eResearch | At this past week’s PocketGamer Connects Digital #2 conference (“PGC”) conference, a key topic of discussion was the changing trends in the gaming industry, as various new technologies allowed for more complex and improved game development.
In addition to games upgrading with better graphics and mechanics, technology has allowed consumers to play games on multiple platforms and from any location, which significantly widened the breadth of game types and monetization models.
As advertisements and sponsorships heavily entered the industry, a divergence occurred between game studios generating revenues from pay-to-play models and games studios generating revenue from free-to-play models, which became an important factor in how new games were developed and designed.
Monetization models were further disrupted as companies such as Alphabet Inc. (NASDAQ: GOOGL) and NVIDIA Corporation (NASDAQ: NVDA) launched cloud-based subscription platforms in which consumers can play a variety of games for a monthly or yearly fee.
Moving forward, new technologies, such as machine learning, are improving and speeding up how game studios develop, test, and manage games, while other innovations introduce different games with functions such as voice activation.
Mobile Gaming
In a panel called “Gameloft: 20 Years of Mobile Gaming”, CEO of Gameloft, Alexandre de Rochefort, spoke about the birth of mobile gaming in the early 2000’s, which really picked up once Java technology integrated with phones in 2003, allowing for the development of complex mobile games.
Gameloft took advantage of the Java integration and grew revenues from 0 to 100 million Euros from 2003 to 2007. As mobile games were new and users had low rates of retention, Gameloft’s strategy was to pump out as many games as possible, with 35-50 games released per year by 2007.
In the late 2000’s, once mobile gaming became ubiquitous in society, large corporations started to target mobile gaming platforms for advertisements as user activity and engagement grew across the industry.
Today, mobile gaming is a part of most leading game publishers’ strategies, such as Activision Blizzard, Inc. (NASDAQ: ATVI) who recently launched the mobile version of its most profitable console game, Call of Duty.
Hyper Casual Games
Hypercasual games are simple and lightweight mobile games that provide instant gameplay and gratification. The category was born from the launch of mobile gaming, as game studios developed arcade-like games which could be played on-the-go in short gameplays.
Baris Ozistek, a Chairman of the EMEA market for Netmarble Games Corp. (KRX: 251270), the largest mobile game developer in South Korea, stated that hypercasual games have grown to make up almost half of the games market, with 20% of new gamers coming from this category.
The popularity of hypercasual games was supported by their low cost and high speed of development, with high margin capabilities through advertisements and in-game purchases.
An example of a hypercasual game is Candy Crush Saga, a free-to-play mobile puzzle game developed by King Mobile, a subsidiary of Activision, which grew to 2.7 billion downloads, five years after its release in 2012.
Innovations in Gaming
The gaming industry’s speed of growth has resulted in dynamic changes in technological integrations and enhanced mechanical functions for the development of gaming products, platforms, and tools.
In a panel called “What Will Inspire the Next Big Thing in Games”, Dieter Schoeller, CEO and Co-founder of Headup, a German-based game developer and publisher, expressed his excitement for subscription models entering the gaming market, which have lower costs, longer customer life-cycles, and reoccurring revenues.
In the same panel, Jeferson Valadares, CEO & Co-founder of Doppio Games, a Lisbon-based voice-driven game developer, spoke about his company’s focus in enhancing the accessibility of playing games and introducing new user experiences through innovative voice activated game functions.
The gaming industry’s dynamic nature is providing opportunities for new companies and studios to develop games that disrupts the market and captures a significant user base. As trends continuously change, it will be interesting to see what next innovation or new category of gaming will go viral.
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