Recovery Economics Games Sees Temporary Bounce but Should Prepare For Decline

The 20,000 Foot View: The effects of the coronavirus-induced crisis unfolded in multiple stages, each with its own characteristics. During the early outbreak and strict lockdowns, games engagement benefited greatly. The cessation of out-of-home entertainment gave games a boost with less competition. As lockdowns ease, the recession will kick in and consumers will start to feel the full effects of diminishing disposable income. Games companies will be negatively affected, unless they are adequately prepared. Any temporary short-term surplus should be harnessed to pave the way for what lies ahead. One of the key opportunities for games is the emergence of digitally-delivered live entertainment.

Key Insights

• Lockdowns were            before consumers felt a financial            (i.e. the recession)
• Curbed out-of-home            enabled consumers to reallocate spend            engagement, resulting in a temporary            for games
           of consumers in the US said they spent more time playing online games in March 2020 during lockdown
• The 2020            will push down disposable income            overall entertainment spend
• As lockdowns            lifted, out-of-home entertainment will again            for spend with digital propositions            gaming 
• Games streaming            will pick up, as they            be viewed as ‘saving money’            gamers
• Majority of            current engagement boom is driven            existing users – super-serving them            be a priority for building            loyalty 
• Games companies            a unique opportunity to provide            lifeline to the struggling live            industries, in the form of            ‘live entertainment venues’

Companies and brands mentioned in this report: Amazon, Fortnite, Travis Scott, PS Now, Xbox Game Pass, Google Stadia, Project Tempo, Netflix