In a year when industries that require the physical presence of their customers are on the ropes — from airlines and theme parks to brick-and-mortar retailers — those that don’t require in-person participation are thriving.
Exhibit A: Online gaming, which has been among the big winners of 2020. Exhibit B: The hardware. The Nintendo Switch was largely sold out at major retailers for months during the summer and holiday season. In November, the PlayStation 5 and Xbox Series X sold out almost immediately.
But can that trajectory continue into 2021 given the ongoing recession and steep unemployment?
In March, as countries around the world were heading into lockdown, “Animal Crossing: New Horizons” was released and became a record hit for Nintendo, selling 26 million copies at $60 apiece. People loved “Animal Crossing” for its ability to transport them to a deserted island, where they could architect, granting them control and a sense of adventure.
People held wedding ceremonies in idyllic vacation games like “Animal Crossing,” and teachers taught classes in virtual reality. Some who didn’t like gaming started to play just to spend time with faraway loved ones. A few even became video game coaches to earn extra cash.
“Overall, 2020 added to the need to escape reality, release tensions and frustrations, uplift the spirit at a time where we were forced to do most of that at home,” said Carolina Milanesi, a tech analyst at research firm Creative Strategies.
All that time spent online translated into massive sales for gaming companies and even firms in unrelated industries like Uber Eats and Wendy’s seized on the marketing opportunities
More people became gamers and more people started watching gamers, as livestream services like Amazon’s Twitch and Facebook Gaming logged record growth. Facebook announced in October it had launched games on Android and it expressed confidence it would continue to grow in 2021.
“As people begin to responsibly edge back into our pre-Covid routines, I believe many will continue to turn to gaming,” said Vivek Sharma, vice president of Facebook Gaming.
Even the nascent esports industry benefited from the hours streamed as traditional sports were paused.
Not every gaming initiative was a smash hit.
Two notable flops came from tech giants that analysts have compared to “oil tankers” that have a hard time pivoting after committing to a direction. In July, Microsoft shut down its livestreaming service Mixer after the company poured millions of dollars into the project. “Crucible,” Amazon’s own attempt at a blockbuster, free-to-play game in a similar genre as “Fortnite,” sank quickly after launch and the company announced in October that the game would be shut down by November.
How 2021 could shake out
Yet most companies in the games industry are bullish that the growth will continue into 2021 despite the recession and high unemployment.
“Even in this economic state, we see a lot of people willing to put down $500 for a new console,” said Carter Rogers, an analyst at Nielsen’s video game arm SuperData. “We don’t foresee anything sort of gaming crash due to economic factors because there are a lot of people stuck at home, shifting discretionary spending into gaming.”
Tech giants like Google and Amazon are still investing in cloud gaming services like Stadia and Luna, hoping to join into the console wars dominated by Sony and Nintendo (NTDOF).
“The games business is a tough business… There’s a reason why there hasn’t been a major new entrant into the gaming space since the Xbox in the early 2000s,” said Jack Buser, games director at Google Stadia, who previously worked at Sony for over seven years. “Have we made mistakes? Absolutely. Have we learned from those mistakes? Absolutely. Will we make mistakes in the future? I’m sure we will. Right. And that’s part of what it means to be in this business. But one thing is for sure: we are committed to it.”
Google’s video platform YouTube logged its best year ever in 2020 with more than 100 billion hours in gaming content watched. Ryan Wyatt, head of YouTube Gaming, said economic conditions like the recession are “ultimately out of our control” but that the company would continue its strategy of entertaining people next year while vying for their attention spans.
Jessica Stout, a 31-year-old mother of three who has a YouTube channel with more than 7 million subscribers, said that she believes gaming growth will slow if people are able to venture outside safely again. Stout, who goes by the name “Aphmau” on her channel, said that “a lot of people are going to spend more time going out than they ever have before, after being inside for so long.”