Given the 2020 we’ve had, I’m not too confident in predicting what’s going to happen next week, never mind next year! However, some trends are clear, and all the signs point to another successful year of phenomenal growth for the global games industry in 2021. With a narrative of new entrants, new powerhouses, rising superstars and breakthrough models, the business of video games will be as captivating as the Mid-Season Invitational.
Consolidation will continue on all fronts
As with most maturing sectors, we see consolidation at the top end as well as the strongest players mopping up the hottest talent and IP on the block. Alongside the tech superpowers of Microsoft, Tencent and Sony, the market cap of the world’s leading video games companies has soared in 2020 – Nintendo to over $70bn, EA over $40bn, Take-Two over $20bn. It’s not surprising therefore that we are seeing moves at the top end of the market, like Microsoft’s acquisition of ZeniMax and the potential acquisition of Codemasters by EA or Take-Two Interactive. Maybe there are some other mid-tier star publishers on the New Year’s shopping list? Look out for more Chinese exploration of the West too, aided by their supreme experience of the F2P model.
Esports – the second biggest spectator sport in the world
In just over a decade the global esports market has grown to over $1bn with a following, second only to football. Whilst esports is estimated to be the second most followed sport, it has one of the least monetised fanbases. And engagement in esports amongst gamers is still below 10% in the US, UK, Germany and France. With so much room for growth, with sponsorship and advertising making up over half of the revenue streams, and consolidation amongst the main players (like the merger of ESL and Dreamhack, and Vindex acquiring Belong), we will see record-breaking esports stats in 2021. And that’s even if huge live events take some time to return to all parts of the globe. Even David Beckham’s advisers have recognised this, with the former football star owning 5% of Guild Esports. Watch out for huge brand partnerships and bumper prize pots.
A landmark year for cloud gaming
The global rollout of 5G connections is forecast to reach 1bn in 2021. Combine that figure with the inevitable tightening of personal budgets after this annus horribilis, and ‘21 may just be the year that the subscription-based cloud gaming proposition lands as the realistic and compelling ‘all you can eat’ offer that it has promised to be. And look out for the new and alternative providers like the global telcos and smaller innovative platforms to compete with Microsoft, Amazon, Tencent, Google and Facebook.
Show me the monetisation!
We all know that gamers aren’t a homogenous group, with over a third of the population already playing or watching games. So, the prize in ‘the games space’ is enormous and increasing. 1st party platforms, AAA publishers, digital stores and streaming channels are all jostling for player attention and ‘stickiness’. They’re appreciating that rich data-driven profiling and close player interaction will ultimately lead to greater commercial success. We will continue to see a proliferation of ‘direct to consumer’ approaches from all the above, which, in some scenarios, will be sub-optimal for the player experience. We will see even more consumer brands drawn to the potential of gamers, as music, fashion, sport and TV extend into the gaming metaverse. Can advertising revenue break into PC and console whilst protecting the sacred gaming experience? Will whoever comes out on top in the competition for player loyalty be down to who uses the data most effectively, has the best offer or simply the best IP?
Games are an even greater force for good
As a Trustee for Safe In Our World, the games industry’s own mental health charity, I’ve seen first-hand just how well the gaming community comes together to focus on a common cause. Our mission is to raise awareness of mental health in the games industry and amongst gamers, changing perceptions and creating safe places to work and play. This is perhaps my safest prediction: in 2021, the games industry and the wider gaming community will continue to prove to the world that we are compassionate and empathetic, with our finger on the pulse of what is truly important in these strangest of times.