Pandemic Gaming is Dead. Long Live Pandemic Gaming.

The pandemic-boost to gaming may be contracting, and it doesn’t really matter.

In the early days of the pandemic I spent a lot of time talking to brands about the presumed impact of COVID-19 on gaming. Now in the late stages of the pandemic, I’m preparing myself for much of the same…just in the opposite direction.

As much as the rise of gaming during the onset of the pandemic grabbed a number of headlines, the inevitable market recalibration which has become evident in recent months is doing the same. An NPD report on declining video game spending was quickly corroborated by earnings reports or guidance among major industry players such as Xbox, Sony, and Nintendo which almost universally pointed to slumping revenue performance in H1 2022.

Quite a bit of doom and gloom, yet industry insiders were unfazed. A number of factors were working against consumer video game spending during the first half of 2022, largely but not exclusively limited to:

• Macroeconomic pressures on consumer spending in general due to inflation and the potential for broader economic recessions.

• A dearth of new content in H1, likely attributable to a number of COVID-related game delays, exacerbated in no small part by the “Cyberpunk effect” (as we previously discussed in more detail).

• Boosts from the new console generation subsiding, though still subject to ongoing supply chain issues limiting availability of Xbox Series X/S and Playstation 5 consoles, in addition to high-end PC GPUs (though the crypto crash may help with the latter bit).

Revenue is often used as a bellwether for the gaming industry given that (at this time) there isn’t much in the way of standardization around (arguably) more meaningful metrics, like player engagement. One might even argue that spending does not cleanly correlate to engagement in an industry such as gaming, where many games have a long shelf-life and gaming fans are known to have a considerable “backlog” of games to play (e.g. games they purchased previously but never quite had time to play). As a practical example, PC gaming platform/gaming backlog king Steam has seen a continued up and to the right trend for concurrent users through 2022 (the eagle-eyed will also note that the Summer months tend to reflect a slump relative to January-March, which is almost certainly not helping Q2 guidance/results). 

However, the fact that guidance from Microsoft cites “lower engagement hours year-over-year,” Sony reported declines in year-over-year gameplay hours, and Roblox DAUs missed expectations by about 2M users (52.2M reported against an expected 54M) would seem to at least partially couple spending declines with overall declines in gaming behaviors. NPD reports these declines are largely from the heftiest play category - those who play more than 15 hours a week, and even then marginally so. Whatever the reason, tempered guidance is indicative of the fact that the major players in the gaming industry are cognizant-of and expecting a quasi-return to normalcy relative to early pandemic behaviors. 

And yet, gaming industry insiders were unperturbed by these trends for the simple reason that the story around the trajectory of game pre- and late- pandemic is the same: Gaming has been steadily on the rise for years. While there will certainly be some short-term adjustments where the levels of growth levels were unsustainable lacking some outside catalyst, the overall industry remains larger (and growing) relative to pre-pandemic levels.

A more interesting consideration is how the marketing community will react to these headlines, when so many marketers redoubled attention on gaming precisely because of the hyperbolic headlines at the onset of the pandemic. Is the honeymoon over?

First, a “honeymoon” would entail a much more serious engagement, which is still hardly the case for marketers and gaming at this stage (here again, the genesis of a whole book). Second, it is possible whatever “trend chasing” that was kicked-off by the spotlight given to gaming early in the pandemic may have partially shifted to the Metaverse, which typically becomes a discussion about gaming anyway. 

The more likely impact is that finding willing ears for conversations about gaming will be that much more challenging. The positive headlines around gaming early in the pandemic made discussions with marketers easier, less positive ones will do the opposite. The same balanced/nuanced take that applied to the early boosts of the pandemic would be well applied to the more recent contractions, as the underlying message remains the same - gaming is a big deal, pandemic or not. 

Those, like myself, who favored a more reserved take on the trajectory of gaming even in those “exciting” early days of the pandemic may breathe a little sigh of relief. Former Obama press secretary Jay Carney noted that the administration never boasted about stock market performance based on that logic that “if you claim the rise, you own the fall” (wisdom that his successor gleefully ignored, of course). The reality is that stock market performance is not a direct outcome of political actions nor a reflection of the economy more generally, but a complex array of factors which may have unpredictable levels of influence. Similarly, the performance of the gaming sector is not the direct outcome of any given pandemic, but a complex array of social and economic factors beyond the influence of any given entity or event. Such a reality makes for less good headlines, but a much better premise upon which one can base an industry POV.

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After a rocky launch due to printer issues, my new book is now readily availiable wherever books are sold. If you’re interested in gaming, marketing, esports, and the opportunities availiable therein, please pick up a copy.

I’d also love to hear what you think - please leave a review if you’ve had a chance to read it.