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  1. 1. Litebulb Entertainment Research™ Industry Opportunity Analysis: Gaming Written by Taylor Stanyon. ID N8614326
  2. 2. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 1 of 11 Executive Summary It is important for trends within the entertainment industries to be effectively understood to ensure that the development of entertainment content is on target. Perhaps the most open to change area of the entertainment industry is gaming, with many technological developments allowing for constant advances and shifts in how gaming is consumed. This document includes a detailed analysis of where the current industry stands in regards to trends that affect content, conduit, consumption and convergence. These trends are largely caused by technological advances rather than audience changes. This document also includes an analysis of the primary and secondary audiences within the gaming industry. Trends that become apparent in these audiences are also addressed and are important to understand what opportunities may arise within the industry, and what will allow for future development and growth. Two very key opportunities have been outlined and deconstructed. Three possible ideas to allow for future convergence in the gaming industry have also been created and explained all with reference to the existing industry and audience data and trends.
  3. 3. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 2 of 11 Table of Contents Executive Summary ................................................................................................... 1 Industry Analysis ........................................................................................................ 3 Audience Analysis ...................................................................................................... 5 Key Opportunities in the Industry............................................................................... 6 Ideas for Future Implementation and Development................................................... 7 Mobile and Console Platform Integration ............................................................... 7 Virtual Reality Implementation................................................................................ 7 Development of a Traditional Sport- Entertainment Model for International E- Sports ..................................................................................................................... 8 References................................................................................................................. 9
  4. 4. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 3 of 11 Industry Analysis With the rise of the digital age, video games have evolved from occasional leisure activities to parts of life consumed on a daily basis by millions around the world. According to the Entertainment Software Association (ESA) (2013, page 11), the consumer spending on video game hardware, accessories, and content in 2012 exceeded $20 billion. This is a staggering statistic when compared to the cumulative box office gross of $7.5 billion for the film industry so far in 2013 (The Numbers, 2013). This incredible figure is a direct result of the massive paradigm shift and convergence that the video game industry has recently undergone. This shift, caused by the advances in technology and wide usage of smartphones and wireless devices has changed the way audiences consume gaming content. The popularity of mobile gaming has risen drastically, as 51% of gamers play on a smart phone or wireless device (ESA, 2013). It is obvious that this industry, along with many others, will continue to evolve and shift as technology creates more opportunities for convergence. There are currently three main conduits that video games are consumed on; consoles, personal computers, and mobile devices. Console gaming is where the industry was born and is still a huge focus and a competitive market with over 6.8 million console sales in 2013 (D’Angelo, 2013). These console sales were dominated solely by three hardware manufacturers that produce the three most popular consoles the Sony PlayStation, the Microsoft X-Box 360, and Nintendo Wii. Sony dominates the 2013 console market with 50.8% (3.4 million console sales) market share, followed by Microsoft with 36.4% (2.4 million console sales) market share (D’Angelo, 2013). An astounding 51% of U.S households own a video game console, and those that do own an average of two. Important times for the industry are often when manufacturers release the announcement of a new generation of consoles. Content creators utilise the ‘stores’ available on the consoles to distribute downloadable content (DLC), often at extra charge and with great success. Microsoft and Sony are currently marketing their next generation of consoles, the X-Box One and PlayStation 4 respectively. According to D’Angelo (2013), consoles see the most sales the year of their release, so as to take full advantage of this and to ensure that each console is a
  5. 5. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 4 of 11 success, the manufacturers must effectively advertise their products to international markets and ultimately change the way gaming content is consumed. Personal computers (PC’s) have been used for gaming since the late 1990’s, and have evolved into the most effective platform for PC gaming. As a platform, PC’s offer many ways to access different content; through free to play downloads, digital purchases (both online and through clients) and physical purchases. Free to play gaming has seen huge growth in the past year, in particular multiplayer online battle arena (MOBA) games have become more popular than gaming juggernauts such as World of Warcraft (a peak of 12 million players in 2010) and other paid subscription based games (Sinclair, 2013). One particularly noteworthy free to play MOBA is League of Legends, with over 32 million registered players and international professional tournaments and leagues that run year round (Augustine, 2012). PC gaming is the foundation of E-Sports, a professional gaming movement that broadcasts online internationally. The Season Two World Finals for League of Legends had 8.2 million viewers becoming the most watched E-Sports event ever with a prize pool of 5 million dollars (Lien, 2012). PC gaming has also seen a paradigm shift as a result of digital convergence with regards to content accessibility very similar to that of the iTunes shift in the music industry. Digital game purchases are now common and accessed through websites and downloadable clients, the most noteworthy of which is Steam, with approximately 6.2 million user logins daily (Steam, 2013). This noteworthy shift towards the consumption of the E-Sports sub- product, and the increase of digital sales must be recognised by producers as this is the future of PC gaming. The final and most popular gaming conduit that has only recently become a player in the gaming industry is the mobile device. One reason for mobile gaming’s success is what can be referred to as a ‘triple crown’ of mobile usage, which is reach, engagement and monetisation which has allowed gaming to be consumed as it never has before (Chou, 2013). In the USA alone the amount of mobile gamers has surpassed 100 million, seeing an increase of 35% in the year (Newzoo, 2012). Over 80% of revenue generated from mobile applications was from gaming content, which is extremely broad and caters to numerous audiences (Chou, 2013). 93% of paid application downloads are game applications, a staggering amount which resulted in $12 billion dollars being generated in 2011 (Intellectsoft, 2013). These staggering
  6. 6. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 5 of 11 statistics are a direct result of the convergence seen through application stores, allowing for device users to consume gaming content in the touch of a button. Audience Analysis Gaming content is extremely diverse, with target audiences ranging from children to teens to adults, and as a result gaming as an entertainment platform has an incredibly huge international reach. With the rise in mobile gaming, the amount of audience demographic variance has increased, meaning that game developers must adapt in order to effectively deliver popular gaming content. Each gaming platform caters to an individual primary audience depending on levels of involvement with the games and industry. As technology advances and allows gaming content to develop and undergo complete paradigm shifts, so will the audiences for gaming content change, and these trends must be recognised by developers in the industry. On a superficial level, research shows that 68% of gamers are over 18 years of age, and that the average gamer is 30 years old. These statistics may be surprising, however not as surprising as the fact that 45% of all gamers are women, representing a larger portion of the audience than boys under the age of 17 (ESA, 2013). These statistics make the primary audience obvious as the highest number of gamers internationally are males aged 18-45. This perhaps stereotypical audience may be overtaken in the future by the current secondary audience of 70% of all women aged 12-24 that currently play video games, mostly on mobile devices (ESA, 2013). The rise in the numbers of female gamers is a direct result of mobile gaming emerging as a viable entertainment conduit. Geoffrey Zatkin of EEDAR Research says “We basically have a gaming device in every single pocket… It’s now social(ly) acceptable to play games anywhere” (Mobile Minute, 2013). The mobile gaming explosion has seen females rise to represent 60% of mobile gamers, and 63% playing social games with interactive engagement mechanisms (DeLuca, 2013). Females between 20-35 play brain quizzes, simulation games, and management games the most, whilst females ages 35-50 played slots and social turn- based games the most (Laughlin, 2013). Male mobile gamers tend to skew towards competitive games, focused on action and
  7. 7. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 6 of 11 role playing (Laughlin, 2013). According to Laughlin (2013) mobile gamers have a high willingness-to-pay in order to progress faster in a game, in particular commitment- oriented games (popular with females) have incredibly high monetisation prospects that are achieved through ‘in-app’ purchases. Key Opportunities in the Industry No other entertainment product can be consumed in as many ways as gaming can. The infinite amount of content and various conduits allow for new developments to be made in the industry almost daily. The future of the gaming industry evidently lies within mobile gaming. Whilst this conduit is not the most exclusive it is the most popular and effective at this current point in time. Applications that are free to play and offer in app purchases are extremely successful on the most part as a result of the reasons mentioned in the industry analysis above. An excellent example is “Candy Crush Saga”, a free to download game that has set records for the highest grossing application of all time. With 44 million monthly active users, “Candy Crush Saga” is played more than 600 million times a day, generating an estimated $633,000 each day projected to amount to $231 million in 2013 (Dickey, 2013). This format of content (free to play- in app purchases) is the most easily monetised game type for the mobile gaming conduit. This style of content has already been proven incredibly successful and is a key opportunity in the ever-expanding mobile gaming market. Whilst mobile gaming has reach to casual gamers through mobile devices, professional gaming based around console and PC gaming has a well connected core gaming audience that is significantly more invested in the industry. The already established yet growing professional gaming scene create huge community events that have exploded in popularity. Major League Gaming (MLG) is a “…producer of broadcasts and video game tournaments for the hard to reach, highly- engaged audience of 18-34 year old males” (MLG, 2013). The 2012 MLG season saw one year growth of 334% in live viewers to reach 11.7 million, statistics which are consistent throughout all content broadcasts and professional leagues (MLG. 2013). The live event for the 2013 League of Legends World Finals sold out the Stapes Centre
  8. 8. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 7 of 11 in under an hour with more than 10,000 tickets sold ranging from $40US-$100US (Pitcher, 2013). Monetisation of these events is also achieved through advertising, sponsorships, merchandise and much more. E-Sports is now a viable entertainment sub-product of the gaming industry, and the producing of E-Sport content represents a massive opportunity for monetisation and eventually all aspects of the traditional sport industry will be emulated by E-Sports. Ideas for Future Implementation and Development Mobile and Console Platform Integration With the rise of mobile and the fall of console, console content developers should integrate the two platforms together creating a much more involved gaming experience. For example players could have the primary gameplay played on a console, and then utilise an app to manage the character, quests or play mini-games and access bonus content whilst out of the house. Current downloadable content (DLC) for consoles is purchased on the console itself, however this convergence would make this DLC available on mobile devices and therefore conform to the in app purchase content format mentioned above. By combining the primary console gameplay with the mobile gaming platform juggernaut, content developers would create the ultimate immersive gaming experience with a hugely broad potential audience, and open many doors for monetisation opportunities. Virtual Reality Implementation The idea of virtual reality simulators has made a return in the form of the Kickstarter project, Oculus Rift. The development of this brand new conduit for gaming will allow for new content to be developed and consumed as it never has before. Once the technology is released (expected to be late September), console manufacturers, in particular Sony and Microsoft, should actively support and integrate the Oculus Rift into the next generation of consoles (OculusVR, 2013). The Oculus Rift and the next generation consoles could be sold in
  9. 9. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 8 of 11 bundles, ultimately the same process that was undertaken with Xbox Kinnect could be imitated and would prove incredibly successful as virtual reality technology has not been made widely available before. Development of a Traditional Sport- Entertainment Model for International E-Sports Current E-Sports as entertainment is very similar to that of the traditional sports model (NFL or NBA), yet there is enough content available to extend the current model even further. The development of a gaming exclusive television channel that featured gaming industry news programs, E-Sports tournaments, player and team streams, advertising, and other exclusive gaming related content would prove incredibly successful considering the huge audience that already engages with E-Sports. This channel would have to be made available through the internet (subscription based) and other cable television providers to prove successful. Once the channel is developed, mobile device applications would be developed (such as the official AFL app) to once again immerse the audience into the channels extensive content. Overall E- Sports has the audience base already strong enough to move towards a massive international monetised conduit that would be consumed on many different platforms.
  10. 10. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 9 of 11 References Augustine, J. (2012, October 12). League of Legends has 32 million active players, is now as big as StarCraft in Korea. PC Gamer. Retrieved from bigger-than-starcraft-in-korea/ Chou, K. (2013, January 31). Mobile Kills the Console But Advances the Gaming Industry. Wired. Retrieved from mobile-kills-the-console-but-advances-the-gaming-industry/ D’Angelo, W. (2013, September 3). 2013 Year on Year Sales and Market Share Update to August 24th . VGChartz. Retrieved from update-to-august-24th/ DeLuca, J V. (2013, May 13). Females and Mobile are Reshaping Traditional Gaming Demographics. Trademob. Retrieved from mobile-are-reshaping-traditional-gaming-demographics/ Dickey, M R. (2013, July 9). Insanely Popular Game Candy Crush Saga Is Bringing In An Estimated $633,000 A Day. Business Insider Australia. Retrieved from Entertainment Software Association. (2013). Sales, Demographic and Usage Data, Essential Facts about the Computer and Video Game Industry. Retrieved from Entertainment Software Association. (2013) Game Player Data. Retrieved from Intellectsoft. (2013). Most Wanted Gaming Stats. Retrieved from Laughlin, D. (2013, March 29). Love, Courtship, and the Promiscuous Male Mobile Gamer. Flurry Blog. Retrieved from Lien, T. (2012, October 23). League of Legends final attracts 8.2 million viewers, Season 2 Championships most-watched eSports event of all time. Polygon. Retrieved from final-attracts-8-2-million-viewers-season-2 Major League Gaming. (2013). Major League Gaming 2012 Season Generates 334% Growth in Live Online Viewers. Retrieved from in-live-online-viewers
  11. 11. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 10 of 11 Mobile Minute. (2013, April 1). Mobile Game Developers- Are You Targetting the Right Audience? Mobile Minute. Retrieved from game-developers-areyou-targetting-the-rght-audience/ Newzoo, (2012). Mobile Games Trend Report. Retrieved from The Numbers. (2013). Domestic Theatrical Market Summary for 2013. Retrieved from Oculus VR. (2013) News. Retrieved from Pitcher, J. (2013, September 2). League Of Legends finals a sell out at Staples Center, North American regionals conclude. Polygon. Retrieved from staples-center Sinclair, B. (2013, July 26). World of Warcraft drops to 7.7 million subscribers. Games Industry International. Retrieved from million-subscribers Steam. (2013). Steam and Game Stats. Retrieved from
  12. 12. Litebulb Entertainment Research™ Industry Opportunity Analysis Page 11 of 11