The explosive growth of video games has transformed the industry into a serious business with top-grossing titles, generating revenue that Hollywood films could only dream of raking in.
No longer considered simply a ‘kid’s thing’, games are now being advertised in front of millions of eyeballs that tune into the Super Bowl (like World of Tanks at the 2017 event), and international companies run multi-billion-dollar global operations to retain and grow audiences.
Last year, total games industry revenue worldwide eclipsed $91 billion, jumping from its previous record of $61 billion (2015), according to a report from market researcher SuperData Research.
A big part of that increase is due to a continued shift away from retail games towards digital distribution, the ascent of streaming platforms (Spotify, Twitch, Pandora, etc.) and services (like Steam), and the massive growth of mobile gaming.
And since kids growing up today are interested in video games and phone apps rather than movies and TV, we’ll see this growth continue into the future.
Piracy…helped the video games industry in ways we often don’t acknowledge
Jungwon Hahn – APAC General Manager at Wargaming
We should hand it to classic entertainment because these major players have forced the movie industry to shift to digital and subscription models (Amazon, Hulu, Netflix, etc.), but it still lags behind gaming, following trends rather than setting them.
But what made it possible in the first place and, most importantly, what could the movie industry learn from video games to narrow the gap?
As odd as it may sound, the same piracy that sent the music and movie business into a downward spiral helped the video games industry in ways we often don’t acknowledge. Big names in music and movies were unwilling to adjust to changing content consumption patterns.
At the same time, many game developers rode the wave, lowering costs and making titles widely available if not totally free.
So here’s the irony: the exactly same thing that caused the former to decline allowed the latter to skyrocket.
Total games industry revenue worldwide eclipsed $91 billion
World of Tanks was in the vanguard, spearheading the new free-to-play PC model for Europe and North America.
We offered a quality product, which costs nothing to play unless you choose to buy exclusive content or pay to quicken the grind, and it clicked.
The game drew audiences in the tens of millions, going from 18 million in 2011 to 100 million by the end of 2013 on PC alone and now surpasses 200 million across PC, console, and mobile.
Once considered a go-to for smaller IPs to break into the market, free-to-play has become a new force to be reckoned with. Much of its growth can be attributed to the service-centric approach to operations.
We didn’t just support World of Tanks with regular new content – to keep up the momentum, we nurtured a community around it through a network of satellite services (from payment services, co-promotion with local companies and artists like Girls und Panzer and Makoto Kobashayi in Japan, and player-facing deals with internet providers through to regular online and offline events and player gatherings).
These all converge to form a living, breathing ecosystem where players stay for years, whether they continue playing World of Tanks PC, switch between it and its mobile/console versions, or keep coming back for the sense of community and the bonds they’ve built over the years.
In an age of easy communication, large companies — regardless of market sphere — have taken on a more personal edge. Everyone feels they are part of the product.
Some companies see that as a negative, but we have always embraced it. We measure what matters to players, design processes from their point of view, and take data-driven actions based on customer insights to enhance our products.
The World of Tanks Sandbox server is a great example of this. It allows the team the most flexibility in terms of hot fixes and other adjustments to ensure any improvement we roll out is in sync with player expectation. Plus, we involve them directly in the process.
Free-to-play has become a new force to be reckoned with
It’s a lot like running a gym. You start by distributing flyers and free trial coupons to attract people. It’s where marketing takes the lead. Once you have customers in your gym, you ensure they have state-of-the-art equipment and well-trained staff to keep them loyal and engaged. As applied to games, it’s enhancing the game’s core, evolving it with new content, and hiring best talent. But you can’t keep the business afloat if the entry fee is low or if it’s free.
So you also provide customers willing to pay extra with personal trainers to drive revenue. In games, these are micro-transactions. Finally, you have to remain competitive as more gyms open in the area.
So you listen to customer requests and introduce new programs like yoga, for example. It’s your content for retention created off player insights. The only difference is that, unlike a gym, we’re digitally connected. So we can track what’s going on in real time and react quickly, while it would make several weeks to change something in a gym.