2020 – Amazing rise in Gaming and Why In-gaming Ads are good for You

What is gaming?

Video games are different forms of games played on a smartphone, smartwatch, tablet, PDA, gaming console, or with a wearable device. Often when we think of video games, what comes to mind is games on App Store, mobile games, online games, computer games, digital games, virtual reality (VR) games, etc. From 2000 to 2020, the video game industry has not looked backward. The recent coronavirus (COVID-19) pandemic instead of causing a downturn in business, has led to a surge in the overall purchase/download of games benefiting the video gaming industry. Here is everything on gaming – what is gaming, types of video games, the growth of the global gaming industry, the Indian gaming industry and advertising in gaming.

A Brief History

The origin of video games is traced to the 1950s and 1960s when professors and students at MIT played video games such as 3D tic-tac-toe and Moon Landing but its popularity rose only in the 1980s when home computers became more accessible. From ‘Spacewar’ to ‘Multi-User Dungeon (MUD)’ to ‘Pong’ the gaming industry was taking birth. When Nokia pre-installed the game ‘Snake’ on its App Store in most of their mobile devices in 1997 (Snake now runs on 350 million devices worldwide), gaming began to see a definitive rise. Tis the time for e-sports, e-games and e-verything in between!

Image credits: FinancesOnline

Gaming – Statistics

Few of these statistics about the gaming industry are sure to blow your mind –

  • In 2019, there were 2.47 billion gamers in the world. In 2020, it will be close to 2.6 billion gamers
  •  39% of gamers are between 21 to 35 years old, 33% are between 36 to 50 years old and 20% are above 50 years.
  • 7.11 hours a week an average gamer spent playing video games in 2019.
  • In 2019, gamers have played for an average of 1 hour 22 minutes at a time. The average longest time gamers have ever consecutively played is 4 hours 19 minutes. 10 percent have played for 10 or more hours consecutively.
  • The game’s revenue in 2019 reached USD 148 billion and is expected to touch USD 180.1 billion in revenue by 2021
  • Asia Pacific is expected to generate USD 78.3 billion revenue in 2020 (49% of the global games market revenue 2020)
  • Free-to-play games constitute 82% of digital revenues.
  • The global market share per device in 2019 is – Smartphone (37%), Console (30%), PC Downloadable/Boxed (21%), Tablet (9%), PC Browser-based (3%).
  • The Sims 3 is the best-selling game worldwide.It has sold 7.95 million units as of January 2018. World of Warcraft comes second, with 6.3 million. Diablo III comes third not only in its series but in ranking as well, with 5.23 million units sold.
  • Sony Interactive Entertainment (creators of PlayStation) valued at USD 13.4 billion is the No.1 video game company, 2019. It is followed by Microsoft Studios (creators of Xbox games) at USD 12.82 billion and Nintendo (creators of Super Mario, Pokemon) at USD 6.28 billion in 2nd and 3rd place.

Different types of Video Games

These are the most common types of video games based on Technology:

  • Computer games
  • Console games
  • Arcade games
  • Mobile games
  • Handheld console games
  • Handheld electronic games

The rise of the new generation computer games – Virtual Reality (VR) Games

Image credits: The Guardian

What is virtual reality gaming?

Virtual reality is the creation of an artificial environment using a 3-D effect in games. A Virtual Reality environment is simulated with VR software and presented to the gamer as the real environment. From using keys, mouse and touchscreens in gaming, technology advanced VR games have evolved to VR headsets, wrap-around display screens, and VR rooms augmented with wearable computers and sensory components, like scents and haptics.

An American teenager Palmer Luckey first introduced VR in 2010, with his prototype VR headset – the Oculus Rift. In 2012, he launched a USD 250,000 Kickstarter crowdfunding campaign to commercialize the VR headset but by 2014, he sold it to Facebook’s CEO, Mark Zuckerberg, for USD 2 billion. Today besides the Occulus Rift there are other VR headsets in the market like HTC Vive, Sony’s Playstation, Microsoft Hololens, Samsung Gear VR, PlayStation VR, and Google Cardboard. The other accessories include sensor-equipped VR gaming gloves and VR game hand controllers. Virtual reality games are played on game consoles, laptops or PCs or smartphones that can power the VR headsets.

Image credits: Forbes

What is the difference between virtual, augmented, and mixed reality?

There are subsets of virtual reality (VR) gaming that use related technologies called augmented reality (AR) and mixed reality (MR). Here is a simple explanation differentiating VR, AR, and MR. 

  • Virtual reality (VR) is an interactive, computer-generated representation of a real or artificial world or an activity. The gamers get immersed in a fully artificial digital environment.
  • Augmented reality (AR) is an interactive experience of real-world environment with additional, computer-generated enhancements. AR simply means it is a combination of the real-world and computer generated virtual environment. The technology adds to the real world image extra layers of digital information.
  • Mixed reality (MR) is the merging of real-world and computer-generated elements to produce a new environment to interact in real time. It is mostly the use of both AR and VR technologies and also called ‘enhanced AR’.

Today there are over 1000 VR games like ‘Keep Talking and Nobody Explodes’, ‘Hide and Spook: The Haunted Alchemist’, ‘Ruckus Ridge’, etc available but before you take your pick, it’s good to read up on few common terms used in VR – latency, frames per second (FPS), field of view, Degrees of Freedom (DoF).

Why are video games gaining popularity?

In recent years, home entertainment has grown. From gaming apps to Netflix, there has been a steady growth. Video games are viewed not only as a source of entertainment but also as a way to improve a player’s attention and IQ. As per, Professor Alex Wade, University of York, “Games such as League of Legends and DOTA 2 are complex, socially-interactive and intellectually demanding.” The coronavirus pandemic created a demand for downloadable mobile games and console games.

8 reasons why video game culture is growing : –

1. Portability and technology

The portability of mobile and console games gives it an edge over traditional games. These games can be played on a laptop or mobile device while at home, travelling or moving either alone or with other gamers. Mobiles and consoles are easy to carry anywhere, anytime. Besides portability it is also technology like 4G/5G that improves gamer interaction and performance.

2. Low cost of games

Today while few games are free, many other games in an App Store cost less than a dollar.

3. Space issues

In September 2019, Electronic Arts began a technical trial for a cloud gaming service. Google launched its cloud gaming service (Stadia), Tencent has released its service, and NetEase is testing one. With Cloud-Based technology, players don’t have to worry about the space taken up by the games on their device.

4. Artificial Intelligence

Thanks to AI if your friends are not available to play an online game with you, a robot is forever ready!

5.  Multiplayer option

The online multiplayer option provides a gamer an opportunity to play interactive games and compete against multiple gamers.

6. Facial Recognition

The facial recognition software helps to produce a player in the game who looks like you, to improve your gaming experience giving it a surreal feel. Also, facial and voice recognition is used by gamers who play betting sport to keep their data safe.

7. Virtual Reality

Beyond 3D graphics, gaming companies are working on virtual reality games. Virtual reality games aim to create a gaming atmosphere around the player, to surround him in the gaming experience. VR games can be played on PCs and computers, on smartphones and  game consoles.

8. Blockchain

Blockchain technology is working towards providing gamers decentralized asset exchanges, verifiable scarcity of virtual objects and collectibles, fast and secure payment networks, and an ability for developers to properly monetize their creation.

Image credits: CNBC

The Global Gaming Industry

Rising internet penetration and affordable smartphones is driving the demand for gaming upwards. GlobalWebIndex’s data points to over 1 billion people streaming games over the internet every month. The global gaming industry is expected to register a CAGR of 12% during the forecast period 2020-2025. But with the impact of the ongoing coronavirus (COVID-19) pandemic where people have been advised social distancing by World Health Organization and to stay at home, online gaming saw a large rise in the number of players.

  • March 16 to March 22, 2020 a total of 4.3 million games were sold worldwide, a 63% total increase from the previous week.
  • Nintendo’s latest Animal Crossing franchise sold more than 1.8 million copies in its first three days in Japan, as per Famitsu.
  • Activision Blizzard’s first-person shooter Call of Duty: Warzone, launched on March 10, 2020, saw 30 million players in 10 days.
  • Steam the digital video distribution service for personal computer video games saw over 23 million concurrent players in March 2020, its largest ever in the streaming service.
  • Twitch saw over three billion hours of content watched over the first quarter of 2020, a 20% increase from the previous year’s.
  • Microsoft reported a substantial increase in users of its Xbox Game Pass service in the months of March and April 2020 bringing it to over 10 million subscribers. 

10 top video game developers in 2019

With the growing number of gaming fans, there is also a need for more online games. Here are the top video game developers in 2019 who have provided significant gaming products gaining billions of dollars and their net worth. A company like Activision Blizzard posted USD 1.79 billion Q1 revenue in 2020 as the pandemic created a gaming surge.

1. Sony Computer Entertainment (USD 13.4 billion)

2. Microsoft Studios (USD 12.82 billion) 

3. Nintendo (USD 6.28 billion)

4. SEGA (USD 4.9 billion)

5. Activision Blizzard (USD 4.85 billion)

6. Namco Bandai (USD 4.74 billion)

7. Electronic Arts (USD 4.14 billion)

8. Konami (USD 3.24 billion)

9. Ubisoft (USD 1.85 billion)

10. Square Enix (USD 1.26 billion

Image credits: WallpaperCart

The most popular online games in 2020

Worldwide, Single-Player games like Candy Crush, Angry Birds, and Spider Solitaire, ranked at No.1 spot in popularity, while First-Person shooter games like Call of Duty, Destiny 2 and Overwatch, ranked at No.2 spot. This second most popular type of video games played, increased in popularity by more than 6% in the past year.

Video games are an important part of the gaming culture. Some of the most popular online games in 2020, include-

  • World of Warcraft (oldest and largest massive-multiplayer-online (MMO) game)
  • PUBG
  • Apex Legends
  • Call of Duty: Advanced Warfare
  • Minecraft
  • Tom Clancy’s Elite Squad
  • Fortnite Battle Royale
  • Playerunknown’s Battlegrounds
  • League of Legends (LOL)
  • Splatoon 2
  • Hearthstone

The Indian Gaming Industry

The Indian gaming industry owes its growth to the Indian demographic, which has a considerably younger population. India is one of the major emerging markets that will drive growth in 2020. As per Statista, in 2019, the value of the Indian gaming industry amounted to INR 62 billion. By 2024, it is expected to be worth over 250 billion rupees indicating a tremendous growth potential.

The Indian Gaming Industry Image credits: Statista

The Indian Gaming Industry – Facts and Figures

  • In 2019, the value of the Indian gaming industry amounted to INR 62 billion.
  • Number of Indian online gamers stood at 300 million and is expected to reach 440 million gamers by 2022.
  • The mobile gaming market in the country will be worth USD 2.4 billion in 2020, up from 600 million dollars in 2017.
  • India ranks among the top five mobile gaming markets in terms of the number of gamers/users worldwide as per a report by Google-KPMG.
  • Mobile games contributed to 89% of the total game revenues in India.
  • The Kantar IMRB report states Indian gamers spent daily 60 minutes playing mobile games.
  • International games such as Houseparty and Psych have topped as the most-played games during the coronavirus (COVID-19) lockdown period in India.  
  • Due to the lockdown in India announced by PM Narendra Modi, there is a surge in multiplayer games such as Carrom, Ludo, and Royal Battle with an increase in users from the age group of 25-35 years, as per Paavan Nanda, co-founder, WinZo Games.

The Growth Potential

Google-KPMG report on gaming reveals that the future regional users of the internet will be 2.5X more than the entire English user base in India. This will provide an incentive to game designers to curate games for the audience in tier-II and tier-III cities. Not only will there be a growing demand for games in regional languages but specifically a demand for more games with Indian themes and characters like Mahabharata, Ramayan, Hanuman, etc., to appease local audiences. Last year, Nazara Technologies teamed up with Amazon to provide localized Indian gaming experience on Fire TV with its favorite title ‘Chhota Bheem Speed Racing’.

India used gaming ads for branding and to increase user engagement. Some classic examples include,

  • Hotstar (Watch and Play to win coupons from Paytm, Oyo, Yatra, Dominos),
  • Make My Trip (Sunday Knock Knock to win a trip),
  • Zomato (IPL Premier League Winner Predictions to win 30% cashback),  and,
  • Colours TV cricket league (to win tickets to watch Mumbai Indians matches LIVE at the stadium).

Now that we know the growing importance of online gaming, moreover, let’s understand why advertisers need to look at in-gaming advertising to include in their sales funnel.

Image credits: YouTube

What is in-game advertising, What are in-game ads?

An extremely interesting study conducted by an advertising and app monetization platform called TapJoy (in February 2020), indicates that gamers are more than twice as likely to pay attention to advertisements placed in mobile games at 41 percent, as compared to ads placed on the internet at 17 percent, in magazines or on billboards at 15 percent each. So especially, with this kind of attention, no digital marketer wants to miss an opportunity to use in-gaming advertising to promote a brand/product.

Ordinarily, in-game advertising (IGA) means placing an ad in a computer or video game. Usually it is a digital advertising strategy provided by game developers to earn money by showing the ads to gamers. Here, the IGA is either in the form of a display in the background or can be integrated within the game. The very first IGA was the 1978 computer game Adventureland which inserted an ad for its own upcoming game, Pirate Adventure.

Image credits: VentureBeats

How to use In-game ads?

Furthermore, an in-game ad can appear as a billboard or a poster or in other forms. The idea of the ad is to attract attention of the gamer without disrupting the user experience. Here are the different ways in which in-game ads are used

  • Static Ads (ads that are not changeable) are integrated into the storyline of the game right at the production stage. As a rule, since this IGA model is more custom-built, the charges are per game basis starting at USD 50k onward.
  • Dynamic Ads (changeable ads) are inserted or removed in real-time, inside of Console and PC video game. IGA’s allow the game manufacturer/advertiser to track the ads in realtime and capture the viewing data. Ordinarily, it follows the CPM or cost per thousand impressions pricing model.
  • Advergaming (game built as an advertisement) is particularly created to promote a company, brand, or product. In comparison, it is a more expensive option. (Nike used this ad format to launch their shoe ‘Epic React’ by creating a game called ‘React Land’ which proved a highly successful experiment).
  • In-Console Advertising is advertising within gaming consoles like Xbox. It is integrated into the form of square tiles in the Xbox Live dashboard. Generally, these ads are charged on CPM (cost per mille or cost per thousand views/clicks) basis.

Why in-game ads are good for you?

With the above interesting facts and figures a digital advertiser should possibly consider setting aside a part of the ad budget towards in-game ads. Similarly, here are a few reasons why in-game ads are good for you:

  • Fortune 500 brands are partnering with game developers to directly reach the in-game target audience.
  • In-Game Advertising market worldwide is projected to grow by USD 3.3 billion, driven by a compounded growth of 11.4%.
  • The global gaming market size will grow by almost USD 90.13 billion during 2019-2023.
  • Ad spend in all games has grown 16% in 2019.
  • 62% of smartphone owners install games within the first week of purchasing a new phone.
  • Retargeting in gaming apps is generating revenue uplift of over 50% among paying users.

In short, to improve the ROI (Return on Investment) on the in-gaming ads, the most important part is to have contextually relevant ads in the game content.

In conclusion:

The video gaming industry has moved up beyond a notch to grow leaps and bounds in recent years. Today personalized gamification is the key to improve gamers’ experience. Solo and multiplayer games are catching the attention of 18-year-olds to over 50-year-olds. Moreover, gaming is beyond just a heightened experience for gamers. On one hand, while video games have become a source of income for game developers, on the other, it provides a golden opportunity for digital advertisers to represent brands/companies/products. To summarize, we don’t know how long this wave will last, or how it will affect the industry in the long run but there’s always an element of risk to undertake in any changing scenario. With this in mind, we have given you an overview of the video gaming industry. As can be seen, the time is NOW to delve a bit deeper into video gaming and explore advertising in gaming. 24 gaming channels on YouTube viz-a-viz none two years back, is only a cue to view gaming differently.