Since Nintendo debuted the first console in 1985, video games have taken America by storm and can now be played pretty much anywhere now that they’ve expanded from consoles and computers to mobile devices. This is great for the 67% of millennials who never outgrew their childhood gaming habits and play games monthly. But what good is that for advertisers who are targeting millennials, but aren’t selling video games?
Tag: video games
“Esports fans are often described as simply “male millennials,” and the description often fits: Globally, men far outnumber women both as esports competitors and fans, reports Nielsen. That doesn’t mean women aren’t in the game, however. Females are engaging with esports, and at increasing rates. According to a recent Nielsen Esports Fan Insights survey, 22% of esports fans around the world are female. And in countries where organized esports have been around the longest, we see more gender parity in esports fandom.”
The video game space is heating up in a big way, especially when it comes to streaming. Late last month, Amazon stepped up to purchase Twitch, a video game streaming company. And earlier this week, the Wall Street Journal reported that Microsoft is close to purchasing Mojang, the maker of Minecraft. Why the sudden interest in these companies?
Spending on video games has been lackluster since the start of 2012. Sales of physical software and hardware have both dropped and some analysts attribute this decrease to a lack of must-have new titles being released. But in one sector, digital, consumers are still buying.
As the economy has recovered, consumer spending bounced back in many categories. However, video games is one of the categories that consumers did not begin spending on again. Nielsen analysts have studied the patterns of consumer entertainment spending and suggest that the video game industry is facing tough competition. Changes in consumer behavior with respect to entertainment spending could translate into new marketing strategies by video game publishers and retailers.
According to The NPD Group, the preliminary estimate for total consumer spend in 2010 on gaming content via all monetization methods, including new physical video and PC games, used games, game rentals, subscriptions, digital full-game downloads, social network games, downloadable content, and mobile game apps, is between $15.4 to $15.6 billion. Based on this estimate, spending on new physical content at retail continues to account for the majority of the total consumer spend on games content. Bright spots came from PC games new physical retail software, which was up 3% in 2010, as well as increases in the consumer spend on used games sales, full-game digital downloads and downloadable content, mobile gaming apps, and social network gaming, which offset declines in console and portable new physical game sales, rentals, and subscriptions. Industry analysts expect 2011 to be “a growth year in the games industry as the consumer demand for gaming continues to evolve.”
As consumers turn to video games for entertainment, marketers have shifted some of their ad budgets to this format. Doing so reaches more consumer eyeballs, especially the hard-to-reach demographic of younger men. This increased exposure to brands and product names via video games is translating to higher sales for marketers according to a Nielsen Company study on this topic. .
Friends rank as the largest influencing factor in the purchase decisions of video games, according to a study released recently by Waggener Edstrom Worldwide, Annenberg School for Communication & Journalism at the University of Southern California, and Harris Interactive. The study indicated that word-of-mouth influence, led by friends, was three times as likely to influence the purchase of video games as traditional forms of advertising and promotion. This was followed by retail, online demos, reviews, and advertising and promotion. Industry trade groups say the video gaming software industry represented sales of more than $11 billion in 2008, and games were expected to be a hot item for the 2009 holiday season.
According to Kids and Gaming 2009, the most recent report from The NPD Group, among all kids in the U.S. ages 2-17, 82%, or 55.7 million, are current gamers. Of these gamers, 9.7 million are ages 2-5, representing the smallest segment, while 12.4 million are ages 9-11, and represent the largest segment. At 10.6 hours per week, gamers ages 12-14 are spending the most time playing video games, with the time spent playing dropping off among older teens, ages 15-17.
The recession has not been kind to the video game industry. Consumers have been cutting spending on nonessentials this year and video games have fallen into that category. The video game industry is valued at $11 billion at the retail level but sales drops through the end of October have come in at 19%.