Gaming Predicted to Become Next Dominant Technology Platform
Some games are offering services once possible only in real life, says Activate co-founder Michael Wolf
Gaming is set to emerge as the next dominant technology platform much the way search engines, mobile phones and social networks redefined industries in previous decades, says Michael Wolf, co-founder and chief executive of consulting firm Activate Inc.
Some games are transforming into digital hubs that offer people an array of services once only possible in real life, according to Mr. Wolf.
The coronavirus pandemic has accelerated gaming's popularity, with overall time spent gaming rising by 29% during the outbreak, according to Activate.
People are increasingly using gaming platforms to view virtual concerts, for messaging, gambling, dating and even virtual celebrations of weddings and birthdays, Activate found.
The firm predicts the consumer gaming industry will reach a value of $198 billion by 2024, not including sales from hardware and devices, augmented reality, virtual reality and advertising.
"We're about to see the videogame wars," Mr. Wolf said.
The trend is one of several he spoke about during a presentation Wednesday at The Wall Street Journal's virtual WSJ Tech Live conference.
The industry is turning from selling individual games to offering subscription services, with Alphabet Inc.'s Google, Apple Inc. and Amazon.com Inc. among the companies offering gaming subscriptions and competing with major players such as Microsoft Corp. and Sony Corp.
Activate found that 58% of gamers use or intend to use gaming subscription services, while 38% use or intend to use cloud gaming services.
Mr. Wolf predicted a wave of mergers and acquisitions involving gaming and tech companies.
"Gaming will also connect industries,'' he said.
About 22% of people who bought their first virtual-reality headsets this year did so during the virus outbreak, Activate reported, with most users intending them for videogames.
The firm said spending by U.S. consumers and businesses on virtual and augmented-reality products would grow eightfold between now and 2024 to $19.8 billion that year.
OTHER FINDINGS FROM MR. WOLF'S PRESENTATION:
- With increased competition, technology and media companies must pay more attention to "super users," or the highest-engaged customers, who tend to skew younger, wealthier and more educated. Super users make up less than 25% of all consumers but spend about 1.5 times more time consuming media than other users. They also spend about 3.5 times more on media purchases. To succeed, companies will have to deploy highly personalized advertisements and services to capture these users.
- Global e-commerce, which is concentrated largely among the most powerful players such as Amazon and Chinese site Taobao, owned by Alibaba Group Holding Ltd., will reach $6.5 trillion in sales in 2024. E-commerce in the U.S. will grow by an average of 12% in coming years. Growth in shopping made through social-media channels will outpace that of total e-commerce, becoming a $69 billion business in the U.S. by 2024.
- Internet connectivity will be a key issue in the years ahead. Connectivity continues limit activities such as live game streaming, according to users cited by Activate. The company forecasts video will represent 90% of U.S. household data-usage growth in the next five years. Consumers will also adopt 5G quickly, with roughly 40% of consumers in the U.S. using the high-speed wireless technology by 2024.
- Fan engagement with sports will be more influenced by content consumed via virtual reality, live-streamed group watching and interactive sports betting. Sports betting will begin to function like financial trading, including with real-time trading, pooled institutional money and media coverage. The amount wagered through sports betting in the U.S. will reach $189 billion a year by 2024.
- An end to third-party cookies-tracking will transform the digital advertising industry. The "walled gardens" of Facebook, Google and Amazon will benefit the most. Internet companies and marketers will need to rely on first-party user data provided by customers with their consent to form "private gardens" to market to users.