Will COVID-19 Mark a Permanent Sea Change for Gaming?

Will COVID-19 Mark a Permanent Sea Change for Gaming?

THIS WEEK IN BUSINESS | Executives and industry figures take a deep breath before the next wave of new announcements to speculate on what the pandemic leaves in its wake.

Back in April, I wrote up what now feels like a weirdly dated version of the same column I'm writing today—a roundup crammed full of speculation about how COVID-19 transforms the games industry in the long-term.

Unfortunately, all most people can do is speculate. And on weeks when not much else is going on (or, in fact, when lots is going on), it's a low-hanging fruit in just about any conversation—whether that's with investors, journalists, or audiences.

The slight change this week is that, as we wrap up another run of quarterly financials, we heard many executives speculate less about the long-term effects of a pandemic on the industry, and more about the permanent aftereffects.

Now that we've been remote working for months, do companies see that as more effective than having offices and begin to switch to a permanent remote work model? Do we see the surge of digital events persist even after it's safe to gather in crowds again? Does film and TV look to the games industry, which is weathering the pandemic better than most, for guidance on future entertainment products? Do people keep buying more and more digital games?

The takeaway that I think you'll get from this column is still, of course, that nobody knows. We're all trying to wrap our heads around this at the same time, and though those with marketing insights and data and experience might be able to speak with more confidence, this is a strange time. We can only hope that the safest, most generous, most empathetic, and most humane predictions bear out.

Also, again, I'm so sorry this is another COVID-heavy round-up. If you're terribly burnt out please go back to this great column from last week that's just a bunch of photos of pets from around the games industry. I'll meet you over there.

QUOTE | "One of the things I feel is, 'Hey, maybe we are burning some of the social capital we built up in this phase where we are all working remote.' What's the measure of that?" - Microsoft CEO Satya Nadella is skeptical that the pandemic could change how companies work for good, saying that a more sticky shift would simply "replace one dogma with another dogma."

QUOTE | "Actors are unemployed because they can't get together to make a movie. They cannot film a movie today. You can't get together and have a sports game. It requires human interaction. But as we speak, we've got thousands of developers and live game operators who are making content in their pajamas from home." - Nexon CEO Owen Mahoney reflects on the impact of PC gaming cafe closures on the company, but says the more interesting impact of COVID-19 will be in how it frames the video games industry as a model to follow by entertainment at large.

QUOTE | "A lot of people believe that whatever trends existed before this pandemic will be accelerated by the pandemic. I've been saying for a long time that we're seeing a shift to digital distribution... We do expect the trends to continue, but we don't expect physical goods to go away." - Take-Two CEO Strauss Zelnick, reflecting on how the existing growth in the digital share of games revenue has been exacerbated by COVID-19 shutdowns. He believes that the spike represents a "bit of a sea change" that heralds a permanent growth in interest in interactive entertainment.

QUOTE | "We cannot develop by squeezing more and more people into the halls. That's not the aim. The aim is to reach a worldwide audience, much broader than we have in the past." - With a digital Gamescom on the way, Game managing director Felix Falk examines the ways digital events can work in a pandemic, as well as after.

STAT | 163% - The year-over-year increase in gaming hardware sales in the US for April 2020—also marking the highest April hardware spend since 2008, according to The NPD Group. PS4 and Xbox One sales rose by more than 160% year-over-year despite their life cycle being nearly at an end, and the year-to-date sales of the Nintendo Switch are now the highest for any platform in US history.

QUOTE | "For every person waxing lyrical about the potential that's been unveiled for a new kind of working, there are probably several for whom this new situation has been far from ideal. Don't be too surprised, or too disappointed, when the future ends up looking pretty familiar after all." - Despite optimistic statements from executives, columnist Rob Fahey analyzes the ways in which the industry is struggling with the changes brought by pandemic, and cautions that an expectation of major, permanent changes to how we work post-COVID is an unrealistic expectation.

STAT | 93 - The number of games Take-Two Interactive says it is currently planning to release in the next five years. Half of these are new IP, while the other half are from existing franchises. Only 15 are "platform extensions" of existing titles. And of course, Take-Two cautions that this number is subject to change.

STAT | 118 - The same stat, but for Embracer Group (formerly THQ Nordic). 69 of these titles total have not yet been revealed.

QUOTE | "While Cyberpunk may be a bigger hit than any one of those five games, the hype around it has likely played a significant role in CDPR's stock climbing to its current point. Companies that earn €115 million a year in revenue aren't typically worth €8 billion, and neither are companies with 35% lower revenue now than in 2015." - If you were intrigued by the headlines earlier this week reporting that CD Projekt Red was now worth more than Ubisoft, you may also be interested in editor Matthew Handrahan's analysis of how that happened, and why it is likely to change dramatically in the coming months.

STAT | 2.2 million - The number of people currently subscribed to PlayStation Now, Sony's cloud gaming subscription service.

STAT | 41.5 million - The number of people currently subscribed to PlayStation Plus, Sony's online subscription service (with monthly free games).

STAT | 10 million - The number of people subscribed to Xbox Game Pass, Microsoft's subscription service that offers access to a library of free titles, as of April of this year.

QUOTE | "We believe this will be one of the first major RTS franchises to open source their source code under the General Public License. Our goal was to deliver the source code in a way that would be truly beneficial for the community, and we hope this will enable amazing community projects for years to come." - Command & Conquer Remastered Collection producer Jim Vessella, speaking of the decision to make the original game's source code, as well as that of Red Alert, available to the public.

QUOTE | "I've never run a franchise before where there's been so little or no pressure from the publisher or from corporate or my partner about the monetization or the revenue." - Respawn Entertainment COO Dusty Welch, speaking about Respawn's new Vancouver studio focused on Apex Legends, and what that means for the Titanfall developer under EA.

QUOTE | "I did read some rumors about Xbox wanting to purchase PlatinumGames, and I thought, 'people on the internet write the craziest stuff', because that conversation has not come to our doorstep at all." - Atsushi Inaba, dispelling rumors that circulated after Phil Spencer said he wanted to buy a Japanese studio last year.

STAT | $39,600 - The amount of money G2A is paying Wube Software to fulfill its promises of paying back ten times the amount they lost on keys for their games illegally sold through G2A. The results of an independent audit on the number of keys were not disclosed, but G2A claims its own audit found 198 illegally obtained keys sold through its marketplace.

QUOTE | "As a smaller Indie studio, it had been challenging for us to carry the project on our own. We believe Tencent's deep capabilities and expertise as a leading game company will bring the franchise to new heights." - A tweet from the official OtherSide Entertainment Twitter account, explaining why it was handing off the System Shock franchise to Tencent. Earlier this year, there were reports of layoffs at the studio as development on the title allegedly fell "critically behind."

QUOTE | "I can't promise that we can avoid toxicity in environments when we open up communication channels like that. That's just an impossible thing to stop. But we're doing everything we can to minimize it." - Amazon Game Studios Seattle head Lou Castle, explaining why Crucible doesn't have text or voice chat right at launch.

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Rebekah Valentine

Senior Staff Writer

Rebekah arrived at GamesIndustry in 2018 after four years of freelance writing and editing across multiple gaming and tech sites. When she's not recreating video game foods in a real life kitchen, she's happily imagining herself as an Animal Crossing character.

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