Why the Online Gaming Industry is Ripe for Disruption
It’s an exciting time for online gaming.
PHOTO CREDIT: Getty Images
We live in a disruptive time. New startups are constantly rising and falling and reputations are staked, made and lost every time a new technology comes along with the potential to change the way we live, entertain ourselves and do business.
The online gaming industry itself is somewhat disruptive. After all, it didn't exist twenty years ago and its growth rate over the last couple of years has been phenomenal. Nowadays, the online gaming market is huge and all-encompassing, covering everything from PUBG and Call of Duty to World of Warcraft and Farmville (which is somehow still going strong).
At the same time, new technologies are constantly reinventing the way that online gaming works. VR is gaining in popularity and even spawning its own controversial memes, and technologies like blockchain are changing the way that we store, access and update records. Blockchain also forms the backbone to cryptocurrencies like Bitcoin, which could be used to power in-game transactions.
One of the big trends that games developers are being forced to deal with is the increasing fragmentation of the devices that we use to access the internet and thus to play games online with. The days of people only accessing the internet from a desktop computer are long gone, although PC gaming is still an attractive alternative to using a console.
Nowadays, every new console is hooked up to the internet by default, and so are our smart TVs and our tablets and smartphones. This opens up huge opportunities for developers to specialize in specific types of projects, whether that's based upon the platform itself or whether it's based upon the mechanic. In the same way that Farmville owners Zynga rolled out the concept across a number of different properties, we're overdue a wave of new specialists who focus on making games that use a premium model or which rely on downloadable mods and addons.
This leads us nicely into another area of online gaming that's already seeing some disruption, and that's the way in which developers monetize their products. We've seen all sorts of different approaches to monetization throughout the years, and online gaming developers are still experimenting with everything from micropayments to crowdfunding and more.
New routes to market
Crowdfunding is a game-changer because it can reduce the risk that developers take by making sure that the costs are covered by fans of the project who want to see the game come to fruition. At the same time, platforms like Steam are making it easier for developers to release their games (and to make a little money while they're at it), and this is leading to a resurgence in indie games and indie developers.
Indie developers already have a reputation for innovation because they can iterate faster and create whatever they want instead of being responsible to shareholders and creative directors. Of course, there's no guarantee of quality, but more established players would be wise to keep their eyes on the indie market for emerging trends. In some instances, they might even be able to hire talent or acquire intellectual property, but there'll also be no shortage of founders and entrepreneurs who'd prefer to go it alone.
All of this creates an unpredictable industry in which anything could happen, and it's those who are able to react the fastest who'll be the biggest disruptors. The biggest companies tend to have longer lead times on their new releases, which means there's plenty of room for more agile disruptors to enter the industry and to shake things up a bit.
While all of this is happening, the demographics of end users are starting to change. A generation of kids who grew up on Sega Megadrives and Super Nintendos are now heading into their early thirties with the spending power to match. This time, though, they're buying games, consoles and computers for themselves, and not for their children.
In fact, the average gamer is 31 years old, and there are more gamers over the age of 36 than between the ages of 18 to 35 or under the age of 18. There are also more female gamers than ever before, which means that gaming is becoming more democratic. It's not just fourteen-year-old boys in their bedrooms anymore. Online gaming is for all of the family now.
This in itself opens up a new opportunity, because different demographics are interested in different types of gaming experience, and with the average American house including at least two gamers, developers can now afford to cater to niche audiences. And by focusing on specific target markets, disruptors can easily take over entire segments of the online gaming market, building up a reputation for themselves and then augmenting their portfolio by buying up competitors.
When it comes to the online gaming industry, disruption isn't just inevitable - it's the new norm. Developers and manufacturers are playing the cat and mouse game between software and hardware, and at the same time, faster and better internet connections are becoming more commonplace. This means that developers have more resources than ever at their disposal, allowing them to tap into capabilities that were previously unheard of.
As a result of that, we're at a pivotal moment in the history of online gaming in which the access to tools has been democratized and where anyone can be a disruptor. Sure, the big multinational companies might have bigger budgets, but the next big MMORPG could end up coming out of a teenager's bedroom.
Believe it or not, this is actually good news for the established players. After all, the industry has always moved quickly, and the only way to stay on top of it is to constantly innovate. This extra competition will hopefully push the bigger companies to disrupt the status quo before someone else comes along and does it for them. And of course, all of this disruption ultimately benefits one group of people the most: the gamers. It's an exciting time to be into online gaming.