As MIDiA has reported multiple times before, engagement has declined throughout the sector, suggesting that the attention economy has peaked. Consumers simply do not have any more free time to allocate to new attention seeking digital entertainment propositions, which means they have to start prioritising between them.
This downward trend in engagement has persisted for a while now, and the latest quarterly results from some major games publishers confirm that a revenue slowdown will ultimately follow consumer behaviour. Arguably sooner than most of the games industry would have thought.
Causes of the slowdown go way beyond just Fortnite
Publishers will be quick to blame declining engagement and revenues on Fortnite. While the title indeed intensified the manifestation of the peak attention economy dynamics among gamers, the coming slowdown is part of a much bigger challenge -- how to capture attention in an increasingly attention-scarce landscape.
Gamer Behaviour Penetration, Q4 2018, US, UK, Canada, Australia
Top publishers are facing several headwinds at the same time. Fortnite is only one of them, and arguably one of the less harmful ones to the long-term outlook of the games industry:
Fortnite's model utilises the attention economy dynamics
It's a high-grade gaming experience and it's free-to-play, which means there is little barrier for consumers to allocate attention to, compare to its paid counterparts. While it has undoubtedly cannibalised some revenue and engagement from other major publishers, Fortnite engagement still contributes to the bottom line of the global games industry.
More gamers engage with games videos and events than Fortnite
Not only is engagement declining across mobile, PC and console gaming, at the same time, video is winning the race against gaming in capturing attention on multipurpose devices such as PC. Between Q1 and Q4 2018, gaming on PC declined faster than TV show viewing on PC among gamers.
While all eyes are on Fortnite, the advent of games-related video content and esports is arguably just as, or more culpable, for the ongoing slowdown. 31% of console gamers watch games-related videos (monthly), compared to just 5% of console gamers playing Fortnite weekly. Furthermore, esports attendance captures about the same audience as Fortnite's weekly active users.
Focusing too much on competing against Fortnite is short-sighted
In traditionally siloed industries, companies typically tend to focus on successful competitors in their market. The games industry needs to wake up to the fact that its competition is currently sitting across entertainment formats and that competitive powers within gaming may not be the most important drivers of engagement and revenue slowdown.
Unfortunately, publishers have so far mostly blamed competition within their own industry (Fortnite and Red Dead Redemption 2 in large part). This in turn has led to several releases of Fortnite lookalikes, be it in form of mini-games of established franchises like GTA, or fully-fledged titles such as EA's Apex Legends. However, not much has happened in games companies competing for attention across entertainment formats yet.
To make matters even more urgent, it is getting harder to target gamers via traditional advertising techniques, because an increasing number of consumers spend more of their digital days behind paywalls, where there is often no advertising. These are also typically the most engaged and most-spending audiences. To win some of the attention back, games companies must target gamers behind paywalls, be it through product placement or original content on video streaming services or podcasts and playlists on music services.
While publishers battle it out among themselves, external propositions like video streaming, digital news, podcasts, music, social media and e-commerce keep eating away at consumers' attention, and will likely dilute games engagement (and revenues) further.
The time for games companies to understand and focus on competing in the attention economy across all entertainment formats (rather than just with other games) is now.