GamesIndustry.biz's State of Games event concluded yesterday with a packed panel of industry watchers sharing a spirited discussion of how they see a variety of industry trends playing out in the coming years.
Moderated by senior staff writer Rebekah Valentine, the panel consisted of Entertainment Software Association president and CEO Stanley Pierre-Louis and five industry watchers from aa variety of market research and tracking firms.
Representing the market watchers were Candice Mudrick from Newzoo, Eduardo Mena of Ipsos Mori, Natacha Hombourger and Sam Naji from B2Boost, and Dr. Alex Champlin from Asia-focused Niko Partners.
The first question was about the longer-term effects the COVID-19 pandemic would have on the games business, and the general consensus was that it would hurry some things along.
"A lot of the behavior we're seeing now... is that COVID is accelerating trends we've been seeing in the games industry, although not necessarily changing them"
"A lot of the behavior we're seeing now, at least from our perspective, is that COVID is accelerating trends we've been seeing in the games industry, although not necessarily changing them," Mudrick said.
As an example, Mudrick said cloud gaming companies Newzoo has been speaking to saw greater interest in game streaming. Newzoo had already been a believer in the longer term prospects of cloud streaming, but said the pandemic has increased the rate of adoption of the tech.
Mena agreed, saying that Ipsos Mori's GameTrack surveys have noted an acceleration in the shift toward digital, as well as a greater emphasis on social interactions and creative aspects of games. Ipsos Mori had been looking for those trends to develop in the long run anyway, but he said the pace has quickened in the past two months.
"There's been this surge, and there's probably going to be a pretty decent tail at the end of it when new games and consoles come out," Pierre-Louis said. "The extent of what that might be is unclear, but what's clear is a lot of new fans have entered the game sphere on top of the engagement that's occurred.
The pandemic-related acceleration Champlin singled out came in esports.
"The esports industry has been rocked in terms of their ability to hold in-person events, but what this has done is really pushed the industry forward in terms of developing an online audience, developing more participation around esports in terms of regular people getting into streaming and producing content," Champlin said.
Niko has seen a significant increase in viewership and live stream numbers across Asia, and Champlin said there's no sign of that falling off once the pandemic fades.
Houmbourger said she's seen a surge in hardware sales during the lockdown period, with a heavy shift toward digital sales as retailers were closed. But unlike Champlin's confidence in Asian esports, Houmbourger isn't so sure this boost will last.
"As soon as the shops have re-opened, we've seen a return to normal in terms of people going back to the shops and buying physical games"
"What is interesting in terms of the structure of distribution is that as soon as the shops have re-opened, we've seen a return to normal in terms of people going back to the shops and buying physical games," she said.
Naji reiterated his colleague's comments, saying market share between digital and physical sales are reaching "a new normal which is very much like the old normal."
Mena had there are similar questions throughout the industry about whether increased engagement in games will recede as the threat of COVID-19 fades, but was optimistic given that games are "very sticky content."
"I would expect video games to keep holding up, but we're also discovering there's still room to grow even with the current generation," Mena said. "And hopefully it will empower the newer generation that's coming toward the end of the year."
Speaking of the next generation, there was also some question about how the economic fallout of the pandemic might weigh on the new machines.
Historically, games have always done well during a recession," Mudrick said, before adding that there are many factors that go into the equation, from the price of hardware to the willingness of console makers to sell units at a loss to the fact that consumers may find games an attractive value in terms of hours of entertainment per dollar spent. She noted that Sony doubled their production of PS5 units so they believe demand will remain high, but she believed it's still a bit early to predict with confidence how the recession will impact consumer decisions.
"As we go to 2021, I think we have to be realistic that we are in the entertainment sector, and if you are running out of money or you need to prioritize your money, we will be put on the back burner"
Naji was more blunt than his colleagues.
"I think we have to be realistic that we're going to be entering a very severe recession," Naji said. "I think the recession of 2021 is going to put the 2009 recession in the pale. Lots of people are going to lose their jobs, people just like you and me. And if you lose your job, you're going to have to prioritize where you'll spend your money."
He believes day-one buyers will probably still go out and pony up for the systems because they have the money and tend not to be sensitive to price anyway, but the picture gets hazier beyond that.
"This is quite a unique situation because we have a new generation being released at the same time we're entering a recession," Naji said. "For this period, 2020, I think it's going to be extremely healthy because of those day one buyers. But as we go to 2021, I think we have to be realistic that we are in the entertainment sector, and if you are running out of money or you need to prioritize your money, we will be put on the back burner.
"Rent and food comes first, so we have to recognize there's a possibility we may experience a downturn in 2021."
A video of the full session -- in which the panelists went on to discuss the future of cloud streaming games, the pace of 5G networks rolling out around the world, and whether "The Roblox Generation" will grow up rejecting premium business models entirely -- can be seen in the video embedded above.