New research from Bain & Company is saying that the global video game industry is expected to grow by over 50% in the next five years, mainly in part to the developing attitudes of modern teens and technological advancements.
There are a few other major reasons why this growth is expected. Still, employment gaps due to a shifting supply of workers may cause impediments to the development of the video game industry.
Additionally, new consumer demands for alternate digital spaces like virtual reality and the metaverse expand the definition of what the video game industry actually is.
Let’s break down the modern video game industry bit by bit to see why the video game industry will likely grow by over 50% within the next five years.
Changing youth attitudes
The major takeaway from this study is that slightly over half of Gen Z teens prefer to hang out with their friends online through gaming experiences rather than in person. Even more, Gen Z teens are comfortable or okay with interacting with friends in a virtual environment.
Ever since the 7th generation of video game consoles (Xbox 360, PS3) starting in 2005 and the release of popular multiplayer PC games in the early 2000s, the youngest generations now appear to be more fasscinated with online gaming. Since then, major titles like Minecraft, GTA online, and a multitude of battle royales have revolutionized online gaming.
On the other end, communication apps, like Discord, have been streamlined to make online gaming more convenient and no longer choppy. Additionally, couch co-op multiplayer games are rarely made anymore because demand isn’t there. In a certain way, the gaming industry has finally converged in demand and quality, and publishers will finally begin to reap the rewards.
How tech impacts youths' attitudes
The video game industry has always been driven by the desires and interests of the youngest members of society. In large part, video games have always been made with a young audience in mind, and most creators think back to their childhood for inspiration. An excellent example of this is how the Pokémon franchise was developed thanks to creator Satoshi Tajiri’s love of catching bugs.
With modern technology, photo-realism in games is commonplace due to the increased power of chips. Latency in games has been shot down by a large margin, so enormous open-world games and 100-player multiplayer games are now possible. Not only will technology continue to develop, but the monetization model for modern games will be supplemented by changes in video game technology and consumer demand.
How video game companies earn revenue
Despite global fears about a worldwide chip shortage and inflation, demand for video games is fairly consistent. Most major video game publishers, distributors, and developers earn the most money through free games. How is that possible?
The free-to-play model is tried and tested on mobile devices, and there was a major uproar from parents over the past ten years, but it seems to have been made much more efficient for PC and console games. Companies can earn from these games by offering paid skins, battle passes (that have various benefits depending on the game), loot crates, emotes, tags, etc.
In these online multiplayer games, young players want to stand out from the crowd; after all, those focused on in this study (14-17 years old) are forming their identities and finding their place in the world. The best and only way to do this is to pay. Add onto that limited-time skins, collaborations with major brands, and the desire to fit, and you have an income-generating machine.
Hedging bets with virtual spaces
Video game development takes long hours of arduous work, which is likely why the Bain & Company study emphasizes programmers joining large tech companies. That being said, many of these tech companies they are joining are developing virtual spaces.
Within the next five years, the culmination of a lot of large projects will finally begin to come to place. Optimists in the industry towards the metaverse, large battle royales, expansive open-worlds, and massive story games are aware of the financial backing that is going into games now and expect returns.
A lot of these projects have billions of dollars poured in and utilized effectively. From hiring top-level personnel to making major moves with collaborations and franchise management, the possibilities are seemingly endless, and excitement is in the air.
While this level of growth may seem unrealistic, the market conditions seem to be in the proper position for significant changes. Consumer demand is there, and video game technology is consistent across platforms (which makes it easy to port games). Not to mention, the COVID-19 pandemic brought many people indoors, and total gaming hours per person rose.
As long as these projects develop on time and consumer attitudes stay the same, 50% growth isn’t too unrealistic. Only time will tell what will happen.
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