Grant Paterson, head of gaming at Prism (Wunderman Thompson) spoke to Little Black Book on how 2023 is gearing up to be a seismic year for the gaming industry.
2023 is gearing up to be a seismic year for the gaming industry – one fuelled by the increasing cross-pollination of Intellectual Property (IP) within the film, TV and music world; sustained mobile gaming growth in rapidly-growing tiger economies in Asia and the Middle East; continued multi-platform, mega-budget content investment from established PC and console companies and long overdue commercial diversification in the esports industry.
Xbox, Sony and Nintendo will all be looking to consolidate their respective market shares with acquisitions, subscription growth or content diversification. Meanwhile, big tech competitors Apple, Google, Amazon and Netflix may need to decide once and for all whether gaming is a passing fancy – such as Google Stadia – or a serious strategic growth driver, like Apple Arcade. Major game publishers will also need to address whether they are serious about adopting emerging production and personalisation technologies like blockchain, AI and machine learning, or commit to doubling down on mobile gaming.
For brands, 2023 should be the year they fully commit to gaming as a key pillar in their marketing plans, as the industry finally matures as a safe, exciting, transformative space for brand building.
Forecasting is always a hubristic, problematic exercise but here goes anyway!
1. Hybrid game monetisation models open new pathways for advertisers
Hyper-aggressive in-game monetisation models are gradually becoming unstuck in the face of greater governmental scrutiny of the wider tech industry. Take, for example, Fortnite, Instagram and TikTok which are all facing the wrath of regulators for exploitative data and marketing practices. This is pushing game developers to adopt hybrid monetisation models that combine less aggressive in-game transactions (hopefully fewer loot boxes) with more ad-funded and bundled subscription content. Expect to see PC and console platforms start to experiment with advertising, and mobile publishers lean into multi-game subscription products. This will create more areas for brands to advertise and generate value for players.
2. Greater personalisation of game experiences
As part of this hybrid monetisation strategy, publishers will seek to leverage technology to help create a more personalised game experience for players. Zero code platforms, generative AI, machine learning, distributed computing and centralised 3D asset libraries will all be utilised to create personalised in-game offers, journeys, promotions, user experiences and bundling that feel more individualised. Brands have a potent role to play here – facilitating the creation of these experiences or enhancing them with added value and benefits. Just don’t expect it to be with NFTs.
3. Big ticket acquisitions continue – bundling and unbundling
Jim Barksdale, the telecoms, computing and internet legend, said “There are only two ways to make money in business: One is to bundle; the other is to unbundle.”
Established gaming companies will continue to seek to bundle content & services together by pressing ahead with major acquisitions. Microsoft will eventually acquire Activision Blizzard King after some concessions to regulators, we may see Sony make a move to finally acquire Square Enix and (admittedly a bit of a long shot) we might even see Nintendo make a move for a major, but underperforming, studio like Ubisoft. Further afield, it is unclear whether we will see any other big tech firms seek to learn the lessons of Google’s failed Stadia experiment and invest in long-term gaming content development by acquiring a major studio. Apple is unlikely to make a move for a company like EA, but Disney might, if it thinks it can shore up its video streaming business with cross-media game development for Marvel, Star Wars and its huge legacy IP catalogue.
On the unbundling side, the increasing accessibility and intuitiveness of game creation platforms like Unity and Unreal Engine is making it easier than ever for brands to create (or co-create) games experiences and content. In an industry too often clustered around a limited spectrum of game genres, stories and archetypes there is an exciting opportunity for third party creators (like brands) to help diversify and broaden the types of games available to players.
For those brands, Microsoft’s acquisition of Activision is less about Call of Duty and more about King – publisher of Candy Crush, Bubble Witch and Farm Heroes – becoming owner of a powerful mobile gaming ad network. Being able to programmatically deliver ads to hundreds of millions of mobile gamers alongside search, CRM, social and Xbox would be a step-change in gaming marketing for brands around the world.
4. Esports organisations start to offer more sophisticated sponsorships
BMW’s decision to walk away from its flagship esports sponsorships should be a warning sign for an industry that is yet to demonstrate how it can meaningfully differentiate its offering from traditional sports entertainment properties. This should start to change in 2023 as organisations begin to diversify their revenue models beyond the hitherto overreliance on brand sponsorship. Fantasy esports & betting, fan experience like esports hotels, merchandising and hybrid content creation will help to both stabilise esports organisations’ business models and provide expectant sponsors with more than just the same old broadcast signage and ad-space.
5. India & MENA become gaming growth monsters
Having surpassed China as the world’s most populated country – 2023 will be a huge year for gaming in India, with a burgeoning mobile gaming market unrestrained by legacy gaming companies who can often monopolise talent & innovation. I think we will see a rapid increase in gaming participation and content development.
Reliance Jio (the dominant smartphone provider in India) is likely to launch its own cloud gaming service on newly rolled out 5G networks – giving potentially millions of passionate gamers access to big-budget, high quality gaming experiences on mobile. Combined with the Indian government’s possible legalisation of real-money gambling games, gaming is likely to explode in India in 2023.
In Saudi Arabia and the UAE, gaming will increasingly be a target for public investment. Governments will likely invest in more gaming events, destinations, talent and technology in an effort to establish the region as a destination for major international gaming and esports events. Publishers and developers are also likely to open new local offices in an effort to capitalise on fast-growing interest and participation in esports.
6. Co-operative play becomes a go-to social experience for gamers
Off the back of wonderful (but underground) titles like It Takes Two, OverCooked and A Way Out, and new game modes within powerhouse franchises like Call of Duty, co-operative gaming is due a renaissance in 2023. Major AAA quality titles like Redfall, Suicide Squad: Kill The Justice League and Minecraft Legends will catapult co-op gaming back into mainstream consciousness and give gamers a viable alternative to the social lottery of online multi-player first-person shooters or battle royale staples.
For brands already in the gaming space this is an interesting development as it presents a unique opportunity to create targeted advertising campaigns designed exclusively to talk to couples, families or friendship groups that play together – at the same time, often in the same place. Cue innovative real-time, hyper-personalised activations designed to enhance the live, in-your-own-living-room gaming experience.