumers have different preferences in the wake of the pandemic that demand such changes. But it extends well beyond series, films, and shorts. One of the largest drivers of these changes is actually an increased demand for video game streaming services. In fact, the gaming industry represents the fastest growing sector in the global media and entertainment sector.
The gaming industry has enjoyed a tremendous boost in the last year as many were in lockdown in their homes. As a result, the growth of streaming services was greater than expected. (Read more about the great streaming pivot of 2020 in this Bold story.) Likewise, the demographics of these markets globally have revealed some interesting findings. All of this is fueling what looks to be a significant shake-up in the media entertainment business. And it seems clear that there is much more change to come before the dust settles. But no matter what happens, most agree the gaming industry will continue to enjoy rapid growth and success.
“As part of the pandemic, we saw that games continue to be how people create and maintain connections. Gaming grew as a socially connected experience, whether that was watching streams or using games as a way to connect with family and friends while sheltering at home.” –Meagan Timney, Head of UX, Stadia at Google
Gaming By the Numbers
The gaming industry has been projected to grow at 11.9 percent compound annual growth for the next several years. But these predictions were underestimated as a result of the pandemic. In the year 2020 alone, video game streaming services increased 27 percent, generating 56.9 billion in revenues in the U.S. Globally, these figures were nearly $170 billion in total revenues for the year. In the process, many new customers and enthusiasts have entered the market who might not have otherwise done so.
While all entertainment media has contributed to higher streaming demand, video games have been a major source of influence. When it comes to mobile and PC devices, the gaming industry represents the fastest growing segment. Because of this, and general changes in consumer preferences, media companies are struggling to keep pace. Video game streaming services have been increasing in demand over this period of time. And with anticipated growth, the competition for these services is steep. As a result, many recent mergers and acquisitions as well as joint ventures have occurred. (Curious about mergers & acquisitions developments? Bold has you covered.)
“Within the next two years, it’s going to be put up or shut up for all of us. Can you show you’re scaling? Are you going to be a player in the U.S.? Are you going to be a player around the world?” – David Zaslav, CEO of Discovery
Jockeying to Stay in the Game
As video game streaming services climb, entertainment giants look to ensure they can meet customers’ future needs. This not only includes having the ability to stream video games, but it also requires content. Those who enjoy rich content and networks will clearly have an advantage within the market. In this regard, Google, Apple, Microsoft, and Amazon have all increased investments into their cloud services. They are also exploring video game subscriptions as potential revenue models. Netflix is also making changes and recently hired a gaming chief executive. Naturally, they too are looking to take advantage of the growing gaming industry.
These are not the only changes that are taking place recently. For example, Amazon recently announced its acquisition of MGM Studios for $8.45 billion. This deal will enable Amazon to major content that it can then license for streaming. Likewise, AT&T recently pursued a joint venture with Disney that involves WarnerMedia and Discovery. This too will expand access to media content as well as streaming platforms. Given these recent consolidations, it’s understandable that gaming content will be in high demand soon as well. Many analysts expect similar moves in the gaming industry as video game streaming services increase.
“Female players are a core component of the gaming population, both for today and tomorrow. The growth rate for new female players is much faster than the one for males, so, in a future where females could be the majority of the player population in many markets.” – Paula Wang, Director of App Developer Sales, APAC
Demographic Shifts in the Gaming Industry
Over the course of the last year, entertainment companies have learned more about those using video game streaming services. Most commonly, these users are younger, usually between 24 and 35 years of age. As a result, the target market for companies in the gaming industry has been those in Gen Z. But interestingly, there are an increasing number of gamers in other age segments as well. Plus, one of the most rapidly growing demographics in the gaming industry are female gamers. This is particularly true in Asian markets where the growth of female user has far exceeded make users.
In addition to these insights, media companies are also learning more about consumer preferences regarding subscription services. The average person currently will generally not sign up for more than 4 streaming platforms or networks. Likewise, they tend to average about $40 a month in expenditures as well. While this applies mainly to other media, the same likely holds true to the gaming industry as well. Therefore, if video game streaming services continue to increase in popularity, sacrifices will likely be made in other media areas. This will likely influence how media enterprises structure their content for users in the future as well.
Predicting the Future Impact of the Gaming Industry
Trying to determine how large a portion the gaming industry will occupy in future media and entertainment markets is tough. But the rapid growth of video game streaming services this year suggests it will be significant. Current moves to scale up streaming capacities and content make logical sense given market shifts lately. And companies will likely start looking to expand gaming content specifically as a result. This sector looks to still be in its early stages, so anything is possible. It’s certain, however, that the current gaming landscape won’t look the same in a few years.
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