Video games are only getting more popular.
Roughly 2.5 billion people around the world played games last year, double the number of players in 2013. Gaming is a $149 billion industry, growing 7% year over year, with the U.S. as its largest market. In America, the average gamer is 33 years old and 46% of gamers are female, according to the Entertainment Software Association.
(This is part one of a seven-part series about virtual worlds.)
Per Quartz reporter Dan Kopf’s summary of U.S. Department of Labor data:
More people now report playing games on a typical day — 11.4% in 2017 compared to 7.8% in 2003 — and, on days they do play games, they spend more time doing so — about 145 minutes in 2017, compared to 125 in 2003.
Young people are the biggest driver of the trend. From 2003 to 2015, 15-24 year olds spent less than 25 minutes playing games on the average day. From 2015 to 2017, those in that age group dedicated almost 40 minutes a day to games.
Mobile games account for a large part of this dramatic growth, but all major game categories are growing. The console gaming market — the oldest segment and most expensive due to hardware cost — expanded more than 7% last year alone.
Much of what people are doing in games — whether on console, PC or mobile — is socializing.
Of the 20 most popular PC games last month by monthly active users (MAUs), 14 are massively multiplayer online (MMO) games and the remaining six are single-player games with online multiplayer modes. Of the 10 top-grossing mobile games in December, six were MMOs. Discord, a startup that provides in-game voice chat and community forums, has more than 200 million MAUs and quickly surpassed a $2 billion valuation.
The nature of conversations within a given game can vary widely. In many cases, interactions are solely for coordinating immediate activity to overcome challenges or peer competition within the game. Broader socializing happens during lulls of activity; many players who meet in-game may form clans to continue collaborating and use Discord threads for chatting outside the game.
Beyond meeting new people, games can also strengthen existing offline relationships. A survey conducted over 2014 and 2015 by the Pew Research Center found that one-third of teenaged U.S. male gamers socialized with friends via online games on a daily basis and another one-third did so weekly.
The underlying focus of MMO virtual worlds is navigating human relationships with countless competitive and collaborative experiences acting as excuses to convene. Socializing — the building of relationships and use of social capital — is the core of the experience.
Games that provide more time and space for friends to socialize require less time commitment and fewer skills to become enjoyable experiences. Yet, few popular games allow players to interact without focusing primarily on a mission. While there are still many games oriented toward gamers who want to focus on individual competition without social interaction, what we’ll see in this multiverse stage of social media are open-world MMOs that target casual gamers and emphasize user-generated content (UGC) and social collaboration.
These virtual worlds will be platforms for others to build upon, rather than mere environments for one specific game or story. They will still have distinct scenery, cultures and narrative context, but also distinct in-world frameworks for creating UGC, enabling political organization and trade and moderating user behavior deemed hurtful or fraudulent.
Games with a social graph have network effects, albeit limited ones. People want to play where others are playing, even if the others are strangers. An MMO without a lot of players who are at your skill level, speak your language and are active at the time of day you’re playing isn’t much fun. It’s a better experience with more active players, at least to the point where you can play any time of day and have the same quality of experience (beyond that, there’s no marginal gain to the consumer). Many people want to play games with specific friends, so games that already have several friends playing them are more enticing.
Network effects like this are the same as social platforms like Twitter and Instagram. They are why games like Minecraft, World of Warcraft, League of Legends and Clash of Clans still have millions of MAUs; in fact, Clash of Clans had its highest grossing month ever in December, seven years after its launch.
Many tech investors avoid investing in game studios because creating games looks more like producing a film than building a software platform. Traditional console games are media experiences designed to take serious players 15-35 hours to complete, keeping gaming a hits-driven industry. Like Hollywood film studios, game companies produce sequels to keep their popular franchises alive.
The network effects of online multiplayer games retain active users for much longer, though. Moreover, customer acquisition costs (CAC) for mobile games have soared, giving an advantage to incumbent mobile gaming companies that have already amassed millions of users (like Supercell, King and NetEase) to cross-promote their new games for free through their existing social graph.
Like most social spaces in the physical world, the coolness of a game fades after people migrate to something new. This is still the natural trajectory of games. Popular titles have a few short years of massive growth before a gradual decline in interest. Even Fortnite seems to have cooled, with monthly revenue down by nearly 40% year-over-year in 2019, according to a SuperData report. Epic Games, the maker of Fortnite, hasn’t released public updates on MAUs since August 2018 (78 million), peak concurrent users since February 2019 or registered users since March 2019 (250 million).
Fortnite proactively keeps its world fresh with new experiences, like changes to the map, temporary themes that celebrate holidays or the intellectual property of another franchise, like Avengers and Star Trek. Focusing on “live ops” like these to keep games fresh is an industry staple.
When users get bored with one game experience or change their mood, the goal is to give them something else to do within the same virtual world so they won’t leave it. Popular open-world games have been designing environments with that goal in mind for years. Grand Theft Auto V, for example, lets players freely roam a city while choosing from a diverse range of missions and activities.
But these expanded worlds in games are still media content — a consumable good that becomes less valuable as novelty fades. Adding more content to retain user interest is a straightforward strategy: publishing sites like TechCrunch retain users with a flow of fresh articles; TV shows retain viewers with new episodes and spin-off shows.
The virtual worlds of games must offer users ways to build new experiences that satisfy a vast range of interests and moods if they intend to evolve into platforms that get more exciting and more valuable over time.
Much of this is about remaining a social hub for players’ conversations and social interactions. To use the words of High Fidelity CEO (and Second Life founder) Philip Rosedale, “I don’t want to talk about my workday while taking cover from bullets in Fortnite.”
The specific context of a game restricts the socializing that typically occurs within it. While many games have achieved massive popularity, no one game has become a destination for a majority of gamers in the way major social apps became hubs for most internet users.
What differentiates social platforms today like Facebook and Twitter from popular MMOs is that the former are purely utilities for users to create their own content; they don’t entertain people. As virtual worlds evolve into social platforms, gaming companies will act like sovereign governments that provide physical environments, set expectations around social norms and a framework of rules and economic dynamics — and then leave it up to users to construct what they want and spend time freely. There are many ways to craft such an environment, and there still needs to be underlying context to the world that makes users want to try it in the first place before there is much user-generated content.
Virtual Worlds EC-1 (Special Series) Table of Contents
- Part 1: “Games already are social networks”
- Part 2: “Why social networks want even more gaming“
- Part 3: “What virtual worlds in this transition era will look like“
- Part 4: “Why didn’t this already happen?“
- Part 5: “Multiverse virtual worlds will be healthier for society than our current social networks“
- Part 6: “Making money from games: The future of virtual economies“
- Part 7: “The companies that will shape the multiverse era“
Also check out other EC-1s on Extra Crunch.