Move from “hits” business to user engagement
The current gaming industry is focusing intensely on improving user engagement among players. Gaming companies Electronic Arts (EA) and Activision Blizzard (ATVI), for example, were previously “hits” businesses, which meant that if a popular game of a successful franchise were launched, gaming companies would benefit greatly from exponential sales during that particular period. Users typically played a game for six to eight weeks and then would move on to the next available game on the market.
Increasing user engagement
For the trailing-12-month period at the end of 1Q16, Activision had about 42 billion hours of played and watched time. This figure is in line with some of the largest entertainment networks in the world, including US-based (SPY) Netflix (NFLX) and Facebook (FB). In 2Q16, Activision had over 10 billion hours of games played. Specifically, Overwatch was one of the most popular games in the last quarter. Users spent approximately 500 million hours playing Overwatch.
Tapping into player networks
The “network effect” occurs when a player’s game experience improves when more people join the game’s network. Electronic Arts (EA) has a player base of around 350 million. It also has an impressive mobile gaming and console portfolio that have been identified as the keys to building a strong player network.
In player networks, players can create content and share it with friends. Ideally, in such networks, players are able to have access to a safe and secure platform to participate in this digital world. Electronic Arts, in particular, will need to identify players across games and devices and connect them socially in order to compete. The aim of these companies will be to provide players with the necessary tools to communicate with one other while providing personalized experiences.
In the next part, we’ll discuss player investment.