Why ignoring gaming is not an option for marketers any more

The numbers around the global gaming business are staggering. According to a report by e-sports analytics firm Newzoo, it will be a $152 billion business in 2019: three times the global movie business. 

It is estimated that there are 2.5 billion gamers in the world, accounting for over 40% of its population. This is a sea change compared to a decade back when PlayStation 2 consoles reached a peak of 157 million.

Mobile gaming is 45% of the market and people spend an average of 24 minutes per day on gaming. ‘Candy Crush’ will have more lifetime revenues than ‘Avengers: Infinity War’. 

It is now very clear that the gaming market has stratified itself in terms of user base.

 

At 200 million to 300 million users, it is niche or hardcore. Mass adoption kicks in once that base crosses a billion. There are category killers: games that start hardcore but go mainstream, or unique games like ‘Pokemon Go’ that straddle physical and digital worlds through augmented reality. Console and mobile gaming can ride off each other – like ‘Fortnite’ has demonstrated. 

And so, given this stratification, here are a few trends to watch out for: 

1. This will be the year when brands will embrace advertising on mobile gaming: This will be the result of video prices increasing on OTT platforms and clutter growing on YouTube and Facebook – not necessarily because they embrace gaming as a category whole-heartedly.

Even as late as 2016, mobile was dominated by banner based ads. Today, video ads represent almost 65% of total revenue in mobile advertising. 

Driven by the proliferation of OTT and social video, advertisers are making video ads the lingua franca for mobile advertising. However when it comes to showing video ads on gaming environments at scale, brands are still sitting on the fence. 

Games with a huge installed base such as Candy Crush which used to make money from in-app purchases are now showing ads in the popular rewarded video format – where the user can get extra points ( or any in-game currency) when he watches an ad between levels. It’s a classic ‘break’ time like in a sporting event telecast.

A 15-second rewarded video ad provides brands the metrics they badly need. A recent Comscore research indicates that rewarded video provided a double digit lift over standard mobile benchmarks for ad recall (+21) and advertising/message association (+17). Additionally, there was a five-point lift for brand favourability and four points for purchase intent.

This is the year that brands will wake up and smell the obvious – when premium catch up TV and OTT is expensive and YouTube is now showing three ads per video viewed – gaming is the environment which is clutter-free, lean forward, commands engaged viewing and possesses scale.

2. E-sports and gaming will become a continuum category worth harnessing in South East Asia: Asia is the largest mobile gaming market in the world, with China, Japan and Korea dominating and South East Asia and India growing faster than any other market (22% and 43%). At the same time, esports is growing rapidly in South East Asia. It will be an official medal event in the 2022 Asian Games.

If you connect the dots, there is an emerging $10 billion market in 2021 for companies that can harness the potential of a demographic with a lot of similarities.

There are synergies in exploiting the esports and gaming market together – in terms of community development and promoting a brand across offline events and online games to create excitement. 

We are already seeing interesting activity in this sector. Lazada has brought the Razer game store to South East Asia and smaller esports companies have been acquired by news firms like IDN media in Indonesia. I bet the activity from a M&A and alliances side will only increase. 

3. 5G can save VR gaming and make it immersive: The ‘fidelity belly’ was a term coined by Kevin Maney in his book ‘Trade-Off’. It refers to a zone where the fidelity created by a new product (in this case, a gaming experience) is not sufficiently good enough to forego the inconvenience (wearing new headgear).

But with the advent of 5G and the ability to probably have an add-on wireless headset to your smartphone for special effects, by 2021 you could see a new dimension of gaming emerge. One that 800 million Pokemon Go players may want to graduate to. VR will also get a boost during the Japan Olympics. 

These numbers and trends should speak loud and clear to anyone who still pooh-poohs the gaming audiences as ‘niche’. Especially in markets like Australia where there are some idiotic advertising folk who go around saying ‘Oh we don’t advertise on gaming’. Jayesh Easwaramony is senior vice president at TruFactor a business unit of mobile ad specialists InMobi, based in Singapore