Gaming Industry Braves Covid

By Pickle  July 6, 2020

Though all industries faced a major hit due to the Covid-19 pandemic, mobile game advertising revenue jumped by as much as 59% in April 2020 compared to April 2019 as the Covid-19 pandemic led millions of people to spend more time playing video games on their smartphones By Dinesh Gupta

The Covid-19 pandemic has dominated 2020 like nothing else ever before. It took weeks to spread across the world, with global infections exceeding 11 million and deaths well beyond half a million mark so far. Worldwide lockdowns to contain the pandemic spread and fatalities have severely affected daily lives of consumers with majority of businesses impacted severely. IMF’s World Economic Update predicts the world economy to contract by close to 1.9%, with 2021 world GDP projected to be about 6.5% below the pre-Covid-19 projections. Compare this to the Great Recession of 2008-2009 where the world GDP fell by less than 1%, making the 2020 Covid-19 pandemic a crisis like no other with a very uncertain recovery.

The Media & Entertainment industry, like any other industry, is facing unprecedented impact from the spread of pandemic like all other businesses. Ernst & Young’s latest report looks at the impact of Covid-19 on the media and entertainment industry in India where it evaluates the current patterns and compares the pre-Covid-19 consumption patterns with how it can revive based on its strengths.

The report studies the meteoric changes in consumer behavior and consumption, stoppages in content production, cancellation of live sports and events and cuts in advertising spends that are impacting companies across the Media & Entertainment ecosystem. Brands, Media platforms and Media agencies which are struggling to maintain media spends due to operational volatility face severe loss of advertising revenues. Films and Television producers are ailing due to the stoppage of all productions and closure of theatres until further notice. These are truly unprecedented times, or times that no industry could have been prepared to handle. The same report also mentions massive growth opportunities in video gaming, online education, shopping and banking platforms.

Unity Technologies, a Danish-American video game software development company based in San Francisco, released a study that clearly establishes Gaming as one of the very few industries to have witnessed positive and astronomical growth in this pandemic. The study is based on mobile games that use Unity’s monetisation platform that helps over 60,000 game developers make money from over 300,000 game titles.

  • During the early days of the pandemic, the mobile gaming activity rose 17% in the US alone. Amongst the mobile gamers that watch ads, the average number of ads viewed rose 14% to 3.8 per day
  • Mobile game advertising revenue jumped by as much as 59% in April 2020 compared to April 2019 as the Covid-19 pandemic led millions of people to spend more time playing video games on their smartphones. This made the ad impressions surge over 57% during the pandemic
  • In-app purchase revenue growth for mobile games jumped 24% to record highs in March-April 2020 far exceeding numbers typically seen during the holiday period
  • eCPM (effective cost per mille) for the average ad in a mobile game fell almost 20% in late March 2020 compared to January amid a dip in brand and non-gaming marketing campaigns. As per study, the eCPMs typically decline in the post-holiday period before leveling off in March
  • The volume of ads and conversion rates increased. The pandemic led to spike in ad revenues and impressions on mobile devices for the gaming category. The jump in ad revenue more than made up for the decline in eCPMs as many marketers suspended or delayed ad campaigns during the pandemic led lockdowns

While the data from Unity Technologies study largely indicates that mobile gaming ad revenue peaked in mid-April before drifting downwards, it may be too early to depict or project actual numbers in May, June & July 2020. There is a high likelihood that the lockdown period will remain encouraging for the gaming industry. As the spread of pandemic is increasingly contained and recoveries dominate, with people leaving their homes, we will witness the numbers falling back to historical pattern that is more regular.

Statista’s Global Digital Market Outlook pegs the digital media market at US$ 172,502 mn in 2020 with a 9.8% year-on-year growth projection. This forecast was adjusted for expected global impact of Covid-19 pandemic. Video Games share with a projected market volume of US$ 92,633 mn and 11.41% growth over previous year dominates the digital media market with a close to 54% worldwide share. This makes the Video Games industry much bigger than Video-on-Demand, ePublishing and Digital Music put together. Majority of the revenues for video gaming are contributed by mobile gaming which is likely to contribute as much as 60% in 2020.

Dinesh is a Director & Co-Founder at Sacom, a tech-based content distribution company that does content licensing, runs content platforms and enables monetisation for some of the top gaming publishers & SVoD apps through digital subscription products in Asia. He can be reached at dinesh.gupta@sacom.in

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