At the beginning of the FT Digital Media conference’s panel on the changing face of the games industry, moderator Richard Waters noted that it’s often video game devs and publishers who are ahead of the curve when it comes to predicting media trends. It’s an industry that has, after all, thrived at the junction of technology and entertainment for decades, has had incredible success in transitioning to digital and mobile publishing, and has a variety of ways of demonstrably successful monetisation strategies.
Case in point – the audience heard from the CRO of Twitch, Jonathan Simpson-Bint. Twitch is a video game streaming service which has over 100m active monthly users, and was bought by Amazon last year for just shy of $1 billion. It’s a niche ecosystem that’s grown organically alongside the industry to the point that 40% of UK males aged 16 – 24 use the site, an enviable position for any media business. Simpson-Bint explicity attributed that success to having been in an anticipatory position to receive an audience who are leaving more traditional forms of media:
“The average user is watching people play for 104 minutes a day. These are the people who’ve moved away from traditional broadcasters.”
So what’s the attraction that leads people to spend just shy of two hours daily watching Twitch’s streams? Simpson-Bint explains that it’s something to which most media companies in 2015 are paying lip service, with varying levels of success – user engagement driven by the gratification that comes from interactivity. Twitch’s live chat functionality, for instance, allows users to communicate with the streamer as well as their fellow viewers.
But the games industry is broader than simply the triple-A publishers behind billion-dollar launches, and the industry itself is just as susceptible to disruption as any other. Tim Merel, the managing director of Digi-Capital, explained how the big winners of the transition to mobile have been the companies who figured out monetisation habits on mobile are very different than on traditional consoles. The microtransactional, free-to-play model (F2P) drives a huge proportion of the industry’s revenue:
“F2P is well over 95% of downloads. From revenue it’s also over 9% of the market.
“It’s important to think of the regional aspect. From an innovation perspective, America and Europe are still very strong. When it comes to monetisation, Japan, China, Indonesia are about 18 months ahead.”
That’s a view echoed by Stephanie Perotti, head of mobile and casual games at Ubisoft, who notes that what’s really being sold a lot of the time is new ways for friends interact with one another:
“When you have strong brands, you can choose whether we have different models. It’s monetising the way people can share with each other.”
Unlike more traditional forms of media whose value is specifically tied to their platform – think of most newspapers’ remaining reliance on print ads – the games industry has proven to be particularly innovative when it comes to how that content is actually delivered. That’s both in terms of the move away from physical media like discs to digital delivery via Steam and in how people interact with that content.
The Apple Watch, for instance, offers game developers a new platform, one which Merel believes will work well with the F2P games that have been successful on mobile rather than replacing it:
“The watch as a form factor is designed to increase frequency. Because the watch is a peripheral to the iPhone it’s always going to be a subset of the iPhone. It’s tricky to see how it will supplant the mobile market since it’s a subset of it.”
If the ‘glance gaming’ of the Apple Watch is on one end of a spectrum of immersion, virtual reality headsets like the Oculus Rift and Microsoft’s HoloLens are on the other. While Merel believes the technology won’t become widely available until next year, the panel praised the nascent tech as offering experiences entirely unlike anything that’s come before. Perotti says:
“As with any new technology its about prototyping. It also creates challenges for us in how we create games. It’s all about what kind of experiences [we can create] for our games.”
Lessons from the games industry aren’t applicable to other forms of media, of course. But as the philosophy of existing at the junction of technology and entertainment is increasingly being adopted across the wider media, publishers could do a lot worse than to embrace new opportunities for diversification and storytelling with the vigour that the games industry has demonstrated.
Image courtesy of Marco Verch via Flickr used under a Creative Commons license.