The turbulent events of the last few months have undisputedly accelerated digitalisation in all areas of our daily life including the digital media and gaming sector. This new reality provides opportunities for businesses in this sector. In this article we discuss the trends we foresee shaping this sector in the medium to long term post pandemic.
Social media
Social-distancing has resulted in an increased use of technology and social media – from casual users seeking to stay in touch with their families and friends, through artists and companies trying to keep their audiences and customers engaged, to authorities using online platforms to spread important health messaging. Video and voice conferencing functionalities such as Zoom have grown from relatively niche businesses to household names and their share prices have sky-rocketed.
This has led to social media platforms currently being able to reach an unprecedented number of people and becoming an even more valuable advertising estate. Ironically, this has not translated into higher ad spending, as third party surveys (here and here) have reported that many brands in heavily affected industries, such as sports or travel, have cut down on their advertising budgets. Companies are also becoming increasingly concerned about the placement of their advertisements online. For example, advertisers have been reluctant to post their ads next to COVID-19 related content and most recently a coalition of big brands including Unilever, Ben & Jerry, Coca-Cola and Starbucks boycotted advertising on Facebook in a row over its policing of hate speech.
The post COVID-19 world has also been challenging for influencers who gave up lucrative tourism and hospitality sponsorship deals in light of many countries closing their borders to visitors. As the social distancing measures are likely to stay in place in some form throughout the year causing people to travel and shop less, influencers are refocusing on other products more suited to the current reality, such as streaming services, online deliveries, homeware and lounge wear.
Many social media platforms have also suffered from an infodemic, a term coined to refer to an influx of coronavirus related fake news. Such proliferation of disinformation quickly caught the attention of the European Union Commission who has just launched a consultation on the regulation of online content that may see more stringent monitoring obligations being imposed on social media giants, such as Facebook, Google or Twitter.
Gaming and esports
Since the start of the pandemic a significant increase in sales and player engagement has been reported across the sector. Self-isolated players have been using online and massive multiplayer games as tools to socialise with their friends and family. Video games, such as Animal Crossing: New Horizons and Half-Life: Alyx, have also been used by parents and teachers in home schooling and it will be interesting to see whether more publishers will follow suit and use this as an opportunity to include more educational content in their current or future games.
Esports have also received a much wider exposure as many traditional sports events had to be cancelled and various leagues, such as Premier League and Formula 1, have been organising their own esports events to stay in touch with their fanbases. The esports organisers have also recently started to utilise the current influx of interest in gaming and esports by offering advertisers in-game arena banners, the equivalent of real stadium signage.
In addition, video games have been coming to the rescue of other industries, such as music, fashion and live entertainment, by providing platforms on which musicians could perform live, or fashion designers could exhibit their latest creations. Fortnite has also been screening regular movie nights within the game. As it seems unlikely that live events will return to their old format any time soon, this may only be the beginning of the collaboration between these industries and the publishers should consider this opportunity to further grow their player base.
Unfortunately, the gaming and esports sector has not been entirely immune to the negative consequences of the pandemic. The physical sales of video games have fallen substantially which will have a negative impact on the physical retailers such as GAME and GameStop that were already struggling before the pandemic. Supply chain issues also impacted the stock of Nintendo Switch consoles and it remains to be seen how Sony and Microsoft’s upcoming launch of their new generation consoles will fare. Due to the move to home working some development teams are also experiencing issues with access to tools and other resources (such as voiceovers and motion capture), with many games likely to be postponed.
Cancellation of flagship industry conferences, such as GDC, E3 or Gamescom, has also impacted the small indie studios leaving them without means to showcase their work and gain financial backing required for further development. This loss may somehow be mitigated by the fact that most of these events will now take place in the virtual world, which is likely to become a standard at least until the end of this year.
These negative impacts are likely to be short-term disruptions only and the subsector is expected to benefit in the mid to long term thanks to the steadily growing demand for gaming and the new opportunities emerging in the last few months.
Virtual and Augmented Reality
The past few months have seen an increased investment in virtual and augmented reality applications and solutions. In particular, areas such as telepresence, VR livestreaming and gaming, use of VR in e-commerce, medicine and recruitment, have become more attractive to consumers and businesses, as social distancing measures make it difficult, if not impossible, to carry out certain day-to-day activities in the usual way.
In addition, as social distancing restrictions may remain in place in some form for the near future, these technologies may facilitate virtual experiences, such as viewing properties, museums and art galleries.
Although the developers may face some COVID-19 related manufacturing and shipment delays, these should be short-term only, and the sector will likely positively benefit from the increased exposure in a long run.
Conclusion
The impact of the pandemic on the digital media and gaming sector has predominantly been positive as there has been an increased demand for digital content, new technologies and apps (eg home schooling, wellbeing and food delivery apps), games, esports and virtual and augmented reality products. Businesses within the sector may be in a unique position to grow and expand further, attract new customers and shape the New Normal.
