The gaming industry was worth over $150 billion in 2019, and that trend will continue. This figure makes the gaming industry one of the biggest industries in the world. Innovations and changes to the industry are always big news. They have the potential to change the market significantly and set the direction for other companies looking to get in on the market. We look at what innovations will dominate over the next ten years.
The Next Hardware Generation
The release of new consoles from the big players always tends to dominate the market. It has been seven years since the release of the PS4, and the Xbox One and the next generation consoles will release by the end of 2020. The success of these consoles is what will determine the market for the majority of the next decade. However, both consoles will likely experience some success. The hardware packed into the new consoles is cutting edge for the market; both consoles will support up to 8K resolutions. We still haven’t achieved widespread adoption of 4K, so these consoles should set the path for home entertainment technological adoption for the next decade easily. First, we will have to wait and see if these features are what make or break the new consoles, though it will take a while to tell. I should mention that given the average shelf life of a gaming console is around seven to eight years, the end of the next decade should see a further release of a console generation. Therefore, it will be fascinating to see what happens and what technologies we will see in the production after next.
VR is heralded as the next leap forward for the gaming industry, though so far, it is still seen as more of a gimmick than a necessity. While Sony has leaped on the VR bandwagon by releasing the Playstation VR, Microsoft has yet to do so. Entry costs to VR are still prohibitively expensive to widespread adoption, mainly when there are no AAA titles that take advantage of the technology. This price-barrier might well explain the reasons why Microsoft has yet to leap. The technology behind VR is still under development, and the next big thing will look to be the development of haptic technology that will help players to control their characters with their bodies rather than using separate controllers. We may still be far away from the sort of technology featured in the film ‘Ready Player One,’ but we are not that far from it arriving, and it could well be here in the next ten years. The real test is to see what game designers can do with the technology and whether they can come up with a killer game that genuinely showcases the technology.
The Digital Revolution
While film and television have fully embraced the digital revolution, and digital delivery tends to be the preferred platform for new content, the gaming industry has yet to embrace it fully. While consumers want to take advantage of digital distribution, it is not quite there. It would seem to be a no brainer; there are advantages on both sides of the equation. However, one of the most significant barriers appears to be the cost. This is something of a paradox. Digital games are cheaper to produce and distribute for the game publishers, and yet on the popular games’ consoles, digital copies of the games tend to be sold at RRP rather than with any discounts. This is still valid many months after the release of a game.
Given that the RRP of many games is in the $60 price range, and some triple-A titles are even more than that, this puts consumers off purchasing digitally. Especially given that retailers such as GameStop are offering discounts and deals on physical copies of games. That is to say nothing of the second-hand market. The secondary market is an area that game publishers have always struggled with as when a game is sold second hand, then publishers see none of that money. Digital distribution kills the second-hand market, ‘stone-dead.’ Which is something consumers are opposed to. Digital platforms like steam have been hugely popular, though a large portion of this is due to the many sales and offers that heavily discount games on the platform.
The streaming model for music, film, and television is working well and allows consumers to enjoy their media agnostically to the devices that they have in their homes. This model is something that has never been the case for gamers. However, gaming companies are looking at ways in which they can embrace the streaming technology model to bring games to a broader audience. Google has recently launched its Stadia product to a mixed reception, and Microsoft is currently working on its Project XCloud technology for game streaming. Whether this model will work or not is still to be determined. The problem with streaming games is the inherent unreliability of the internet that underlies the technology. Temporary interruptions in communications might cause a small drop in quality for film or television; we can counter this by using buffering. Buffering isn’t an option for games that require responses to be instant. A glitch in comms can cause you to lose a game you were winning, and that is something that just puts gamers off. Therefore, this is a challenge we are working on still. We have to see whether we can overcome the issues.
Changing Revenue Models
Revenue models vary in gaming steadily over the last decade and will continue through the next decade. The traditional model was to sell a (relatively) low-cost console and then make money on the sale of games. These saw companies getting a seasonality to their revenues as the push around the holidays saw sales spike and then taper off for the rest of the year. This model has evolved with the introduction of DLC and live services. These keep players paying for games all year round.
Along with in-game purchases such as with Fifa’s FUT card packs, it means that companies can keep pulling in money all year round and keep gamers hooked on their games. EA saw their revenue from in-game purchases exceed their income for sales for the first time this year. This is something that the gaming press is keeping an eye on, though, as some games are becoming little more than a platform for content delivery, albeit in a pretty shell. We see this with some triple-A titles that have extra content included on their discs but hidden behind paywalls. A practice that doesn’t sit well with gamers.
Increasing regulation is something that has been quite prevalent in the news recently. Governments are looking to crack down on sprawling tech companies such as Facebook and Google as their models for attracting revenue come under increasing scrutiny. Games companies are getting caught up in a mess as well. The recent high-profile challenges to the practice of selling ‘Loot boxes’ in games is one of the most notable. Loot boxes offer in-game rewards that can be purchased using real money, though there is no guarantee as to what you get. Many people have seen this as a form of gambling that is encouraging children to gamble with their parent’s money often without their parent’s knowledge as they search for the latest must-have item. The fact that the money side of things is often hidden behind virtual currencies or tokens on adds to the fact that children don’t realize how much they are spending, and this has led to parents being surprised at bills running to thousands of dollars. Some countries are going so far as to consider legislation that bans loot boxes in games. What is certain is that the gaming press and players heavily criticize ‘pay to win’ loot boxes (those that offer more than mere cosmetic changes).
Attracting more and more players in the market has always been a challenging prospect for game companies. The omnipresence of smartphones and tablets has created a demand for ‘casual gamers,’ and this is only set to expand massively over the next decade. As more and more people walk around with gaming machines in their pockets, then companies are wanting to try and attract more players to their games. Now there is an explosion of the so-called ‘freemium’ style game. These are games that are ostensibly free to play but offer paid for incentives to speed up or improve the gaming experience. Games such as Candy Crush seem to have struck the right balance and have appealed to the mass market of casual gamers while still being able to rake in money from upselling in the game. Other titles though have gone too far, and the fiasco that EA saw with titles such as Dungeon Keeper shows that we will strike a balance. The casual gaming market will keep developing over the next decade and one that is to be watched with interest, mainly as process power within mobiles and tablets improves and allows for more sophisticated titles.h
As the Nintendo Switch has shown, gaming doesn’t have to be restricted to the bedroom or living room any longer. As technology improves and you can get more power in handheld devices, then this is changing the way that people play games. The mobile and smartphone gaming market already holds the share of the digital gaming market, and this will only continue. The ability to play anywhere or maybe just even the ability to play whilst doing other things (e.g., Watching tv or films) is changing the way that people adapt to gaming. Companies that will take advantage of this are going to succeed in the next decade. If this pairs successfully with streaming services that will be able to deliver top-quality games regardless of the platform, then it is only going to make mobile gaming and portable gaming more prevalent. There will always be the place for those that want their games running on state-of-the-art technology and delivered in the best quality. However, that is only a smaller subsection of the total gaming market now rather than the bulk. The mass market is for lower quality causal games, and that is where companies are going to succeed over the next decade.
Gaming and eSports are becoming bigger and bigger. As fiber networks roll out across the world, then the ability to play high-level games online becomes more accessible. The eSports market is one that is just growing and growing. ‘High-level’ tournaments like those offered by Blizzard and Riot are seeing players winning vast sums of money and thousands of people tuning in to watch the competition. These tournaments are something that will only continue to grow over the next decade. There have even been talks to get eSports showcased at places like the Olympics. Mainstream acceptance of eSports is coming in the next decade, and this will change the landscape of gaming over the next decade.
The gaming industry behemoth will continue to develop and evolve over the next decade. New development in technology will dominate the landscape and hit all the headlines. However, many other changes are coming in the background that may well see more of a shift in the gaming market. We will have to patiently wait and observe the decade pans out, but one thing is sure, the gaming industry is only going to continue to grow. The big players have vast sums of money to be made and invested in the success of gaming as a market, and they are going to drive it forward no matter what.