We are living through unprecedented times. The world as we know has been profoundly altered. Some sectors have been hit hard (hospitality, retail, aviation etc) and some have been indirect beneficiaries (remote working tools, digital media, mobile gaming). As we go through this turbulence, I do a deep dive to see the impact on the gaming industry. &nbsp;

Global Gaming is a $149 billion industry, with mobile gaming accounting for 46 per cent of revenues i.e. $68 billion (growing at nearly 9 per cent), expected to achieve $180 billion by 2021. 2.2 billion gamers across the world mean that the business of fun is serious business. &nbsp;

Typically, gaming as a sector is more resilient than other tech sectors in down cycles. In 2008, a Nielsen study revealed that players devoted 1-2 hours of additional gameplay, corresponding with a secular rise in average minutes/month played in 2008 continuing through Q1 2009. When console sales declined, gamers migrated to mobile, web-based or second-hand games. Real annual economic growth among game makers topped 10 per cent between 2005-2009 even as economies contracted.&nbsp;

In times of stress and forced solitude, the immersive and social nature of games can bring people together like no other medium can. Last week, Verizon reported that videogame usage in the US was up 75 per cent in comparison to video streaming which increased by 12 per cent (while overall web traffic was up nearly 20 per cent and social media usage remained largely flat). A week back, Steam hit its all-time concurrent user peak of 20 million users. In China, average weekly downloads of apps/games during the first two weeks of February jumped 40 per cent compared with the average for the whole of 2019. Revenues followed a similar trajectory. Daily usage of games increased by 40 per cent to 159 minutes. Report says Honor of Kings achieved a new record of 150M DAUs; other titles like Peacekeeper Elite achieved 100M DAU’s. Certain genres i.e. card games, board games, female-focused content also did particularly well.&nbsp;

Given that games deliver a higher value to price proposition there is an increasing desire to get more value out of games often at the cost of costlier forms of entertainment. As discretionary expenditure on vacations/dining out/events etc wanes those freed up consumer dollars divert to gaming. However, as the inevitable unemployment events take place, certain demographics of gamers will cut back on playing and spending. The substitution effect above will tend to offset any direct demand destruction. &nbsp;

On the e-sports side, conspicuous lack of sports competitions will drive enthusiasts to virtual sporting events. ESL Pro League reported a 27 per cent year over year increase in online viewership with its Counter-Strike: Global Offensive&nbsp;March 16 event. However, actual e-sports tournaments/ticket sales will take a hit with cancellations.&nbsp;

In India, gaming is witnessing a similar boost. Time spent and mobile game downloads both increased by 20-30 per cent, over a time span of a week across the board for companies like Adda52, WinZO, Games 24*7, Gametion and many others. However, fantasy games will be impacted due to the eventual cancellation of IPL/sports matches and have to experiment with content, resort to daily rewards and other give-aways to retain users. As anxiety, stress, boredom and desire for stimulation all trigger, it will result in an increase in wagering/lottery style real money games. Cost of user acquisition will go down as ad inventory frees but conversely ad-based business models will be impacted as brands pull back. Games streaming and influencers will see a surge in popularity. In a milestone event, two home-grown streamers, CarryMinati and Mortal attracted 200,000 concurrent users on a live stream last week. &nbsp;

On the flip side, global supply chain disruptions will impact console sales/peripherals given that China is a major supplier. Expect wider disruption in manufacturing and sales of smartphones particularly as factory units shut down. Delays in the release of next-generation consoles will adversely impact console studios in the mid-term. AAA updates and new game releases will be pushed back. Live operations for mobile games due to remote working could be a challenge if the current period of lock-down extends further. Cancellation of GDC/E3 events will hurt small indies hoping for product launches. &nbsp;

While an extended period of social distancing could result in lost productivity games companies are far better prepared than other entertainment industries (TV studios/content producers etc) on building products with remote teams. Glu Mobile recently launched Disney Sorcerers Arena in the midst of remote working without disruption. &nbsp;

There is no doubt that Covid-19 will have far-reaching consequences. However, as we seek to soothe frayed nerves, a little escapism, frivolity and seeking alternate realities where you have some control won’t be a bad thing. &nbsp;

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

We are living through unprecedented times. The world as we know has been profoundly altered. Some sectors have been hit hard (hospitality, retail, aviation etc) and some have been indirect beneficiaries (remote working tools, digital media, mobile gaming).

We are living through unprecedented times. The world as we know has been profoundly altered. Some sectors have been hit hard (hospitality, retail, aviation etc) and some have been indirect beneficiaries (remote working tools, digital media, mobile gaming). As we go through this turbulence, I do a deep dive to see the impact on the gaming industry. Global Gaming is a $149 billion industry, with mobile gaming accounting for 46 per cent of revenues i.e. $68 billion (growing at nearly 9 per cent), expected to achieve $180 billion by 2021. 2.2 billion gamers across the world mean that the business of fun is serious business. Typically, gaming as a sector is more resilient than other tech sectors in down cycles. In 2008, a Nielsen study revealed that players devoted 1-2 hours of additional gameplay, corresponding with a secular rise in average minutes/month played in 2008 continuing through Q1 2009. When console sales declined, gamers migrated to mobile, web-based or second-hand games. Real annual economic growth among game makers topped 10 per cent between 2005-2009 even as economies contracted. In times of stress and forced solitude, the immersive and social nature of games can bring people together like no other medium can. Last week, Verizon reported that videogame usage in the US was up 75 per cent in comparison to video streaming which increased by 12 per cent (while overall web traffic was up nearly 20 per cent and social media usage remained largely flat). A week back, Steam hit its all-time concurrent user peak of 20 million users. In China, average weekly downloads of apps/games during the first two weeks of February jumped 40 per cent compared with the average for the whole of 2019. Revenues followed a similar trajectory. Daily usage of games increased by 40 per cent to 159 minutes. Report says Honor of Kings achieved a new record of 150M DAUs; other titles like Peacekeeper Elite achieved 100M DAU’s. Certain genres i.e. card games, board games, female-focused content also did particularly well. Given that games deliver a higher value to price proposition there is an increasing desire to get more value out of games often at the cost of costlier forms of entertainment. As discretionary expenditure on vacations/dining out/events etc wanes those freed up consumer dollars divert to gaming. However, as the inevitable unemployment events take place, certain demographics of gamers will cut back on playing and spending. The substitution effect above will tend to offset any direct demand destruction. On the e-sports side, conspicuous lack of sports competitions will drive enthusiasts to virtual sporting events. ESL Pro League reported a 27 per cent year over year increase in online viewership with its Counter-Strike: Global Offensive March 16 event. However, actual e-sports tournaments/ticket sales will take a hit with cancellations. In India, gaming is witnessing a similar boost. Time spent and mobile game downloads both increased by 20-30 per cent, over a time span of a week across the board for companies like Adda52, WinZO, Games 24*7, Gametion and many others. However, fantasy games will be impacted due to the eventual cancellation of IPL/sports matches and have to experiment with content, resort to daily rewards and other give-aways to retain users. As anxiety, stress, boredom and desire for stimulation all trigger, it will result in an increase in wagering/lottery style real money games. Cost of user acquisition will go down as ad inventory frees but conversely ad-based business models will be impacted as brands pull back. Games streaming and influencers will see a surge in popularity. In a milestone event, two home-grown streamers, CarryMinati and Mortal attracted 200,000 concurrent users on a live stream last week. On the flip side, global supply chain disruptions will impact console sales/peripherals given that China is a major supplier. Expect wider disruption in manufacturing and sales of smartphones particularly as factory units shut down. Delays in the release of next-generation consoles will adversely impact console studios in the mid-term. AAA updates and new game releases will be pushed back. Live operations for mobile games due to remote working could be a challenge if the current period of lock-down extends further. Cancellation of GDC/E3 events will hurt small indies hoping for product launches. While an extended period of social distancing could result in lost productivity games companies are far better prepared than other entertainment industries (TV studios/content producers etc) on building products with remote teams. Glu Mobile recently launched Disney Sorcerers Arena in the midst of remote working without disruption. There is no doubt that Covid-19 will have far-reaching consequences. However, as we seek to soothe frayed nerves, a little escapism, frivolity and seeking alternate realities where you have some control won’t be a bad thing. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

How coronavirus outbreak is impacting the gaming industry

The question is not if, but when the long-standing American defence umbrella in the Gulf, the world’s most militarised and volatile region, will be replaced by a multilateral security arrangement that would have to include China, as well as, Russia.

The United States’ perceived diminishing commitment to the Gulf and the broader Middle East and mounting doubts about the deterrence value of its defence umbrella leave the Gulf stuck between a rock and a hard place. The American umbrella is shrinking, but neither China nor Russia, despite their obvious interests, are capable or willing simply to shoulder the responsibility, political risk and cost of replacing it.

On balance, China’s interests seem self-evident. It needs to secure its mushrooming political and economic interests in the Gulf, which includes ensuring the flow of oil and gas and protecting its infrastructure investment and the expanding Chinese diaspora in the region. Nonetheless, China has, so far, refrained from putting its might where its money is, free-riding instead (in the words of US officials) on America’s regional military presence.

China’s approach is grounded in the belief that economics rather than geopolitics is the key to solving disputes

Indeed, for the longest time, China has been able to outsource the protection of its interests to the United States at virtually no cost. For the US, guaranteeing security in the Gulf has been anchored in an American policy which accepted that maintaining security far beyond the borders of the United States was in America’s national interest, including the protection of Chinese assets. All China needed to do, therefore, was to make minimal gestures such as contributing to the multi-national effort in the Gulf and adjacent waters to counter Somali pirates.

In the meantime, China could pursue a long-term strategy to bolster its capabilities. This included infrastructure projects related to the Belt and Road Initiative (BRI) with dual-purpose potential (such as the strategic ports of Gwadar in Pakistan and Duqm in Oman as well as commercial investment in Dubai’s Jebel Ali), the creation of China’s first overseas military facility in Djibouti, and significant expenditure on upgrading the Chinese armed forces.

All that potentially changed with the rise of US President Donald J Trump, who advocated an America First policy that attributed little value to past US commitments or to maintaining existing alliances. Hence Trump embarked on a trade war with China – viewed as a strategic competitor – and appeared to fuel rather than resolve regional stability by uncritically aligning American policy with that of Saudi Arabia and Israel and targeted Iran as the source of all evil.

This change has yet to translate into specific Chinese policy statements or actions. Nonetheless, the anticipated shift from a unipolar to multilateral security architecture in the Gulf has cast a new light on the first-ever joint naval exercise involving Chinese, Russian and Iranian naval forces, as well as China’s seemingly lukewarm support for a Russian proposal for a multilateral security approach in the Gulf.

China was careful to signal that neither the joint exercise nor its closer military ties with a host of other Middle Eastern nations meant it was aspiring to a greater role in regional security any time soon. If anything, both the exercise and China’s notional support for Russia’s proposed restructuring of regional security suggest that China envisions a continued US lead in Gulf security, despite the mounting rivalry between the world’s two largest economies.

The Russian proposal in many ways fits China’s bill. Its calls for a multilateral structure involving Russia, China, the United States, Europe and India that would evolve out of a regional security conference along the lines of the Organisation for Security and Cooperation in Europe (OSCE). While backing Russia’s proposal in general terms, Chinese foreign ministry spokesman Geng Shuang stopped short of specifically endorsing it. Geng welcomed ‘all proposals and diplomatic efforts conducive to de-escalating the situation in the Gulf region’.

China’s reluctance to endorse the Russian proposal more wholeheartedly is rooted in differing approaches towards multilateralism in general and alliances in particular. China shies away from alliances, with their emphasis on geo-economics rather than geopolitics, while Russia still operates in terms of alliances. Despite favouring a continued American lead, China sees a broadening of security arrangements that would embed rather than replace the US defence umbrella in the Gulf as a way to reduce regional tensions.

China also believes that a multilateral arrangement would allow it to continue to steer clear of being sucked into conflicts and disputes in the Middle East, particularly the Saudi-Iranian rivalry. A multilateral arrangement,&nbsp;in which the US remained the key military player, would further fit the pattern of China’s gradual projection of its growing military power beyond its borders.

With the exception of the facility in Djibouti, China’s projection becomes less hardcore the further one gets from the borders of the People’s Republic. More fundamentally, China’s approach is grounded in the belief that economics rather than geopolitics is the key to solving disputes, which so far has allowed it to remain detached from the Middle East’s multiple conflicts. It remains to be seen how sustainable this approach is in the long term.

Such an approach is unlikely to shield China forever from the Middle East’s penchant for ensuring it is at the heart of the major external parties’ concerns. And as Jiang Xudong, a Middle East scholar at the Shanghai Academy of Social Sciences, puts it: ‘Economic investment will not solve all other problems when there are religious and ethnic conflicts at play’. 
 
&nbsp;(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

The question is not if, but when the long-standing American defence umbrella in the Gulf, the world’s most militarised and volatile region, will be replaced by a multilateral security arrangement that would have to include China, as well as, Russia.

The question is not if, but when the long-standing American defence umbrella in the Gulf, the world’s most militarised and volatile region, will be replaced by a multilateral security arrangement that would have to include China, as well as, Russia. The United States’ perceived diminishing commitment to the Gulf and the broader Middle East and mounting doubts about the deterrence value of its defence umbrella leave the Gulf stuck between a rock and a hard place. The American umbrella is shrinking, but neither China nor Russia, despite their obvious interests, are capable or willing simply to shoulder the responsibility, political risk and cost of replacing it. On balance, China’s interests seem self-evident. It needs to secure its mushrooming political and economic interests in the Gulf, which includes ensuring the flow of oil and gas and protecting its infrastructure investment and the expanding Chinese diaspora in the region. Nonetheless, China has, so far, refrained from putting its might where its money is, free-riding instead (in the words of US officials) on America’s regional military presence. China’s approach is grounded in the belief that economics rather than geopolitics is the key to solving disputes Indeed, for the longest time, China has been able to outsource the protection of its interests to the United States at virtually no cost. For the US, guaranteeing security in the Gulf has been anchored in an American policy which accepted that maintaining security far beyond the borders of the United States was in America’s national interest, including the protection of Chinese assets. All China needed to do, therefore, was to make minimal gestures such as contributing to the multi-national effort in the Gulf and adjacent waters to counter Somali pirates. In the meantime, China could pursue a long-term strategy to bolster its capabilities. This included infrastructure projects related to the Belt and Road Initiative (BRI) with dual-purpose potential (such as the strategic ports of Gwadar in Pakistan and Duqm in Oman as well as commercial investment in Dubai’s Jebel Ali), the creation of China’s first overseas military facility in Djibouti, and significant expenditure on upgrading the Chinese armed forces. All that potentially changed with the rise of US President Donald J Trump, who advocated an America First policy that attributed little value to past US commitments or to maintaining existing alliances. Hence Trump embarked on a trade war with China – viewed as a strategic competitor – and appeared to fuel rather than resolve regional stability by uncritically aligning American policy with that of Saudi Arabia and Israel and targeted Iran as the source of all evil. This change has yet to translate into specific Chinese policy statements or actions. Nonetheless, the anticipated shift from a unipolar to multilateral security architecture in the Gulf has cast a new light on the first-ever joint naval exercise involving Chinese, Russian and Iranian naval forces, as well as China’s seemingly lukewarm support for a Russian proposal for a multilateral security approach in the Gulf. China was careful to signal that neither the joint exercise nor its closer military ties with a host of other Middle Eastern nations meant it was aspiring to a greater role in regional security any time soon. If anything, both the exercise and China’s notional support for Russia’s proposed restructuring of regional security suggest that China envisions a continued US lead in Gulf security, despite the mounting rivalry between the world’s two largest economies. The Russian proposal in many ways fits China’s bill. Its calls for a multilateral structure involving Russia, China, the United States, Europe and India that would evolve out of a regional security conference along the lines of the Organisation for Security and Cooperation in Europe (OSCE). While backing Russia’s proposal in general terms, Chinese foreign ministry spokesman Geng Shuang stopped short of specifically endorsing it. Geng welcomed ‘all proposals and diplomatic efforts conducive to de-escalating the situation in the Gulf region’. China’s reluctance to endorse the Russian proposal more wholeheartedly is rooted in differing approaches towards multilateralism in general and alliances in particular. China shies away from alliances, with their emphasis on geo-economics rather than geopolitics, while Russia still operates in terms of alliances. Despite favouring a continued American lead, China sees a broadening of security arrangements that would embed rather than replace the US defence umbrella in the Gulf as a way to reduce regional tensions. China also believes that a multilateral arrangement would allow it to continue to steer clear of being sucked into conflicts and disputes in the Middle East, particularly the Saudi-Iranian rivalry. A multilateral arrangement, in which the US remained the key military player, would further fit the pattern of China’s gradual projection of its growing military power beyond its borders. With the exception of the facility in Djibouti, China’s projection becomes less hardcore the further one gets from the borders of the People’s Republic. More fundamentally, China’s approach is grounded in the belief that economics rather than geopolitics is the key to solving disputes, which so far has allowed it to remain detached from the Middle East’s multiple conflicts. It remains to be seen how sustainable this approach is in the long term. Such an approach is unlikely to shield China forever from the Middle East’s penchant for ensuring it is at the heart of the major external parties’ concerns. And as Jiang Xudong, a Middle East scholar at the Shanghai Academy of Social Sciences, puts it: ‘Economic investment will not solve all other problems when there are religious and ethnic conflicts at play’. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

China manoeuvres to protect its interests in Gulf while keeping its hands clean

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How coronavirus outbreak is impacting the gaming industry

China manoeuvres to protect its interests in Gulf while keeping its hands clean