Are you getting a PS5 this Christmas?
If you are one of the lucky few who have either managed to get their hands on a Play Station 5 or have a direct connection to Santa Claus this Christmas, then make sure to consider the amount of time your kids are likely to spend gaming over the holidays.
Usually over the holiday period, the time spent online skyrockets. And with a more relaxed view on parental controls during the holiday season, online in-game spending can get out of hand.
The changing gaming business model
The Video Gaming Industry is now estimated to be worth $159.3 Billion in 2020, increasing by 9.3% from 2019. This represents a marked difference from the value projected in 2016, which had estimated the industry to be worth in the region of $90 Billion in 2020. Current forecasts estimate the video gaming industry to be worth approximately $200 Billion by 2023. These significant increases have been accelerated by the onset of the COVID-19 pandemic, and also the changing gaming business model.
The gaming industry business model has evolved considerably over the last number of years. Consumers tend to buy fewer numbers of games than they did previously, but spend more time and more money on the games that they do purchase. And so the gaming industry is focused on increasing engagement and extracting as much money as possible from in-game purchases. And thus the introduction of significant amounts of downloadable content including new features, expansion packs and loot boxes. All designed to increase the interaction with the game and increase the individual spend.
Many games are offered for free and instead choose to monetise through in-game purchases. They aim to make the game incredibly compelling and requiring in-the user to make game purchases to progress within the game. These are essential elements to driving sales. That is why the gaming industry is focused on getting every gamer to increase their time spent engaged with the game.
COVID-19 has helped to increase game engagement, as usage and time spent online has dramatically increased during the lockdown periods. Indeed, data from Streamlabs has shown that platforms such as YouTube gaming and Facebook gaming have experienced significant growth of approximately 20% increase in usage hours.
Aligned with gaming, and unique to this industry, is the activity of watching gaming video streams. Kids can spend hours watching others gaming online. This has nearly become as big as gaming itself. During the COVID-19 pandemic, all of this activity has increased dramatically because of both the new time available to people and their need for social interaction, which gaming provides.