Stanyon taylor n8614326_videogames

Litebulb Entertainment Research™
Industry
Opportunity
Analysis: Gaming
Written by Taylor Stanyon. ID N8614326

Industry Opportunity Analysis Page 1 of 11
Executive Summary
It is important for trends within the entertainment industries to be effectively understood to
ensure that the development of entertainment content is on target. Perhaps the most open
to change area of the entertainment industry is gaming, with many technological
developments allowing for constant advances and shifts in how gaming is consumed. This
document includes a detailed analysis of where the current industry stands in regards to
trends that affect content, conduit, consumption and convergence. These trends are largely
caused by technological advances rather than audience changes.
This document also includes an analysis of the primary and secondary audiences within the
gaming industry. Trends that become apparent in these audiences are also addressed and are
important to understand what opportunities may arise within the industry, and what will
allow for future development and growth. Two very key opportunities have been outlined
and deconstructed. Three possible ideas to allow for future convergence in the gaming
industry have also been created and explained all with reference to the existing industry and
audience data and trends.

Table of Contents
Executive Summary ................................................................................................... 1
Industry Analysis ........................................................................................................ 3
Audience Analysis ...................................................................................................... 5
Key Opportunities in the Industry............................................................................... 6
Ideas for Future Implementation and Development................................................... 7
Mobile and Console Platform Integration ............................................................... 7
Virtual Reality Implementation................................................................................ 7
Development of a Traditional Sport- Entertainment Model for International E-
Sports ..................................................................................................................... 8
References................................................................................................................. 9

Industry Analysis
With the rise of the digital age, video games have evolved from occasional leisure activities to
parts of life consumed on a daily basis by millions around the world. According to the
Entertainment Software Association (ESA) (2013, page 11), the consumer spending on video
game hardware, accessories, and content in 2012 exceeded $20 billion. This is a staggering
statistic when compared to the cumulative box office gross of $7.5 billion for the film industry
so far in 2013 (The Numbers, 2013). This incredible figure is a direct result of the massive
paradigm shift and convergence that the video game industry has recently undergone. This
shift, caused by the advances in technology and wide usage of smartphones and wireless
devices has changed the way audiences consume gaming content. The popularity of mobile
gaming has risen drastically, as 51% of gamers play on a smart phone or wireless device (ESA,
2013). It is obvious that this industry, along with many others, will continue to evolve and
shift as technology creates more opportunities for convergence.
There are currently three main conduits that video games are consumed on; consoles,
personal computers, and mobile devices. Console gaming is where the industry was born and
is still a huge focus and a competitive market with over 6.8 million console sales in 2013
(D’Angelo, 2013). These console sales were dominated solely by three hardware
manufacturers that produce the three most popular consoles the Sony PlayStation, the
Microsoft X-Box 360, and Nintendo Wii. Sony dominates the 2013 console market with 50.8%
(3.4 million console sales) market share, followed by Microsoft with 36.4% (2.4 million
console sales) market share (D’Angelo, 2013). An astounding 51% of U.S households own a
video game console, and those that do own an average of two. Important times for the
industry are often when manufacturers release the announcement of a new generation of
consoles. Content creators utilise the ‘stores’ available on the consoles to distribute
downloadable content (DLC), often at extra charge and with great success. Microsoft and
Sony are currently marketing their next generation of consoles, the X-Box One and
PlayStation 4 respectively. According to D’Angelo (2013), consoles see the most sales the
year of their release, so as to take full advantage of this and to ensure that each console is a

success, the manufacturers must effectively advertise their products to international markets
and ultimately change the way gaming content is consumed.
Personal computers (PC’s) have been used for gaming since the late 1990’s, and have evolved
into the most effective platform for PC gaming. As a platform, PC’s offer many ways to access
different content; through free to play downloads, digital purchases (both online and through
clients) and physical purchases. Free to play gaming has seen huge growth in the past year, in
particular multiplayer online battle arena (MOBA) games have become more popular than
gaming juggernauts such as World of Warcraft (a peak of 12 million players in 2010) and
other paid subscription based games (Sinclair, 2013). One particularly noteworthy free to play
MOBA is League of Legends, with over 32 million registered players and international
professional tournaments and leagues that run year round (Augustine, 2012). PC gaming is
the foundation of E-Sports, a professional gaming movement that broadcasts online
internationally. The Season Two World Finals for League of Legends had 8.2 million viewers
becoming the most watched E-Sports event ever with a prize pool of 5 million dollars (Lien,
2012). PC gaming has also seen a paradigm shift as a result of digital convergence with
regards to content accessibility very similar to that of the iTunes shift in the music industry.
Digital game purchases are now common and accessed through websites and downloadable
clients, the most noteworthy of which is Steam, with approximately 6.2 million user logins
daily (Steam, 2013). This noteworthy shift towards the consumption of the E-Sports sub-
product, and the increase of digital sales must be recognised by producers as this is the
future of PC gaming.
The final and most popular gaming conduit that has only recently become a player in the
gaming industry is the mobile device. One reason for mobile gaming’s success is what can be
referred to as a ‘triple crown’ of mobile usage, which is reach, engagement and monetisation
which has allowed gaming to be consumed as it never has before (Chou, 2013). In the USA
alone the amount of mobile gamers has surpassed 100 million, seeing an increase of 35% in
the year (Newzoo, 2012). Over 80% of revenue generated from mobile applications was from
gaming content, which is extremely broad and caters to numerous audiences (Chou, 2013).
93% of paid application downloads are game applications, a staggering amount which
resulted in $12 billion dollars being generated in 2011 (Intellectsoft, 2013). These staggering

statistics are a direct result of the convergence seen through application stores, allowing for
device users to consume gaming content in the touch of a button.
Audience Analysis
Gaming content is extremely diverse, with target audiences ranging from children to teens to
adults, and as a result gaming as an entertainment platform has an incredibly huge
international reach. With the rise in mobile gaming, the amount of audience demographic
variance has increased, meaning that game developers must adapt in order to effectively
deliver popular gaming content. Each gaming platform caters to an individual primary
audience depending on levels of involvement with the games and industry. As technology
advances and allows gaming content to develop and undergo complete paradigm shifts, so
will the audiences for gaming content change, and these trends must be recognised by
developers in the industry.
On a superficial level, research shows that 68% of gamers are over 18 years of age, and that
the average gamer is 30 years old. These statistics may be surprising, however not as
surprising as the fact that 45% of all gamers are women, representing a larger portion of the
audience than boys under the age of 17 (ESA, 2013). These statistics make the primary
audience obvious as the highest number of gamers internationally are males aged 18-45. This
perhaps stereotypical audience may be overtaken in the future by the current secondary
audience of 70% of all women aged 12-24 that currently play video games, mostly on mobile
devices (ESA, 2013). The rise in the numbers of female gamers is a direct result of mobile
gaming emerging as a viable entertainment conduit.
Geoffrey Zatkin of EEDAR Research says “We basically have a gaming device in every single
pocket… It’s now social(ly) acceptable to play games anywhere” (Mobile Minute, 2013). The
mobile gaming explosion has seen females rise to represent 60% of mobile gamers, and 63%
playing social games with interactive engagement mechanisms (DeLuca, 2013). Females
between 20-35 play brain quizzes, simulation games, and management games the most,
whilst females ages 35-50 played slots and social turn- based games the most (Laughlin,
2013). Male mobile gamers tend to skew towards competitive games, focused on action and

role playing (Laughlin, 2013). According to Laughlin (2013) mobile gamers have a high
willingness-to-pay in order to progress faster in a game, in particular commitment- oriented
games (popular with females) have incredibly high monetisation prospects that are achieved
through ‘in-app’ purchases.
Key Opportunities in the Industry
No other entertainment product can be consumed in as many ways as gaming can. The
infinite amount of content and various conduits allow for new developments to be made in
the industry almost daily.
The future of the gaming industry evidently lies within mobile gaming. Whilst this conduit is
not the most exclusive it is the most popular and effective at this current point in time.
Applications that are free to play and offer in app purchases are extremely successful on the
most part as a result of the reasons mentioned in the industry analysis above. An excellent
example is “Candy Crush Saga”, a free to download game that has set records for the highest
grossing application of all time. With 44 million monthly active users, “Candy Crush Saga” is
played more than 600 million times a day, generating an estimated $633,000 each day
projected to amount to $231 million in 2013 (Dickey, 2013). This format of content (free to
play- in app purchases) is the most easily monetised game type for the mobile gaming
conduit. This style of content has already been proven incredibly successful and is a key
opportunity in the ever-expanding mobile gaming market.
Whilst mobile gaming has reach to casual gamers through mobile devices, professional
gaming based around console and PC gaming has a well connected core gaming audience
that is significantly more invested in the industry. The already established yet growing
professional gaming scene create huge community events that have exploded in popularity.
Major League Gaming (MLG) is a “…producer of broadcasts and video game tournaments for
the hard to reach, highly- engaged audience of 18-34 year old males” (MLG, 2013). The 2012
MLG season saw one year growth of 334% in live viewers to reach 11.7 million, statistics
which are consistent throughout all content broadcasts and professional leagues (MLG.
2013). The live event for the 2013 League of Legends World Finals sold out the Stapes Centre

in under an hour with more than 10,000 tickets sold ranging from $40US-$100US (Pitcher,
2013). Monetisation of these events is also achieved through advertising, sponsorships,
merchandise and much more. E-Sports is now a viable entertainment sub-product of the
gaming industry, and the producing of E-Sport content represents a massive opportunity for
monetisation and eventually all aspects of the traditional sport industry will be emulated by
E-Sports.
Ideas for Future Implementation and Development
Mobile and Console Platform Integration
With the rise of mobile and the fall of console, console content developers should integrate
the two platforms together creating a much more involved gaming experience. For example
players could have the primary gameplay played on a console, and then utilise an app to
manage the character, quests or play mini-games and access bonus content whilst out of the
house. Current downloadable content (DLC) for consoles is purchased on the console itself,
however this convergence would make this DLC available on mobile devices and therefore
conform to the in app purchase content format mentioned above. By combining the primary
console gameplay with the mobile gaming platform juggernaut, content developers would
create the ultimate immersive gaming experience with a hugely broad potential audience,
and open many doors for monetisation opportunities.
Virtual Reality Implementation
The idea of virtual reality simulators has made a return in the form of the Kickstarter project,
Oculus Rift. The development of this brand new conduit for gaming will allow for new
content to be developed and consumed as it never has before. Once the technology is
released (expected to be late September), console manufacturers, in particular Sony and
Microsoft, should actively support and integrate the Oculus Rift into the next generation of
consoles (OculusVR, 2013). The Oculus Rift and the next generation consoles could be sold in

bundles, ultimately the same process that was undertaken with Xbox Kinnect could be
imitated and would prove incredibly successful as virtual reality technology has not been
made widely available before.
Development of a Traditional Sport- Entertainment Model for
International E-Sports
Current E-Sports as entertainment is very similar to that of the traditional sports model (NFL
or NBA), yet there is enough content available to extend the current model even further. The
development of a gaming exclusive television channel that featured gaming industry news
programs, E-Sports tournaments, player and team streams, advertising, and other exclusive
gaming related content would prove incredibly successful considering the huge audience that
already engages with E-Sports. This channel would have to be made available through the
internet (subscription based) and other cable television providers to prove successful. Once
the channel is developed, mobile device applications would be developed (such as the official
AFL app) to once again immerse the audience into the channels extensive content. Overall E-
Sports has the audience base already strong enough to move towards a massive international
monetised conduit that would be consumed on many different platforms.

References
Augustine, J. (2012, October 12). League of Legends has 32 million active players, is
now as big as StarCraft in Korea. PC Gamer. Retrieved from
http://www.pcgamer.com/2012/10/12/league-of-legends-has-32-players-is-now-
bigger-than-starcraft-in-korea/
Chou, K. (2013, January 31). Mobile Kills the Console But Advances the Gaming
Industry. Wired. Retrieved from http://www.wired.com/opinion/2013/01/how-
mobile-kills-the-console-but-advances-the-gaming-industry/
D’Angelo, W. (2013, September 3). 2013 Year on Year Sales and Market Share
Update to August 24th
. VGChartz. Retrieved from
http://www.vgchartz.com/article/251276/2013-year-on-year-sales-and-market-share-
update-to-august-24th/
DeLuca, J V. (2013, May 13). Females and Mobile are Reshaping Traditional Gaming
Demographics. Trademob. Retrieved from http://www.trademob.com/females-
mobile-are-reshaping-traditional-gaming-demographics/
Dickey, M R. (2013, July 9). Insanely Popular Game Candy Crush Saga Is Bringing In
An Estimated $633,000 A Day. Business Insider Australia. Retrieved from
http://www.businessinsider.com.au/candy-crush-saga-daily-revenue-2013-7
Entertainment Software Association. (2013). Sales, Demographic and Usage Data,
Essential Facts about the Computer and Video Game Industry. Retrieved from
http://www.theesa.com/facts/pdfs/ESA_EF_2013.pdf
Entertainment Software Association. (2013) Game Player Data. Retrieved from
http://www.theesa.com/facts/gameplayer.asp
Intellectsoft. (2013). Most Wanted Gaming Stats. Retrieved from
http://www.intellectsoft.net/resources/wanted-mobile-gaming-stats/
Laughlin, D. (2013, March 29). Love, Courtship, and the Promiscuous Male Mobile
Gamer. Flurry Blog. Retrieved from http://blog.flurry.com/?Tag=Monetization
Lien, T. (2012, October 23). League of Legends final attracts 8.2 million viewers,
Season 2 Championships most-watched eSports event of all time. Polygon.
Retrieved from http://www.polygon.com/2012/10/23/3542424/league-of-legends-
final-attracts-8-2-million-viewers-season-2
Major League Gaming. (2013). Major League Gaming 2012 Season Generates 334%
Growth in Live Online Viewers. Retrieved from
http://www.majorleaguegaming.com/news/mlg-2012-season-generates-334-growth-
in-live-online-viewers

Mobile Minute. (2013, April 1). Mobile Game Developers- Are You Targetting the
Right Audience? Mobile Minute. Retrieved from http://mobileminute.info/mobile-
game-developers-areyou-targetting-the-rght-audience/
Newzoo, (2012). Mobile Games Trend Report. Retrieved from
http://www.newzoo.com/trend-reports/mobile-games-trend-report/
The Numbers. (2013). Domestic Theatrical Market Summary for 2013. Retrieved
from http://www.the-numbers.com/market/2013/summary
Oculus VR. (2013) News. Retrieved from http://www.oculusvr.com/news/
Pitcher, J. (2013, September 2). League Of Legends finals a sell out at Staples
Center, North American regionals conclude. Polygon. Retrieved from
http://www.polygon.com/2013/9/2/4685046/league-of-legends-finals-a-sell-out-at-
staples-center
Sinclair, B. (2013, July 26). World of Warcraft drops to 7.7 million subscribers.
Games Industry International. Retrieved from
http://www.gamesindustry.biz/articles/2013-07-26-world-of-warcraft-drops-to-7-7-
million-subscribers
Steam. (2013). Steam and Game Stats. Retrieved from
http://store.steampowered.com/stats/

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