Quick take: Bridging IRL and digital – the next phase of entertainment consumption

We are entering a new phase in the evolution of consumption. Traditionally, IRL dominated entertainment consumption. With the advent of the internet, smartphones and other technological innovations, companies and consumers created de-facto digital replicas of IRL. This is largely because the initial fundamental pillars of the digital transformation were laid by generations who had never previously lived in digital realms in the first place. Coupled with unequal distribution of technology adoption, the net result is that the current digitally-native generations have to balance their lives between IRL and digital. However, because the digital environment is more or less a replica of IRL, those two worlds are, in fact, competitive, rather than symbiotic. It intensifies problems with the information overload and saturation of the attention economy.

The challenge for digital natives going forward will be to innovate digital propositions to complement real-life environments (and vice versa), rather than compete against them. Covid-19 swung the pendulum of strategic focus significantly towards digital and away from IRL. While we are heading towards a ‘new normal’, where digital does gain on importance, IRL will fight back in 2022. Companies that over-focussed on digital innovation during the pandemic will face increased competitive pressures as the pendulum between IRL and digital corrects itself back to a ‘new normal’ equilibrium. Games face a particular risk here. One, IRL is games’ weakest engagement touchpoint. Two, games have been transitioning towards in-game spending and engagement-led business models, meaning that any uptick in IRL activities will impact revenues more significantly than in the unit-sales led era.  Games companies need to establish presence and engagement touchpoints in IRL. Entertainment partners who are traditionally strong in IRL (be it music, sports, cinemas or fashion) will play a key role in this. 2021 was the year of IRL penetrating games. 2022 will be the year of games penetrating IRL. Expect games character appearances at festivals, avatars at IRL fashion shows, IRL content drops at events and more.

This is an excerpt from our upcoming 2022 predictions report. Please register your interest in the comments and stay tuned for our upcoming podcast series where we will dedicate a full episode to the impacts and challenges of bridging IRL and digital realms.