November 28, 2021
The CBS Post

THE VOICE OF CBS

Online Gaming and the Road Ahead

Online gaming includes any sort of electronic or video game played over a computer network through interactions with other players.

The history of the start of online gaming dates back to the 1940s when the first mathematical game named NIM was introduced. Subsequently the second computer game OXO was developed in 1952. A space combat video game, Spacewar was created in 1962 which turned out to be one of the most important and influential games as it could be played on multiple stations. In 1971 Atari, Inc, an American video game development company produced the first arcade video game, Computer Space. It also marked the start of commercial design and development of games worldwide.

The next 10 years witnessed the creation of some popular games like Dungeons and Dragons, Maze, Pong, Gunfight etc. Around the same time the revolutionary development of the Internet took place paving the path for online gaming. Further some games that were developed in the 90s gained immense popularity and could be played across the Internet like Xtrek, Marathon, Warcraft, Nintendo, Quake, Starcraft.

Entering into the 21st century the online gaming industry had already started showing its commercial presence in the global market. The creation of games with built in internet capabilities led to a drastic growth of this industry. World of Warcraft, Playstations, Pokemon Go, League of legends etc were some distinct genre games that gained popularity among players. 

The online gaming industry has witnessed tremendous growth in the past few years It was valued at USD 151.55 billion in 2019 and is expected to reach a value of USD 256.97 billion by 2025. Many startups are also being built around game development and designing and becoming popular henceforth increasing the revenues generated by this industry even further. Examples include VSPN, Donut lab, Scopely etc.

Gaming has evolved from just being a mere source of entertainment to giving rise to various full-time professional careers. The advent of gaming can be truly understood by the acceptance of the term “Serious Leisure” which is defined as ‘The systematic pursuit of an amateur, hobbyist, or volunteer core activity that is highly substantial, interesting, and fulfilling and where, in the typical case, participants find a career in acquiring and expressing a combination of its special skills, knowledge, and experience.’ The increased recognition of this underlying theory has been partly due to greater internet penetration, which has facilitated such ‘leisure’ activities to be taken up as a livelihood.

As such, the growth potential of the gaming industry has increased manifolds. Coupling this internet reach, with the ever-increasing smartphone  infiltration has landed the gaming industry in the top 10 of the fastest growing industries globally.

In just a few short decades, the world of online gaming has exploded in popularity. Estimated to reach $196 billion in revenue by 2022 as per report by Visual Capitalist, it now challenges more traditional entertainment industries like box office and music records (be it via streaming platforms like Spotify or sale of record albums). The no. of online gamers globally stands at 931.7 million as per Statista.com.

This has led to the creation of a ‘Gaming Ecosystem’ which has generated dozens of revenue streams. These include distributors and retailers, streaming services, hardware and software developers, game publishers, game Developers among others.

Owing to its immense popularity globally; eSports World Cups, World Conventions were started in the previous decade. These were, however, limited to LANs in their initial years. But now their reach is virtually limitless. The Fifa eWorld Cup 2018 champion received $250,000 in prize money and a chance to meet Cristiano Ronaldo and Lionel Messi among many others, while the finals themselves were streamed on YouTube as well as broadcasted on TV.

Probing further, the mobile gaming segment promises the most potential. It has eclipsed other segments by hefty margins and there seems to be no slowing down in the future.

Comparing the global scenario to the Indian situation, and one could witness the untapped potential the market offers. Indian online gaming market currently stands at USD 290 million, and is poised to grow to USD one billion by 2021.

An average Indian online gamer:

  • is introduced to online gaming through their friends, family and peer group
  • is a male aged 24 or below 
  • prefers puzzle, action and adventure games

Indians are attracted to freemiums, and lower subscription-based games, and more likely to invest time in fantasy-based gaming. A recent report published by Federation of Indian Fantasy Sports along with the global consulting firm KPMG pegged the Indian fantasy sports market at 90 million users. Of these, 20% are willing to pay for these games. The user base itself has shown a cumulative average growth rate (CAGR) of 212 per cent over the last four years, as per the report. Meanwhile, the industry itself is expected to be valued at $3,750 million by 2024.

The Indian game developers are working on newer ideas and almost 400+ start-ups have cumulatively attracted approximately $448 million in investor funding between 2014 and 2020, according to DataLabs by Inc42+.

The global gaming industry witnessed a huge surge in its user base when the pandemic hit. While the economies dwindled, start-ups failed, business shut down; online gaming has been one of the few benefactors and saw a tremendous spike in global revenue.

Where connecting over discord is the new virtual equivalent of a houseparty; the ‘new normal’ is being redefined every day. All this has contributed to increasing popularity of online gaming; not only amongst teenagers but even in corporate atmospheres, whereby employees are encouraged to participate in these virtual gatherings.

A U.S. based telecom firm, Verizon found that gaming traffic increased by 75% during the lockdown enforced due to COVID pandemic. Between the months of February and March, visits to online gaming websites or apps rose by 24%. Moreover, engagement, as measured by time spent on gaming sites or apps, also increased by 21% during the same time period. It was also reported that the average time spent on online gaming constitutes 11% of total entertainment per day.

Confined to their homes, people are turning to their consoles/ smartphones/ PCs not only for entertainment but also as a means of distraction. Some gamers are even hiding behind these games. Research (von der Heiden, Braun, Müller and Egloff, 2019) has found that excessive gaming drives gamers to create split personalities, sometimes even confusing the real world and the virtual one.  

The American Psychiatric Association defined Internet Gaming Disorder as a behavioural addiction, lying closely on the lines of gambling. Beyond the obvious effects on the eyes, the knack of burying up one’s emotions can lead to suppressed anger which can erupt in bursts of fit and violence. Escaping in the world of games as a coping mechanism is dangerous and one could develop unhealthy behaviours such as craving, loss of control, loss of appetite, depression etc. The absence of a social life can create chronic mental problems which drive people to insanity. 

Despite all of this, there seems to be no break on the acceleration of the reach of online gaming. The onset of next-generation gaming including VR games, cloud gaming and real time personalization game content that is customized to fit each player’s personality and playstyle; paves the way for exponential growth, currently estimated to grow at a CAGR of 17.5% between 2020-2027, according to reports by ‘Absolut Marketing Insights’. Deeper market penetration and the vast expanse of time to kill nowadays only aids the already bright future ahead for the industry and the Corona pandemic might further inflate these CAGR numbers.

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