From a Perceived Niche To Breaking Records
The world's largest video gaming conference Gamescom registered a new attendance record as companies wake up to the fact that gaming is the place to meet with consumers.
Dear Readers,
357,000.
That’s how many people made their way to Cologne last week to attend Gamescom, the world’s largest gaming conference. That’s a plus of 22,000 people compared to last year and the show is starting to get close again to its all time attendance record of 373,000 people it attracted in 2019. If you were trying to make a spontaneous trip to Cologne to get in, you were out of luck - all 3 days of the trade show were sold out.
The opposite of a niche
Just looking at these numbers and the fact that more people play video games today than the population of China and India combined, gaming is no longer a niche activity that executives and leaders have marked it off as.
It’s the medium where consumers spent most of their time.
It’s the medium where real engagement exists.
It’s the medium where consumers spend real money on virtual items as well as their physical versions.
It’s the only medium that attracts all demographic cohorts.
So one takeaway from this year’s Gamescom is as clear as ever: for any brand, any company, that wants to stay relevant with consumers and interact with them in engaging, authentic ways that can drive significantly uplift of both the bottom and the top line, having a gaming strategy is a must have.
More and more companies are waking up to this fact. The need for a dedicated gaming strategy applies to any industry, any company - as illustrated by the fact that 1,568 exhibitors from 72 countries participated and more than 34,000 trade show visitors swarmed the business area.
Amongst the visitors and exhibitors and people that I spoke with were executives from companies like Adidas, Netflix, and Disney. But also a lot more non-obvious ones like car manufacturers Audi and Porsche, German rewards company Payback, and Belgian bath appliance retailer X2O - all wrestling with similar questions: how do we leverage gaming to position our brand, engage with consumers more effectively, and elevate our product offering.
After my keynote at the Gamescom Congress where I dove into details of what a successful gaming strategy looks like based on the insights in my upcoming book Press Play - Why Every Company Needs a Gaming Strategy, I was even approached by two partners at a large multinational law firm. Per their own admission, they had been thinking about video games but weren’t convinced that it would (and didn’t know how to) apply gaming to their core business as a law firm. Listening to the keynote changed their perception entirely as well as highlighting the case of Boston Consulting Group, who developed a video game to train employees as well as clients on different ways of applying business strategy concepts that ultimately led to more client workshops and sold projects.
Client facing engagement, training of employees, as well as internal compliance procedures are all areas in which even the most traditional businesses can benefit from leveraging gaming.
Out of the rut
All this comes to the backdrop of a gaming market that is showing signs of vitality. After a few months of a lull and stagnation, sales numbers across the industry are starting to pick up:
The German gaming market grew by 4% year-over-year during the first six months of the year
The US gaming market grew 5% year-over-year in July driven by strong mobile games results as well as hardware sales from the Nintendo Switch 2, putting the market on pace for 2024 sales
You could feel a significantly lightened and more upbeat mood compared to last year’s Gamescom where the hotel lobbies were filled with a mix of CO2 from the hundreds of meetings taking place simultaneously and a dose of despair and struggle, wondering if gaming was facing its reckoning day.
Cautious optimism
That doesn’t mean that either investors or publishers are back to gunslinging mode, taking huge financial bets merely on the belief that the game they’re betting on is a great idea and that the founders and leaders of the studio must know what they’re doing because they’re ex-Riot, ex-Blizzard, ex-[insert another well known studio name]. If we have learned anything over the past 12-24 months, is that none of this guarantees a game’s success in any way. But all stakeholders are investing actively, looking to build the next big thing - but they’re doing so more cautiously and only with proper external validation and vetting of their idea via external data and research.
To quote an executive at one the most successful gaming publishers of the last decade after having just shut down their latest new game that cost somewhere between $50 to $80 million to make:
“Even we can’t afford to take big hits like that any longer. We need to make sure we have the right data in place to validate our new projects and especially know our audience far better than we previously have.”
Organizational friction
Growing and maturing inevitably comes with some friction. This was palpable in my conversations with many studios that are part of bigger publisher organizations. As publishers like MTG and Stillfront push towards centralization of services and functions in an attempt to streamline their operations (read: save costs), studios are faced with a new level of oversight and management they previously haven’t been used to as they are left with the impression that their creative freedom is being infringed on.
It’s a fine line to walk and both sides have a valid argument to make here. At the end of the day, making games is a creative endeavour and the studios and their leadership need to be empowered to ship the best possible product while pairing it with best-in-class distribution (read: marketing and sales). The publisher organizations should evaluate closely where they can add true value while realizing cost synergies without compromising their priced assets.
Centralization is good - but when executives from the HQ start marching into meetings with game ideas that are based on their own taste and belief, that’s the opposite of what a healthy and effective organizational setup looks like.
In case you missed my keynote at the Gamescom Congress, below is short video from my talk. I’ll release the full keynote video next week as well as a deep dive into the new Skydance Paramount, which is making bold moves in entertainment - and per people on the inside is preparing a big move for gaming as well. Be sure to subscribe to not miss out.