Throughout this holiday season, all eyes have been on the next-gen consoles from Sony and Microsoft. The new gaming systems will provide plenty of entertainment to a few hundred million gamers during their lifecycles, but it can be easy to lose the forest for the trees in this industry. The number of smartphone users across the globe is approaching 4 billion, and gaming remains one of the most popular uses of mobile devices. Between consoles and mobile, for game publishers the difference in potential addressable audiences is vast.
Tencent’s mobile phenomenon, Honor of Kings, is recording 100 million daily active users. PUBG Mobile publisher Krafton is looking to go public next year and could be valued at a staggering $26 billion. Over 300 million players have downloaded Call of Duty: Mobile, and Activision Blizzard has been stressing to investors that mobile gaming now represents its “biggest opportunity by far” – it’s planning on bringing all its major franchises to mobile in the coming years. Mobile publisher Scopely, which operates popular games like Marvel Strike Force and Star Trek: Fleet Command, also just raised $340 million (in a pandemic, no less) at a $3.3 billion valuation.
There are no signs of mobile gaming’s ascension slowing down. We may see a blurring of platform lines in part due to cross-platform franchises like Fortnite and PUBG, as well as technological advances like cloud gaming, but the biggest share of gaming revenues will continue to come from mobile devices. This has been especially true during the pandemic, as Interpret’s GameByte® reveals that households with children ages 3-12 are spending more on mobile gaming. Among those who purchased a mobile game app, 47% spent more during the pandemic, and among those who purchased mobile in-game microtransactions, 40% spent more on that content as well.
The Xbox Series X and Series S consoles are launching this week, and interest in next-gen gaming has been quite strong, but what comes after those systems as the console cycle winds down 5-7 years from now? The “death of consoles” has been a favorite rumor in media circles for years now, and while the future is uncertain, Microsoft has plainly put its cards on the table: cloud gaming technology and subscriptions may be the next evolution.
As reported by Stevivor at the end of October, Xbox boss Phil Spencer remarked to Stratechery, “I think you’re going to see lower-priced hardware as part of our ecosystem when you think about streaming sticks and other things that somebody might want to just go plug into their TV and go play via xCloud. You could imagine us even having something that we just included in the Game Pass subscription that gave you an ability to stream xCloud games to your television and buying the controller.”
If that sounds like a familiar strategy, that’s because it’s precisely what we’re seeing from cloud gaming options like Google Stadia (which utilizes a Chromecast to stream on TVs) and Amazon’s newly unveiled Luna platform. It’s important to recognize that this does not necessarily signal the end of consoles, but it does clearly signal a shift in strategy for Microsoft’s gaming unit. It’s a strategy that’s working too – despite being at the tail end of the Xbox One’s lifecycle, the gaming business enjoyed a 22% spike in revenues recently, largely due to software and services like Xbox Live and Xbox Game Pass.
Hardware in the console business is typically a loss leader, so if Microsoft can drum up recurring revenues from millions of Xbox fans, the company isn’t concerned whether those people are playing on consoles, PCs, or streaming sticks. As for the latter, they’re far cheaper to manufacture, and the good news for Microsoft is that Xbox Owners already have a strong affinity for the technology. According to Interpret’s New Media Measure®, among Xbox One owners in the US, nearly 40% own a Fire TV device, 44% use a Roku, and more than a quarter own either a Chromecast or Apple TV.
Gaming has been on the rise in the US as much of the nation continues to seek out entertainment while social distancing. That’s especially true among kids who have been watching more gameplay-related videos online and have been playing more games on mobile devices, according to Intepret’s latest GameByte® report.
Among kids age 3-12, weekly gaming hours increased from 11.9 in Q1 to 13.4 in Q3. Additionally, when not playing, many kids enjoy watching others play their favorite games, as 66% report watching more gameplay-related videos during the pandemic.
Mobile devices have long been an entry point for gaming among children, and mobile was far and away the most popular gaming platform for kids during the last 6 months, Interpret data shows. 87% of kids age 3-12 report having played a mobile game, and that figure jumps to 92% among girls age 3-9. There was also a significant increase (from 48% in Q1 to 56% in Q3) in girls age 6-9 playing a social PC game.
In fact, when it comes to weekly hours spent watching gameplay videos, the 3-5 age bracket among girls saw the biggest increase during the pandemic, rising from 3.5 hours in Q1 to 5.7 hours in Q3. The data is encouraging and points to further interest in games among girls at an even earlier age, which bodes well for continued involvement from women in games in the future as these girls grow older. The Entertainment Software Association (ESA) already shows strong participation from women across various age brackets, especially on smartphones.
Sony is currently gearing up for the launch of its next-gen console, PlayStation 5, but its older systems are in the spotlight currently, especially as parents look to keep their kids socially distanced, safe, and entertained during the ongoing pandemic. According to Intepret’s GameByte®, US households with kids age 3-12 are seeing increased levels of PlayStation system ownership when comparing Q1 to Q3 2020, while Nintendo Switch and Xbox One ownership remained flat or slightly down. Nintendo 3DS, which was recently discontinued by Nintendo, was also down.
Reported PS4 ownership levels increased from 49% to 54% among gamers age 3-12, and even the older PS3 saw slight gains. It’s possible that some of these ownership increases among kids comes from older siblings as hand-me-downs or from parents who are ready to pass their PlayStation systems to their children as they get ready to purchase a next-gen system.
Gaming usage (not just ownership) among kids also increased on PlayStation systems, as well as across Android smartphones, iPhones, and computers, while holding steady for Nintendo Switch and Xbox One. With many kids staying home, and now remote schooling, parents are doing their best to keep their children entertained and gaming is way up as a result. 72% of kids report playing more video games during the pandemic, which leads other forms of entertainment, and 47% of households with kids report decreases in social activities.
Playdates are clearly a risk during the pandemic, so online gaming is one way for kids to still engage with their friends. In fact, Interpret data shows that 42% of kids now play online with their real-world friends, which is up from 36% during Q1. It’ll be interesting to see how these behaviors potentially evolve as the pandemic eventually abates.
Roblox, Minecraft, and relative newcomer Core all share similar traits: they’re driven by user generated content and they’re inching their way towards earning “metaverse” status. Much like Epic Games’ popular Fortnite, these three have been evolving from video game to full-on entertainment platform.
Roblox recently held a virtual fan meetup with pop star Ava Max and wants to do more virtual music events, Minecraft had its own virtual concert, Block by Blockwest, earlier in the year, and Core – a bit like Roblox for older gamers – is heading in the same direction and gained $15 million in funding from Epic.
The momentum behind user generated content-based games is undeniable. Roblox, which has been available since 2004, now has 115 million monthly active users and raised $150 million back in February at a $4 billion valuation. Moreover, the company is now actively preparing for a public listing next year in which its valuation could jump to $8 billion. Microsoft saw the potential back in 2014 when it purchased Minecraft studio Mojang for $2.5 billion – since then, Minecraft has become a global phenomenon with 200 million copies sold and over 126 million monthly players. Microsoft even distributes a Minecraft Education version to schools. And Core, which has raised a total of $60 million thus far, could be the most ambitious yet, as it aims to transform game creation and transform gaming much like YouTube and Twitch revolutionized video content.
According to Interpret’s New Media Measure®, both Minecraft and Roblox have enjoyed high levels of familiarity among US consumers, with 42% of Americans familiar with the former and 33% familiar with the latter. That puts these user generated content-based titles in similar territory as other blockbuster game franchises, like Fortnite (37% familiar) and Grand Theft Auto (34% familiar). The world of tomorrow is being constructed by your kids today. Are you ready?
Cloud gaming has been talked about as a future industry disruptor for some time now. There have been numerous attempts over the years, but a combination of internet infrastructure hurdles and lack of consumer interest made it impossible for early contenders to succeed. Things have begun to change, however, as Sony (PlayStation Now), Microsoft (xCloud), and Google (Stadia) are all investing heavily in the market. And now Amazon, which already powers much of the business world with its cloud-based Amazon Web Services, has joined the cloud gaming arena.
Amazon Luna is launching in early access for $5.99 monthly across PC, Mac, Fire TV devices, Android and iOS (via a web app). Amazon is inviting players to request access and then if they are invited into early access, they can purchase the Luna-specific controller for $49.99. The controller is designed to reduce lag by connecting directly to the cloud, but Luna allows for any Bluetooth-enabled controller to be used.
Unlike Stadia, Luna is offering access to games (more than 100 to start) via a subscription with no need to purchase titles on the service separately. Moreover, Luna is planning to offer “channels,” beginning with a Ubisoft-specific portal that will provide day one access to upcoming releases like Assassin’s Creed Valhalla and Far Cry 6.
What could be a big differentiator for Luna is the service’s planned Twitch integration. Amazon intends to include Twitch streams for top games, and viewers can start playing those games instantly with one click. Twitch has nearly 4 million content creators and is forecast to reach 40 million monthly active users in 2021. That’s a built-in audience that would make any service jealous.
Considering the nascent state of cloud gaming, global interest in the technology is fairly strong among both Twitch viewers and Amazon shoppers, according to Interpret’s NMM: Global Profiles®, with 18% of the Twitch audience and 12% of Amazon customers stating they are likely to try a cloud gaming service in the next 12 months.