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Video Games Surge in Lockdown Boom

researchsnappy by researchsnappy
October 15, 2020
in Investment Research
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Video Games Surge in Lockdown Boom
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The “free-to-play” category includes popular multiplayer “battle royale” titles like Epic Games’s Fortnite, Electronic Arts’ Apex Legends and Activision Blizzard’s Call of Duty: Warzone. The latter is a free version of the popular Call of Duty series. It debuted on March 11 and had more than 60 million downloads in less than two months, according to Activision Blizzard. “Free-to-play models continue to permeate the industry. Battle Royale genre games are the hot segment that everyone seems to be chasing,” notes David Johnson, who is Founder, CEO and Creative Director of Undertone FX, a studio specializing in real-time visual effects for video games and VR/AR. Prior to that, Johnson was the Lead Visual Effects Artist at Activision Blizzard’s Infinity Ward Studio and worked on the Call of Duty franchise, among other projects.

Other popular top free-to-play games include Nexon’s Dungeon Fighter Online, Tencent’s Honor of Kings, Niantic’s Pokemon GO, Smilegate’s Crossfire and Riot Games’ League of Legends. Free-to-play titles generate considerable income through sales of extras. Fortnite, which is a hybrid of a building game and shooter game, earned $1.8 billion in global digital sales in 2019, according to SuperData, a Nielsen-owned digital gaming research firm. It comes in three game mode versions: Fortnite Battle Royale, Fortnite: Save the World and Fortnite Creative. “Free-to-play games grow as their engagement grows. This means more players, more time spent, or more things to buy. All of the above is happening for free-to-play games, so, yes, they will keep growing,” says Pachter. “Fortnite is popular because it’s a good game and it’s approachable. It tells us that consumers like free-to-play and are willing to spend money on cosmetic items. Everyone else is emulating Fortnite’s success.”

Fortnite players use real-world money to purchase the in-game currency of V-Bucks, which allows them to buy items like gliders, pickaxes, outfits and “emotes” (dances). In-game events are part of the mix. An in-game Travis Scott virtual concert in April had 12.3 million concurrent views from players, breaking Marshmello’s record last year of 10.7 million virtual attendees. A Star Wars event took place in 2019; the Millennium Falcon soared across the sky and director J.J. Abrams presented an exclusive clip from Star Wars: The Rise of Skywalker. “In-game events drive engagement higher. More engagement equals more spending,” comments Pachter. As of May 4, Fortnite had 350 million registered players worldwide and, in April alone, its players racked up a combined 3.2 billion hours in-game, according to Epic Games.

Many gamers use subscription services. In late April, Microsoft revealed that Xbox Game Pass had surpassed 10 million members from 41 countries around the world, and that Xbox Live had almost 90 million active users. Game Pass members are interacting more now within the gaming community. In another example of the lockdown effect, Microsoft reported on May 30 that Game Pass subscribers had added over 23 million friends since March, a 70% increase in the “friendship rate.” Apple Arcade, PlayStation Now, EA Access, Google Stadia, Nintendo Switch Online and Ubisoft’s Uplay+ are other examples of video game subscription services, which seem to be multiplying at the rate of premium TV services.

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