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14 OctoberGame AdvertisingVideo Game IndustryVideo Games

Advertising in Video Games

The global market for video games has grown exponentially over the past decade and 2022’s revenue is projected to reach $219.90 billion. This comes from a variety of segments within gaming, which we’ve covered in detail in our game monetisation article. Long gone are the days when game revenue came from physical or even digital sales of copies. These days, subscription services, in-app purchases (IAPs), and advertising all contribute just as much, if not more, to revenue.

The biggest chunk of video game market revenue, a whopping $91.4 billion in 2021, comes from smart-phone games and is more than the PC and console markets combined. In 2019, a survey conducted by deltaDNA found that 94% of free-to-play video game developers incorporate some form of in-game advertising. Knowing these facts, we’re going to zoom in on one particular sector here, which is advertising in games.

It makes sense to look at how advertising in games works and how it came about, considering that the global video games advertising market is expected to reach $4.8 billion by 2024.

The History of Advertisements in Gaming

From the above data, the question arises, how did game makers realise the potential of generating revenue through advertising? The first ever ad in-game was actually not a commercial one, but that of a game developer trying to generate interest for his next game. Scott Adams, the creator of Adventureland left a message promoting his next game, Pirate Adventure.

After this (relatively) wholesome ad though, game devs and brands alike took a note from movies and TV shows. They saw how the latter did product placement and wanted to replicate it in games but they faced some hurdles. In movies and shows, you can see the world in great detail so including a product or two doesn’t look odd. A character casually drinking Coca Cola or lacing up their Nike shoes doesn’t affect the quality of the production. In games however, the graphics then weren’t great enough to include most products organically. Thus, the gaming industry came up with another way to partner with brands and those were advergames.

Advergames are games made exclusively for advertising purposes. The first released advergame was Tapper in 1983. The game had been originally sponsored by brewer Anheuser-Busch, and featured the brand’s logo with gameplay based on serving beer. The game proved so popular that a non-branded version of the game, Root Beer Tapper, was released for general arcades, with the beer replaced by root beer to cater to younger audiences. In the 80s and 90s, numerous advergames were released (though the term only came into existence in 1999) and with graphics improving significantly, new advergaming opportunities appeared. For instance, car manufacturers couldn’t really show off their cars in games until graphics improved enough by the 90s and games like Driver and Need for Speed really took off (though they didn’t show these vehicles being damaged even if you were an awful driver because bad for business, but we digress.)

While ads these days in games are mostly annoying, back then, a lot of the released advergames were actually quite popular and… fun. Chex Quest, a cereal-themed child-friendly remake of Doom, was a huge hit and is till date, considered one of the best advergames made. Advertisers also experimented with different kinds of product placements. They had ads integrated into splash screens (McVities Penguin Chocolates in James Pond Robocod, 1991), they made their mascots characters in-game to avoid directly mentioning their products (Ronald McDonald starring in McDonald’s Treasure Land Adventures, 1993), and they even weren’t below taking potshots at their competition. The latter in particular was interesting: Coca Cola worked with Atari to redesign their mega-hit Space Invaders for one of Coca Cola’s sales conventions. The aliens you had to shoot would spell out ‘Pepsi’ on the screen. A rather on the nose shot.

In 1999 though, Crazy Taxi rewrote the classic advergame template, where the brand was no longer the center of the game but instead, just a facet. In the game, you’re a taxi driver picking up a passenger and taking them to where they want to go, which are places like Levi’s store or Pizza Hut. You could also see other brands and stores enroute, and the placement of all of these were organic enough for gamers to appreciate the realism. A case of where art imitates life (a tad ironically) arose in games like Madden, NFL, and FIFA. They all had to pay licensing fees to incorporate details from the real-life leagues and to offset these, they started getting into sponsorship deals with brands to show them prominently in-game.

In 2005, a game called Splinter Cell: Chaos Theory used what we call now as ‘dynamic advertising’ where the ads shown were relevant to players. This audience segmentation, as it is known, was first done by Splinter Cell’s developers Ubisoft, though the industry followed suit soon.

Of course, if you’re going to be overly heavy handed with in-game product placement, especially if it doesn’t make sense in the game universe, your audience isn’t going to be very happy about it. EA found this out to their chagrin when their billboards for Pepsi and Intel in Battlefield 2142, a game supposedly set a century in the future, were disliked strongly by players. To give them their due, they did eventually remove the ads from the game but it was one of the first games where the negative side of putting ads in your game really showed up.

When mobile gaming started to take off, it led to a change in game design and how games were monetized. Games were now often F2P with their main revenue coming in from ads. We’ve covered how exactly mobile games are monetized in our article about them if you want the details, but a lot of different kinds of ads began being made and incorporated into games. We’ll head into the different types of ads in a later section but suffice to say, ads in games were here to stay. However, not all game developers took care that these ads were ok with their customers. Often, mobile games have the issue of showing too many ads. You clear a level? Ad. Lose a life? Ad. Open the app? Ad. This sort of nagging by a game would be bad enough but since a lot these games derive most if not all of their revenue from ads, they feel the need to make levels shorter and squeeze in as many adverts as possible to maximise revenue, to an extent sometimes where games become almost unplayable.

Finally, both AR and VR have also started seeing the potential of ads to generate revenue. In Pokemon Go, Niantic added advertising which showed up depending on which location you were at, bringing the real and virtual world together. While there are no conventional banner ads in Pokemon Go, they still have sponsored Poke Stops, free items in-game from companies that support the game which you can claim by looking at an ad, and even some sponsored cosmetics but so far, all of these have not messed with the game’s immersion. On the VR side of things, Volvo made an app that uses VR glasses to test drive their XC90 SUV. In fact, by 2022, the number of annual installs of AR and VR apps will grow by 45% compared to 2017, and the market for in-app purchases will increase by 92%.

The Types of In-Game Advertising

We can see from our history of game advertising that there are several ways of placing products in-game. Different methods of advertising work for various products, game devices, or even game genres, and especially with mobile game ads, a lot of variety has popped up. Let’s look at the major types.

Static Advertising/Product Placement:
Static in-game advertising is when ads are coded right into the game and can’t be changed (unless the game is completely online.) These advertisements are planned and integrated into a video game during the design/development stage, and as such, can be integrated in a customised manner. For example, Splinter Cell used in-game Sony Ericsson phones to catch terrorists. Unlike conventional static advertising in real life, static ads in game allow players to interact with the product being advertised. Ads are also incorporated on billboards, especially in sports games, analogous to how it happens in reality.

Advergames:
These are custom-made games which are built for promoting a particular product or brand through its story, environment, or gameplay. Advergames can also offer players benefits in real life through coupons, discounts, and the like. These games are a fun and entertaining way for brands to connect with their customers if done right.
Examples of great advergames include Cool Spot from 7up, Sneak King by Burger King – this led to a 40% increase in sales revenue for Burger King, McDonald’s Treasure Land, and Pepsiman by, well, Pepsi.
Dynamic In-Game Advertising
Dynamic advertisements are those which consider various factors such as location, age, personal interests, and more before displaying ads. These are personalised ads at scale and using dynamic ads, any brand can segment people who use their app or website and show them products and services they have a keen interest in. They allow game developers/publishers or the ad delivery service to track their ads in real-time and get data such as angle from which the ad is viewed, screen-time spent, and more to correct issues and improve existing and future ads.
There are various kinds of dynamic ads, some of which include:

Diegetic dynamic ads: These are dynamic ads which are seamlessly placed in the video game world. This allows media buyers to purchase real-time and geo-targeting capable advertising inside of video games. The adverts appear inside the game environment, on virtual objects such as billboards, posters, and bus stops – all of which are objects that you’d expect to see in a realistic sports or urban environment video game. Tony Hawk: Ride is an example.
Interstitial ads: According to Google, interstitial ads are full-screen ads that cover the interface of their host app. They’re typically displayed at natural transition points in the flow of an app, such as between activities or during the pause between levels in a game. When an app shows an interstitial ad, the user has the choice to either tap on the ad and continue to its destination or close it and return to the app, though often, games force users to sit through several seconds of the ad which can be quite frustrating. Video ads are a popular kind of interstitial ad in games.
Banner Ads: These are advertisements present in the form of banners in the game. They may be displayed at different positions like the top, bottom, or side of the screen. They may occur at different instances in the game such as in the main menu, during gameplay, between levels, and more.
Reward ads: These are ads which are basically an in-game exchange offer: users view ads for in-game rewards like extra lives, boosters, and the like. Candy Crush is a good example of a game with good reward ads. Since these ads are optional and users can choose to avoid them, they aren’t as negatively looked at and they even increase in-app purchases. However, unlike interstitial video ads, some of these are not skippable.
Playable ads: These are mini games users can try out and if they like it, they can install the complete app. They make for a great user experience and have some of the best conversion rates. Tennis Clash and Royal Match both are popular playable ads.
Offerwall ads: These tend to list out tasks that users can complete in exchange for in-game rewards. They act almost like a mini online store and since they’re optional, they aren’t frowned upon as much as ad barrages. They also increase time spent on apps significantly by extending the session length.
Through-the-Line Advertising
This is a kind of advertising that involves the use of URL hyperlinks within the game to get players to visit web-pages with advertisements. The technique used to tempt the player into visiting the intended URL varies from game to game.
In games such as Enter the Matrix, Year Zero, I Love Bees, and Lost Experience, URLs make up a part of the background of the game such that certain plot details can only be learned by following the link.

Why Ads are a Necessary Evil

Advertisements have their benefits (at least for game development companies and the companies placing the ads) but they have more than their fair share of issues. While ads are great in a way that they keep games F2P, especially when it comes to mobile games, they can often prove to be extremely annoying, tasteless, or even downright misleading. Let’s look at the good, bad, and ugly when it comes to in-game advertising.

Pros:

The biggest point in the favour of advertisements in-game is that they can create new revenue streams. By adding ads to games, companies can reduce the price they’re sold at, and even make them free, as seen by the F2P model pioneered in mobile devices. When Angry Birds was ported to Android devices, it was released as a free game with ads and even if users opted not to pay to remove ads, they could still enjoy the game. King’s release of Candy Crush Saga as a F2P game right off the bat propelled it to the top of the charts. In just more than a year, King had seen over 400 million new players of the game and their revenues had jumped from $62 million in 2011 to $1.88 billion from advertising revenue and in-app purchases.
In-game ads which promote a popular artist or concept can also boost your own game. For example, in 2021, Fortnite announced the continuation of its cooperation with the Jordan brand. Players can compete for the Air Jordan XI Cool Gray, the iconic sneaker model, and discover rooms dedicated to the best basketball players. The MVP gets access to a virtual museum, a basketball court to test your abilities and an immersive video that advertises the Jordan brand.

A 2009 study by an advertising company found that 80% of consumers correctly recalled an advertiser and 56% had a more favorable impression of the advertiser because it allowed them to play a free game. This is especially relevant when it comes to advergames and mobile gaming, though in the past decade, it’s more of the latter. FIFA and other popular licensed sports franchises made extensive use of in-game product placement and advertising, on billboards, jerseys, and more. Since these franchises already have a great deal of sponsorships and ads in real life, in game, it didn’t cause eyebrows to be raised.
In-game advertising is an important source of income for browser-based and other Internet games that do not feature micro-transactions or pay-to-play. Websites like miniclip, pogo, and kongregate all feature free games one can play online and they offset their expenses with ad revenue.

Cons:

Integrating IGA into games without alienating or frustrating players can be hard, especially if done overtly. A lot of mobile games tend to slam ads between every level, if you fail a level, and as soon as you open or close the game. They also tend to shorten levels to increase the number of ads opened and this can make playing them really frustrating.
Some games market themselves as something they aren’t: titles like Homescapes which is basically a match-3 puzzle game is peddled as, well, a fixer-upper game in ads. This kind of misrepresentation leads to a lot of downloads but it also causes games to look at mobile titles with increasing resentment and scepticism. This is more of a marketing issue than being specific to ads.
Game companies and developers worry that they may be forced to change the game as requested by advertisers if in-game adverts become a common revenue source, and face a possible backlash from consumers. However, certain kinds of ads, such as reward ads are actually looked at favourably by users and removal of them can lead to customer dissatisfaction.
Like in any other industry, false advertising is an issue in games as well. In one rather notable instance, the Gatorade company had published a free mobile game Bolt! which featured Usain Bolt and challenged the player to “keep your performance high by avoiding water”. The state of California asserted this claim was false, as Gatorade had been shown to be more harmful to the human body than water. Since the game was targeted towards kids and teenagers, this gave the state cause to sue Gatorade. The case was ultimately settled with Gatorade paying a $300,000 fine to the state. This case might have had a happy ending (except for Gatorade). However, misleading claims and even F2P games that promote toxicity are still around. For example, ads on Facebook for a F2P mobile game called ‘Game of Sultans’ literally imply that abuse can make women listen to you. The lack of regulation when it comes to both game making and ads like this can prove deeply harmful.

In-game advertising can also lead to negative reviews for a video game because the ad doesn’t make sense or just seems very insulting to players. A great example of ads being despised by games was Maxis’ promotion of a heavily branded Nissan Leaf charging station as downloadable content in SimCity. This being the first DLC for the game was just insult to injury.
Companies have found that gamers do not want distracting advertisements when they have already paid the retail price and/or a monthly subscription fee. Games which are paid, full-on AAA releases already make plenty of money from game sales and having ads which break immersion or are unskippable is not something which customers, for obvious reasons, are gonna be happy about. In NBA 2K20, there were ads during loading screens which are not only unskippable, but also longer than the game load timing. The game already has microtransactions, loot boxes, and cost $60 to get, but this was the last straw for a lot of customers. 2K Games got a lot of backlash for it, but they did the same with NBA 2K21. (Yikes.)

The Future of Ads in Games

We’re in a place where like it or not, ads are here to stay. We’ve looked at both the pros and cons, and at the end of the day, especially when it comes to mobile games, F2P is the monetisation method of choice. Game developers, publishers, and advertisers alike have to find the balance between making enough money and annoying their customers. Innovative ads which provide tangible value to customers is the solution to this. The good news is that players are receptive to ads in-games – in fact, 95% of players say that ads increase in-game realism.

Ad platforms are already connecting publishers and advertisers within the metaverse to deliver in-game ads. Game developers can offer advertisers the possibility to show their ads within metaverse worlds on various fronts such as billboards in stadiums to posters in virtual worlds like Fortnite and Roblox.

Reward-based ads are some of the most successful ones: they have been shown to directly increase in-app purchases, increase screen-time, and improve engagement. In May 2017, after adding rewarded video ads that enabled users to gain an additional life, CookApps saw a 16% increase in session length in one of its apps. A/B testing found that session length shot up by 211% if reward ads were placed as soon as users exhausted their last life. In fact, when Rovio decided to remove reward ads for users who had spent money in their game Angry Birds Transformers, these players were extremely annoyed as they’d come to rely on these ads as a supplement as opposed to an annoyance.

Another reason why advertising in games can be so difficult for game developers and publishers is because they don’t have data often as to what kind of ads their users prefer. This data is often kept secret by the advertiser they tie up with and they’re forced to put in what the advertiser says, sometimes at the cost of user satisfaction. However, if ads which are appealing to their audience based on their preferences are shown dynamically at a frequency that customers can handle based on player data, the irritation these ads cause can be reduced.

Innovative ads are also often appreciated, especially if users get something exclusive. Fortnite is known for their concerts with prominent music artists like Travis Scott and Marshmello but recently, pop star Ariana Grande held a concert in the game across multiple days. While in previous concerts, you could dance in-game with your friends, fly around a giant character model of the artist, and enjoy cool visuals, this time around, you could play minigames where you raced and collected power ups, or fought in-game villains. Experiences like this which are utterly unique are sure to make users happy. With the metaverse booming and online experiences evolving, in-game ads are a great way to make money while also setting a standard and entertaining your users. Finally, sponsorships when done tastefully can be a great way to boost revenues while also advertising a company or product. For example, VALORANT’s international tournaments call rounds where you win by eliminating your opponents without losing your teammates a ‘Prime Gaming Flawless’ as they have a tie-up with Amazon. They also offer free-in game loot for those who have a Prime subscription.

In-game advertising doesn’t have to be something done just for revenue at the cost of annoying your users, it can be done in a way that proves beneficial to all parties involved and that is what both game companies and advertisers should aim for. Data-backed dynamic advertising which either gives users in-game rewards or something else unique is the way to go.

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12 AugustMobile GamingVideo Game Industryvideo game monetisation

Monetisation In Video Games

by Kaavya Karthikeyan0 Comments

Gaming is one of the most massive industries out there, with it being evaluated at $178 billion in 2021, and it is estimated that it will amount to $268.8 billion in 2025. Games aren’t just for entertainment, they are played for a variety of reasons such as competition, socialising with friends, and more. With games being so universally popular and a lot of popular ones like Candy Crush for mobile or Fortnite for PC/console/mobile being free, the question that arises is, why do companies keep investing in it? How do they make money from it and keep their industry thriving while also creating new content for their audience? The answer to that is game monetisation.

Game Monetisation at a Glance

Video game monetisation is a type of process that a video game publisher or developer can use to generate revenue from a video game product. The methods of monetisation may vary between games, especially when they come from different genres or platforms, but they all serve the same purpose: to return money to the game creators, copyright owners, and other stakeholders.

Initially, game monetisation was pretty simple: you’d pay a fixed fee to get hold of a physical copy of a game, or go drop a quarter in an arcade for one more turn. But with different kinds of games and gaming platforms popping up, there are several kinds of monetisation methods, each with their own set of pros and cons.

A lot of games still can be bought with a one-time fee, such as the Assassin’s Creed series. These could either be physical discs or digital keys for the game. Some games require a subscription on a recurring basis to play such as World of Warcraft while others while being buy-to-acquire, are available to play for free through subscription services. A great example of the latter case is the Microsoft Game Pass for PC which not only gives you access to titles but also gives you discounts in the Xbox Store. The share of gamers who currently pay for a monthly gaming subscription worldwide is 35%.

The annual net sum generated by Ubisoft through sales of digital items, seasonal passes, subscriptions, and advertising is €780m. You can also make money through additional content like DLCs and these can be purchased as add-ons to the original game. The annual net revenue generated by Activision Blizzard through microtransactions, DLCs, and subscriptions is $6.49 billion. Finally, a lot of games, especially mobile games, depend on advertisements in-game to generate revenue. These include games like Candy Crush Saga. Mobile games are well on their way to make $39.8 billion in ad revenue alone.

The History of Game Monetisation

Back in the 70s, the most common way to play a video game was to head down to your local game parlor and toss a coin into an arcade machine. Gaming consoles, PCs, and mobile phones weren’t quite in existence yet, and even when they did come into the picture, they were too expensive for most people to buy. Let’s look at the stats for one of the most popular arcade games of all time, Pac-Man.

Cabinets Sold: 400,000 units
Revenue by 1990: $3,500,000,000
Inflation-adjusted: $7,681,491,635

Eventually, in about a decade, computers and consoles became affordable and opened up the retail market. You could buy a game and take it home on a cartridge, floppy disk, and eventually CDs depending on your device. The release of Gameboys and Tamagotchis revolutionised the ability of consumers to game on the go.

Up next came the shareware method where gamers would be able to play a portion of the game for free, and if they liked it, purchase the rest of it later. id Software used this for their famous releases Doom and Commander Keen. This possibly served as inspiration for games that have both a free and premium version where the latter has additional features/levels/content.

Later came DLCs or downloadable content which serve as an expansion or addition to the base game. One of the first ever DLCs was Grand Theft Auto: London 1969 for Grand Theft Auto and was a resounding success. Games like Total Annihilation in 1997 also offered a new unit every month as free downloadable content for the game on PC. In fact, more money is now spent on DLCs and subscriptions compared to buying video games themselves in the US according to data from 2021.

Of course, once mobile gaming came into existence, so did the Apple App store and the Android Playstore. Initially, most apps were paid for with a one-time fee but then the F2P methods and freemium versions also slowly gained popularity. You can read more about this and the history of mobile gaming in our comprehensive article.

As for PCs and consoles, online gaming expanded. Back in the late 90s and 2000s, F2P games came into existence with the revolutionary notion that a game could be completely free for everyone, that purchases didn’t give their players an advantage in the game. Games like Neopets, Runescape, and Maplestory gained popularity for these reasons, and even today in newer games, you can buy cosmetic items which make you look cooler than ‘default skin players’, such in the case of Fortnite, which generated $9 billion in revenue in its first two years.

The concepts of subscription gaming, in-game items, then loot boxes also gained traction over the past two decades. The concept of in-game items was cemented with the release of ‘horse armor’ packs for Bethesda Softworks‘s The Elder Scrolls IV: Oblivion in 2006, and subsequently followed by many similar content packs over the next few years. Microtransactions and in-app purchases (IAPs) also became a considerable source of revenue in the upcoming years.

In-game advertisements also took off around the mid-2000s, particularly on mobile devices. It is estimated that in-game ad revenue might grow up to $56 billion by 2024. In the last several months, cloud streaming is slowly becoming bigger with more subscription services jumping into the space. You can read about the industry in detail here.

Types of Monetisation

We looked at some types of monetisation which are commonly seen at the onset of this article but different sorts of games and platforms prefer various kinds of monetisation methods. For example, most mobile games use free-to-play (F2P) models with inbuilt advertisements or in-app purchases (IAPs) for generating revenue. There are also mobile games that work on the freemium model where you get free but restricted access to the game before you need to buy the full premium version of the game to unlock the rest of it. The aforementioned model is pretty similar to the shareware approach we’ve covered.

Finally, there are games that are marketed as buy-to acquire but these have dropped significantly over the past decade. In fact, compared to most of the top 10 mobile games in, say 2008, which are accessible with a one-time fee, the top 10 from this year (so far anyway) is comprised of mostly F2P games with IAPs or adverts.

When it comes to mobile games, here are the key types of monetisation seen:

Buy-to-Acquire games: This is the simplest revenue model. You pay a one-time fee to download a game. An alternative way of doing this is releasing a free version with ads and a premium version with no ads and more content which you can buy with a one time payment. This is how Angry Birds did it on Android. You can also release the first chapter or part of the game for free and then charge for the rest of the game.
F2P with In-App-Purchases (IAPS) and Adverts: In this type of game monetisation, the game itself is free which lets the users try them out without having to buy it, increasing the game’s user base. Once in-game, players have the option to purchase in-game perks, abilities, upgrades, or items which help them progress further ahead in the game. A key example of this would be extra lives in Candy Crush Saga. They also have the choice to avoid this and continue playing the game normally. On average, only about 4% of players make a purchase within a game. The players who make these purchases often tend to repeat them and hence are the primary sources of income for the game. When it comes to ads, there are several ways for advertisements to appear in games apart from just the full-screen ads or the banners that appear on the screen headers and footers. Increasingly subtle approaches are being taken by brands such as the sports drink brand Gatorade. They gave players a digital boost through energy refills in EA’s Madden NFL Mobile, letting them play longer. Rewarded ads are currently the leading ad format on mobile. Instead of having an ad forced onto them, players choose to watch a video in exchange for a bonus. Most of these games come with both IAPs and advertisements.
Subscription models: Games may also have subscriptions that grant the player more items and even on occasion, an edge over normal players, such as VIP Access in games like March of Empires. Games with this form of monetization usually track live data and are updated based on it.

When it comes to console games though, it seems as though the majority preference is still buy-to-acquire games, though subscription services like the Xbox Game Pass are still popular. Within consoles, there is an internal war as to which console sells better. This used to be between the Xbox and the Playstation, though in the past two years, it’s the Nintendo Switch which has sold the most. This could be a result of the several Nintendo exclusives like Animal Crossing: New Horizons and Super Mario Odyssey. Between the Xbox and Playstation though, it is still the Playstation coming out on top. A large portion of this success can be attributed yet again to the exclusive games available on the Playstation platform such as The Last of Us or the Uncharted series. When most people would only want to own one console, these exclusives represent another tangible benefit for investing in one particular console. However, exclusives are slowly fading away, and you can read more about that in this blog.

Looking at console subscription services, Microsoft and Nintendo are doing a phenomenal job of making these appealing to their audience. The former offers Game Pass, which is a monthly subscription providing all-inclusive access to Xbox games and new games. Customers get access to more than a hundred Xbox games—including previous generation games that played on Xbox, Xbox 360, Xbox One, and Xbox Series X. Game Pass subscriptions are also available for use on PCs and mobile devices that support cloud play so that you can play compatible games available through the Game Pass on other devices. This last point in particular has hugely popularised the Game Pass and even people without an Xbox often buy it so they can play on other devices, usually the PC.

The Nintendo Switch Online subscription service provides access to more than 100 games from Nintendo and Super Nintendo, including the classics Super Mario Brothers and Donkey Kong Country. The company also offers an expansion pack with more enhanced services, including cloud saving and online multiplayer. Last month, Sony released their answer to Game Pass called Playstation Plus Extra and Premium. They follow the same model as Game Pass and provide a large library of both current generation games and older games from the PS2 and PS3 as well. One major issue in Nintendo games which the Online subscription is partially remedying is how the same game needs to be bought separately on each different generation of Nintendo devices.

When it comes to PC games, buy-to-acquire games and in-game transactions are the forerunners for preferred methods of monetisation, followed by subscription services for either games like Humble Bundles or cloud gaming subscriptions like Nvidia’s GeForce Now and Google’s Stadia. Lots of players still like buying physical or digital copies of a game. When it comes to online games, especially free ones, in-game advertising similar to mobile games plays a role. Finally, a recent kind of monetisation called play-to-earn, where both the players and the game publishers profit, is gaining traction with the rise of the Metaverse and games like Axie Infinity. Axie Infinity has made over $4 billion in NFT sales since its launch. It also shows that there have been 14.45 million transactions and 1.62 million buyers since its inception.

Apart from our breakdown across devices, here is a comprehensive list of game monetisation methods employed by game makers before and after a player has acquired the game.

1. Pre-Acquisition:

These are monetisation methods usually employed before you purchase a game or a subscription to it.

Pay-per-Play
Like the name suggests, you pay per game. This originated during the time of arcade machines where one game cost a quarter or two to play, and apart from online games like Poker or Rummy where you have to buy-in per game, it is not that popular these days.
Buy-to-Play
Like premium games, the consumer buys the game once to play, but here, the game generally continues to be supported by the developer or publisher by maintaining online servers or producing new content regularly for the title. Examples of games like this include GaaS titles such as Rainbow Six Siege and Minecraft.
Free-to-Play
Free-to-play games do not require the player to purchase the title to play, though access to some features and content may require purchase of a subscription or via microtransactions. An example of this would be Angry Birds, which after being a paid app on the Apple App Store, shifted to a freemium model where to unlock extra levels and play unhindered by ads, you needed to make a one-time payment. There are subtypes here as well, which you can see below:

– Truly Free: The game is free and you don’t need to buy anything to complete playing it or to win. Games like Pixel Dungeon which have no ads or strings attached come under this category. These are not made for monetisation purposes, they are created and put out into the world by developers who want to express their artistic vision.
– Freemium/Shareware: Games that have a demo version or come with restricted content come under these categories. For freemium games, the aforementioned Angry Birds is a great example. Shareware is another, rather dated method of game monetisation where the games are free to play to start, but limit how far the player can progress before they must purchase the game. You could play the first part of a game, and if you liked it, you could buy the rest of it. Games like id Software’s Commander Keen or Doom were sold and marketed in this way.
– Free to play games with IAPs: These are games which are free to download and play, but come with in-app purchases (IAPs) such as in-game skins (Fortnite), extra lives and hints (Candy Crush Saga), and the like. These are popular because such games thrive on a small minority of big spenders. According to App Annie, games now compose 56% of all App Store spending, with 95% of this on IAPs.
Subscription model (Pay-to-play):
These are games that require the player to pay a regular subscription fee to maintain access to all parts of a game. The game is typically free-to-play to allow new users to try the game but full access requires the subscription to be paid. A good example of this is Destiny. Other examples of this include games like World of Warcraft, which is free to play up to level 20, after which you need to buy a subscription.

These can be further split into the following:

Subscription Model
For these kinds of games, you need to pay a monthly or annual subscription fee usually to be able to access the entire game with all its features. You might also have in-game transactions but a majority of the revenue for these kinds of games comes from the subscription fee.
Subscription Services
These are services through which a gamer can gain access to a multitude of games for a fixed monthly price. The player may need to buy access to new content at times, such as through a season pass. This includes both offline stores as well as digital distribution methods. The best example of these is the Xbox Game Pass or Apple Arcade.

Games can be bought either through retail outlets offline or through digital distribution methods. The former are growing less popular with digital distribution being instantaneous, less onerous since you don’t have to find a place that stocks a game before heading there to buy it, and cheaper since digital copies of games are often cheaper, though not always, compared to physical ones.

2. Post-Acquisition:

Downloadable Content (DLC)
These include additional pieces of story, new areas, and weapons added to the game, new characters, and the like. These can be purchased with an ultimate edition of the game or bought separately if released after the main game. Examples of great DLCs include Blood and Wine for Witcher 3: Wild Hunt or the Citadel DLC for Mass Effect 3.

Season Passes
A season pass is a form of DLC Compilation in which consumers purchase a package for current and future downloadable content (DLC) packs for a video game (that is generally cheaper than the base price of purchasing DLCs individually). A game may have a single season pass or, for some GaaS games, new season passes over time. Examples include Assassin’s Creed Valhalla’s Season Pass and Super Smash Bros. Ultimate: Fighters Pass Vol. 2.

Microtransactions or IAPs
We briefly spoke about how IAPs can be found in F2P games and act as their monetisation method but these can also be present in paid games. In fact, Star Wars Battlefront 2 had to remove game-play affecting microtransactions which made the game pay-to-win. Players no longer had to pay to unlock characters though microtransactions for in-game cosmetics still stayed.. However, microtransactions when they don’t mess up gameplay by giving unfair advantages or offer enough value for money still exist and work for gamers and publishers alike.

In-game items:
– Cosmetic Only: These include cosmetics like character and gun skins, house decorations, and the like which don’t provide any benefit to the gamer apart from eye candy.
– Gameplay Affecting: These can be of two kinds, one where by sinking money into the game, one can quickly climb to the top of the leaderboards. The other is by purchasing things like hints or extra lives so that you can solve the game when you’re stuck as opposed to propelling you forward. If gameplay-affecting IAPs are excessive, the game becomes unplayable for free players and the user base of the game will greatly decrease.
Loot boxes:
A loot box is a consumable virtual item which can be redeemed to receive a randomised selection of further virtual items, or loot, ranging from simple customization options for a player’s avatar or character, to game-changing equipment such as weapons and armor. A loot box is typically a form of monetisation, with players either buying the boxes directly or receiving the boxes during play and later buying “keys” with which to redeem them. These can be seen in games like Rocket League (which removed them two years ago) and Genshin Impact (there till date.)
Some loot-box systems within free games are criticised as “pay-to-win” systems. In these cases, the contents of the loot box contain items, beyond superficial customization options, which directly affect gameplay, such as booster packs for a digital collectible card game. An example of this is Hearthstone, where players have to keep spending money to get new cards. Full-priced games which already provide downloadable content and then include a loot-box system have been heavily criticised by players. One of the games which drew a lot of flak for this was the aforementioned Star Wars Battlefront 2. The outcry against loot boxes has reached the ears of international lawmakers and they’ve already created legislation which has pushed some countries to roll out bans, like Belgium.
VIP Subscriptions:
These are a kind of special subscription, usually on top of purchasing a game or subscribing to it which offers exclusive rewards that give your game a boost and make you stand out. For example, if you purchase the VIP subscription for Forza Horizon 5, you will receive 3 Exclusive Forza Edition cars, Vanity Items, 2x Credit race rewards, weekly bonus Super Wheelspins, and loads more.
Battle Passes:
Again, you can buy these in game, usually F2P games. They encourage players to play the game on a periodic basis to complete it while also providing them with in-game items and cosmetics they can use. Games like Fortnite and Valorant have these.

Advertisements:
When it comes to in-game advertisements, they can be of two major kinds:
– Interstitial ads
These are ads which are initiated by the game and cannot be avoided by the player usually. These include popups which players have to watch for a few seconds before closing or ads that appear along the foot or side of the game while playing. These are usually simpler to make while also more annoying to the player, unless they’re interactive or creative. Gameloft worked with Indian online retailer Myntra for a playable ad campaign that received an impressive 82% completion rate and 2.1 million impressions in just under two months.
– Reward ads
These are ads which are initiated by players, usually for additional resources like more in-game currency, extra lives, or faster cooldowns. These are usually more accepted by players since they have a choice as to whether they want to watch them while also being rewarded if they do.

Play-to-earn Games:
These are games that typically incorporate blockchain elements such as NFTs. Players are incentivized to use NFTs to improve their existing portfolio or create new NFTs, with their sale managed by the video game publisher or developer. The player then is paid by the company for their work towards the new and/or upgraded NFT. Games like Axie Infinity have even proven to be a source of revenue for some players but these games are also rather susceptible to scams.

There is usually an upfront payment required by the player to get started, typically in the purchase of either cryptocurrency used by the game or in-game currency that they can later trade out, thus making these games “pay-to-earn”, and have been considered the equivalent of Ponzi schemes.

The Impact of Monetisation

At the end of the day, the video game sector is also an industry expected to continue generating the incredible revenue which it does. This means that in order to get gamers to spend more time and money on their games, publishers and developers alike will need to innovate and hold themself to a certain standard. In fact, with developers investing more time in games post their launch to ensure they remain fresh, players often end up getting more value for their money. A great example of this is the original Destiny. Games which were initially pay-to-acquire have also been made free and have switched to an IAP-driven revenue model. The Epic Games store in particular is driving this transition with their acquisition and subsequent free giveaways of games like Rocket League, Among Us, and Fall Guys.

However, monetisation of games can also come with negative impact for games. Since the method of monetisation must be decided before the game production, it may affect the game’s overall design and will shape how new games are designed. This might mean that games might be made in genres that are easier to monetise. Copies of successful games flooding markets can also lead to a lack of originality. For example, the F2P game Wordle has a plethora of similar games, some good and some bad. The rush to make the most money from one’s game can also lead to an improper consideration of balance between good game design and effective monetisation. This in turn can cause either players feeling extorted by the game and its developers or a failure of the game to produce enough revenue for the game to turn a profit.

Finally, with games shifting towards a digital world, the question of ownership comes into play. Ubisoft recently said Assassin’s Creed Liberation from Steam would be removed and players who had bought it through that portal couldn’t access it even though they, according to Steam, owned the game. This was eventually rolled back and the game was made available again after global outrage. This is however a reminder that licensing issues can arise anytime and if they strike owners of digital copies, well, odds are that they won’t be able to play the game again. Also, with servers going down for decrepit games, they can become unplayable as well.

To conclude, in our previous blogs about the game industry, we look into the motivations of players and how the decisions they make regarding platform players, investment in the metaverse, and futuristic tech like VR and cloud gaming. All of these usually incorporate monetisation in some form or the other. When it comes to monetisation, it seems like the most successful and thriving model by far is the F2P one. Being able to play a great game for free is more likely to encourage a player to buy a battle pass or invest into cosmetics for the game. A great example of this phenomenon are CS:GO and Valorant skins.

One of the best kinds of monetisation methods which benefit both consumers and industry players are advertisements, particularly customer-initiated reward ads. Another method would be subscription libraries where customers get a lot of content and games for a fixed price while publishers can resell older content along with the new. Everyone profits. Whether you want to play a game from the good ol’ days or jump into the latest hit, subscriptions like Nvidia GeForce Now and Xbox Game Pass have you covered across several platforms.

Monetisation has evolved a lot over the years. If you’re looking for custom data about a particular kind of monetisation or the games that fall under the category, we have you covered.

Gameopedia works with clients across the industry on custom requests and can provide in-depth data about metaverse-related games. Reach out to us for data that can empower you to new heights.

06 JulyGaming MetaverseMetaverseNFTsVideo Game Industry

A Guide to Everything Metaverse and Gaming

by Kaavya Karthikeyan0 Comments

In the past year, one of the most searched for (and least understood) phrases on the internet was ‘metaverse’. This was a result of Facebook – after 17 years of operating under the name – rebranded itself to Meta because Mark Zuckerberg believes the metaverse is the future. Meta has also announced an investment of $10 billion in 2022 and more over the coming years to develop metaverse technologies. In fact, the metaverse is estimated to become an $800 billion market by 2024. The question that comes to mind is, what’s all the hype about?

In this article, we will attempt to understand what the metaverse exactly is, the technologies that play a major role in it, and its future.

What is the Metaverse?

The word “metaverse” came into existence in the 1992 science fiction novel Snow Crash by Neal Stephenson as a combination of “meta” and “universe.” It was Stephenson’s early 1990s vision of how a virtual reality–based internet might evolve and resembled a massively multiplayer online game (MMO) where people controlled virtual avatars. In modern parlance, the metaverse is a network of three-dimensional virtual worlds focused on social connection. It seamlessly blends games, virtual reality, live-streaming, cryptocurrencies, and social media. The gaming world seems to have already adopted the metaverse’s most basic form. We’ll dive into metaverse games a bit later.

The metaverse is a word that is often used in conjunction with Web3 or 3.0 which aims to decentralise the internet. Web3 technology is supposed to give their users the following guarantees:

Unified identity authentication system
Decentralized operation network
Data confirmation and authorization
Privacy protection and censorship resistance

For this to be possible, there has to be technology that has decentralized storage, immutability, and information encryption.

Technologies That Play a Part in the Metaverse

There’s a lot that you need to create a fully-fledged three-dimensional virtual reality and in the past decade or two, technology has developed a great deal. We can break down the requirements into hardware and software needs. The former includes powerful computers and mobile devices, augmented reality (AR), virtual reality (VR), and their associated peripherals. We have a series of articles where we talk about VR and its evolution in detail if you want to learn more. When it comes to software, there has been no wide-scale adoption of a standardized technical specification for metaverse implementations, and existing implementations rely primarily on proprietary technology. At this juncture, you have multiple platforms that offer experiences in VR and AR which are like the different apps you can download from the App Store. However, there isn’t a single portal that people can use to access the metaverse.

The Role of NFTs and Blockchain Technology

Two terms you would have heard often in conjunction with the metaverse are NFTs and Blockchain. We’ve covered the basic definition of these in our 2022 Gaming Trends article, but to recap, a blockchain is essentially a chain of data blocks on a computer network that is transparent to all of its users as well as anybody else. It cannot be altered or relocated. This way, a complete record of everything that has transpired on the network in relation to the data is preserved. Blockchain gaming is a means of turning digital assets inside video games (such as collectibles or cosmetic skins) into real-world assets in the form of NFTs or non-fungible tokens.

The metaverse is a virtual universe with a lot of possibilities: you could buy a virtual house, get designer clothes, or attend a concert. One of the main features of the metaverse is that it has a full-fledged economy within it and bestrides the boundaries of both the real and the virtual world, so it needs to be decentralised. This means no one person or organisation should own it or control it. Ideally, it should be a distributed peer-to-peer network that uses blockchain technology (because of its aforementioned transparency) to maintain consensus. In the metaverse, creators need to be able to assign value to their digital assets and NFTs are a way of doing so. NFTs will be in charge of pricing their content with proof of ownership.

NFTs are created when a digital file (commonly an image, video, or GIF) is minted. Minting means that a certificate of ownership and originality is generated via cryptocurrency (usually Ethereum) and sold or granted to the new owner. They are also often combined with tangible benefits in the real world, such as Chevrolet auctioning an NFT of a Corvette where the winner of the auction also gets the uniquely colored car in real life (the auction didn’t get any bids, so the benefits can be dubious.) Owning an NFT can also give you access to certain private communities, though the jury is still out on whether it’s worth spending hundreds of thousands of dollars on virtual images of a monkey in a suit, even if celebrities don’t seem to mind.

It is important to note that while the words NFTs, blockchain, and metaverse are all often thrown around together, only a handful of companies have already built real solutions in this field that implement NFTs. It is perfectly viable to be a part of the metaverse without using these technologies, and that’s what some of the most popular games do, such as Fortnite. Let’s look at gaming in the metaverse, because it is one of the most popular areas of interest in it.

Games in the Metaverse

Players can invite their social media friends, interact with other players inside the Metaverse, and collaborate to enjoy games together. Metaverse games are also often based on the play-to-earn concept that allows players to win virtual in-game items and sell them to earn real-world money. However, not all metaverse games are NFT-based or play-to-earn.

When it comes to the envisioned future of the internet, the simulation game Second Life is pretty close. You can sleep, eat, shop, and basically enjoy an existence similar to what you would have in real life. Your avatars in the game are how you virtually represent yourself. This was released way back in 2004 and has evolved since then but the concept is the same. In 2006, Roblox was released. Here, you can play games other people have created and spend time in their worlds. It gained massive popularity during the pandemic and was the third highest grossing game in 2020. Recently, a collaboration between Roblox and Gucci created a virtual Gucci Garden space that sold limited edition virtual bags. One of the digital bags even sold for $800 more than the actual version.

In 2015, Decentraland, the first platform to allocate virtual pieces of land via a proof-of-work algorithm, was launched and since then, some of these plots of land have sold for several hundreds of thousands of dollars. You can also find and participate in events like art exhibitions, parties, and the like. Something similar is the Sandbox, the third-largest metaverse based on the Ethereum blockchain. It allows users to create, share, and monetize their assets (like real estate) and gaming experiences.

In 2017, Fortnite released and quickly became a cultural phenomenon. Travis Scott, a famous rapper, hosted a virtual concert in 2020 that was attended by over 12 million people. There are in-game character skins created in collaboration with several famous franchises like Star Wars, Naruto, Marvel, DC Comics, and more.

Play-to-earn games have started becoming a phenomenon. In 2017, a game called CryptoBots went public, which was the first play-to-earn NFT game. In 2018, Axie Infinity, a play-to-earn NFT blockchain game, was built on the Ethereum network. During the game, players breed mythical animals and trade them. Your creatures can battle other animals to earn Smooth Love Potion tokens, which can be traded for real money through a cryptocurrency exchange. Axie Infinity has made over $4 billion in NFT sales since its launch. It also shows that there have been 14.45 million transactions and 1.62 million buyers since its inception. However, it has also proven to be vulnerable to hackers, who stole approximately $620 million worth of cryptocurrency from a network used to process in-game transactions. While Axie representatives have stepped up and said that they’re committed to reimbursing players for their losses, the risk remains.

In 2019, Facebook (now Meta) launched a social VR world called Facebook Horizon, now called Horizon Worlds. With the success of AR thanks to Pokémon Go, Swedish lifestyle and furniture behemoth IKEA jumped in on the bandwagon with their innovative Place app, which lets you choose a piece of furniture and see how it looks in your home or office. In 2020, Alien Worlds was released. It involved a multi-metaverse interplanetary scenario that had NFT characters interacting in a decentralized autonomous organization to mine tokens and perform tasks. By 2021, Alien Worlds had more than 2.5 million users.

We can see that games in the metaverse fall into one of the below categories, and are often a mix of multiple categories.

Social Gaming: These are games in the metaverse where you can meet your friends from real life or make new ones with similar interests. You can even hang out with strangers and meet new folks. One of the first social games was Horizon Worlds by Meta but usually, successful social games are combined with other categories so they’re more fun. Notable examples include Fortnite and Decentraland.
Games-as-Platforms: Games aren’t just limited to playing Tetris or whatever, they’ve become a whole new lifestyle. You can spend time in them building your own house or games, play other peoples’ creations, and enjoy a diverse, virtual life. Roblox and its many worlds are a great example of games as a platform.
Mixed Reality Experience: When we talk about mixed reality, we mean not just pure VR games but also augmented reality and any kind of mix between the virtual and the real. Games like Beat Saber (VR) and Pokémon Go (AR) are testaments to how merging the worlds can end up into incredibly fun experiences.
Play-To-Earn: From a zero-value market size, the blockchain gaming industry grew to $3 billion in 2021 and is projected to rise to $39.7 billion by 2025. Fueled significantly by the play-to-earn model, the blockchain gaming industry has attracted over 1.5 million diverse gamers across the globe. Games such as Axie Infinity have generated several millions in revenue and are used by a multitude of people as a source of revenue.
Portable Game Assets: This is technically not a game category but is a huge feature that the metaverse would like to ideally have. Being able to buy cool things in a game and reap their benefits in game has been a thing ever since skins for characters and weapons became popular. In the metaverse though, one of the biggest promises is that of portable game assets, where for example, if you own a car in one metaverse, you should be able to take it to the next. There are no universal portable game assets (yet) but in games like Roblox with a huge number of worlds, you can take your virtual belongings around between them.

Gaming in the metaverse is full of potential with a focus on new ways to play, earn, work, and do a lot more.

The Costs and Processes of Populating the Metaverse

However, all this isn’t easy. Currently, it feels like every mention of the metaverse comes with a price. NFTs are either exorbitantly expensive or the fees associated with them are, blockchain games require expensive buy-ins before one can try the gameplay, and owning digital land within a metaverse platform can rival one’s real life rent. Equipment costs can also be high if you want to buy VR gear or more powerful devices to experience the metaverse. While brands and tech companies want consumers to embrace this evolution of the internet experience, it seems increasingly inaccessible to a large portion of the internet’s denizens.

A lack of capital is a hindrance in the metaverse. A writer loaded up Decentraland to try playing a little poker to see how well it worked. In the poker area, they were informed they needed to buy an item of clothing, which acts like a membership card to play. The price for the cheapest item, a pair of glasses, was 1.948 ETH, around $5,588.19 then. Compare this to informal poker buy-ins in real life. According to Fortune, the metaverse platforms Sandbox and Decentraland are selling the smallest chunks of land for 3.7 and 3.46 eth respectively, which was around $14,099 and $13,211 at the time.

A lot of people turn to the internet as a place of affordable entertainment. The metaverse so far though seems to cause more roadblocks to this sentiment than aid it.

The Positives of the Metaverse

It isn’t all doom and gloom though. The metaverse, even in its current avatar, brings a host of benefits to the table. These include:

Better social connections irrespective of physical proximity:
You can stay in touch with your friends and find new people who have the same interests as you relatively easily. Gaming worlds like Roblox excel at this as you can find a game within it you and your friends like and hang out in that world with them, just like going to a park together.
Immersiveness:
You can enjoy games and experiences online with additional dimensions, with new haptic suits and gloves even simulating physical interactions. The critically acclaimed Half-Life Alyx takes interactions in VR to a new level: you have to physically duck for cover or reload a gun by taking the magazine out and reinserting it.

New business opportunities:
Whether it’s NFTs being sold, virtual brand deals and concerts, or even digital real estate, the metaverse is a great place to try and make money. The risk might be high but the rewards can be astronomical. Games like Axie Infinity have proven to be ways for players to supplement their income or even play the game for a living and places like the Philippines account for 35 percent of Axie Infinity traffic and the biggest share of its 2.5 million daily active users.
Games have drastically improved:
With VR being increasingly realistic and affordable, far more VR games have been released and companies like Epic are betting on gaming and the metaverse. They put in $1 billion into metaverse gaming in early 2021. These investments into the gaming industry are sure to bear fruit, either in the form of new and innovative games, or other supporting technology such as VR. Meta is certainly focusing significantly on the latter.
Online education and work:
One thing during Covid was how several schools and universities around the world switched to platforms like Zoom to ensure their students would be able to continue learning. Further, imagine learning with the help of immersion. If you want to teach geography, wouldn’t a virtual tour of the world be better than just staring at an atlas? Gamification of academics is a great way to encourage learning and metaverse gaming is a great way to do that. Companies are also looking more favorably on remote work and the virtual office is looking increasingly likely.

Challenges the Metaverse Faces

There are a lot of problems to solve before the metaverse can really thrive though. While we’ve looked at the benefits, the drawbacks should also be considered.

Social issues:
While the metaverse might not be affected by physical distances, it can definitely lead to a loss of connection with the real world. Internet addiction disorder, social media, and video game addiction can have mental and physical repercussions over a prolonged period of time, such as depression, anxiety, and an increased risk for obesity and cardiovascular disease thanks to a sedentary lifestyle.
Cybercrime:
Existing online platforms and games are vulnerable to all sorts of illegal activities, such as fraud, money laundering, child exploitation, illegal goods, services trafficking, and cyberattacks. The metaverse is no different, with several large-scale scams already proving to be an issue. The lack of moderation and proper guidelines and comprehensive laws can lead to major criminal activity. User safety is also a concern, as there is no easy way to verify age, gender, and the like without possible privacy violations.
Personal Data Security:
Users will probably have their information collected on an even greater scale now as a result of interactions in the metaverse as well as possible biometric data through VR and AR devices. Companies like Meta also plan on having targeted adverts within their metaverse, which might lead to more exploitation and manipulation of individuals.
Feasibility and accessibility:
A true metaverse as portrayed in fiction such as Ready Player One and Snow Crash might not be feasible with today’s technology – both in terms of hardware and software. Furthermore, the technology currently available often is extremely expensive. Virtual spaces might also have too high an entry cost for a lot of people and this might prove to be prohibitive.
Lack of Interoperability.
Currently, it’s nigh on impossible to take virtual items like cars or real estate from one metaverse to another. Legal and commercial challenges are also a major issue, with no real adjudicator available on the scene yet.

Current Investments in the Gaming Metaverse

Like we mentioned at the onset of this article, the metaverse is estimated to become an $800 billion market by 2024. That’s up from almost $500 billion in 2020.

In October 2021, Tencent established the F1 studio under the subsidiary TiMi Studio Group for focusing on metaverse development. Meta has also announced investment of billions of dollars over the coming years to develop metaverse technologies. The tech giant has also invested up to $10 billion in acquiring VR technology and has plans to invest in AR technology to build out their virtual world capabilities. With their plans expected to take up to 15 years, they’re in this for the long haul. Google has also discussed the possibility of mapping the Metaverse and implementing current services such as YouTube into virtual worlds. They have also invested a hefty $39.5 million into a fund that invests directly into Metaverse projects.

In June 2021, Epic Games said that it has secured $2 billion in its latest round of investments in its quest to create the metaverse, a realm of interconnected virtual worlds like those depicted in novels like Snow Crash and Ready Player One. Disney is developing a metaverse theme park. Nike has a virtual store within the Roblox Metaverse called Nikeland, which has attracted over 7 million people from over 200 countries. They’re currently selling their Nike branded virtual sneakers for over $100,000.

Even dating apps like Tinder are getting in on the action, with their new concept on a few college campuses in South Korea that allows users to meet in an area called Singletown and interact as avatars using real-time audio. The company is also rolling out its own coins — Tinder Coins — which are currently being tested in several markets, including a few markets in Europe.

What the Future of the Metaverse Looks Like

If the metaverse can be decentralised, safe, and accessible, it is possible that it will be as commonplace as the internet is today. AR, VR, and other technologies are propelling the metaverse forward and evolving along with it. Future technologies and players that will enhance metaverse capabilities have yet to emerge. The power and reach of the metaverse can potentially eliminate many of the constraints and biases of today’s reality.

The future of the metaverse is uncertain, but only as to how exactly it will look. With major investments being pumped into it by global titans such as Google and Meta, it is likely that the combination of digital worlds, virtual assets, and how they shape our social experiences and affect our economy will be of extreme significance. Gaming in the metaverse in particular is breaking barriers with increasing speed and soon, we might be able to play games in the metaverse and enjoy them like a real-life experience.

Gameopedia works with clients across the industry on custom requests and can provide in-depth data about metaverse-related games. Reach out to us for data that can empower you to new heights.

09 JuneGaming MetaverseMetaverseVideo Game Industry

Why the Gaming Industry is Spending Billions on Consolidation

by Karthik Balasubramanian0 Comments

The pandemic was a difficult time for the world, but a period of growth for gaming. The industry rose to prominence during COVID lockdowns – when millions turned to video games – and its biggest players are now consolidating at a rapid pace through high-profile mergers and acquisitions.

In this article we will discuss some of the transformative gaming deals of the past to provide context for the current spate in M&A, and delve into the motivations behind today’s high-profile acquisitions – companies are looking to penetrate lucrative gaming platforms, racing to create the metaverse, enriching gaming with cutting-edge technology, and incorporating vast user bases built around successful franchises. We will conclude with a discussion of how the industry appears to be entering a period of mega-consolidation.

How Explosive Growth in Gaming is Powering Consolidation

The industry registered record growth during COVID – people restricted to their homes sought to entertain themselves and stay connected, and gaming enabled them to do both – as more users played multiplayer games, time spent on gaming and related activities increased by 39%. No surprise, then, that the gaming market was valued at $198.40 bn in 2021, and is expected to be worth nearly $340 bn by 2027, with mobile games revenue expected to cross $100 bn by 2023. The gaming industry is larger than the movie and music industries combined.

The industry is capitalising on this growth by consolidating: according to investment banking firm Drake Star, M&A activity reached a record $85 bn in 2021 – three times the value in the previous year – as game companies participated in 1,159 deals including 299 mergers and acquisitions. The value of deals announced in Q1 2021 was $18.2 bn, and deal value mushroomed to $90.4 bn in Q1 2022, on the back of Microsoft’s purchase of Activision Blizzard (the biggest ever acquisition in gaming), and Take Two’s deal with Zynga.

While industry observers agree that explosive growth is powering gaming consolidation today, they also argue that tech giants are fighting over the future of gaming through high-profile deals, and vying for supremacy in the industry. COVID transformed gaming forever, and the aggressive plays by tech powerhouses are the result of this tectonic shift. However, there is more to the consolidation today than just a bid for primacy or an investment in gaming’s future, as we will discuss below.

Transformative Gaming Deals: Then and Now

Gaming deals then and now have powered the growth of companies via the acquisition of lucrative IPs. The key difference between the deals of the past and the M&A today is the large sums of money involved, and the complex agendas behind consolidation. Some acquisitions before the pandemic period also reveal similar motivations, foreshadowing the billion-dollar deals that characterise gaming acquisitions today.

The IP-centric deals of the past

Many of the transformative gaming deals in the two decades prior to COVID center around the acquisition of lucrative IPs.

In 1998, Take Two bought BMG Interactive, the then makers of Grand Theft Auto, for $14.2 mn. Take Two’s purchase eventually resulted in ‘the most lucrative game in history’ and the most profitable entertainment product of all time – GTA V. GTA’s ‘incredible staying power’ has yielded billions of dollars in revenue.

In 2005 Bandai and Namco merged and became the third-largest gaming company in Japan after Nintendo and Sony, on the strength of their combined franchises.

In 2011, Tencent became the majority shareholder of Riot Games, the makers of League of Legends, acquiring a 93% stake in the company for $400 million. Four years later it acquired the remaining 7%, owning League of Legends outright at a time when the game was rapidly becoming one of the world’s biggest esports. The game is hugely popular, especially in China, and League of Legends’s esports events are some of the biggest in the world.

In 2014, Microsoft acquired Mojang, the creator of Minecraft, for $2.5 bn – a prescient deal, considering that Minecraft would go on to become the best selling game of all time, with 238 million copies sold across platforms as of 2021.

Amazon’s acquisition of Twitch in the same year for $970 mn is an example of a pre-COVID platform play – Amazon not only had the capacity to sustain Twitch’s rapid growth, but it could also enter an entirely new platform – live streaming – and Twitch was eventually able to support a massive number of viewers and broadcast high-profile esports tournaments on the back of Amazon’s support platform. In 2021, the Dota 2 International finals drew in a total of 1.7 mn unique viewers on Twitch – 62% of the 2.7mn viewers who tuned into the game.

Tencent’s 2016 acquisition of Supercell is not only one of the few high-stakes deals before COVID: it is also a platform play. The Chinese company made the third-largest gaming deal in history by paying $8.6 bn for a majority stake in Supercell, adding the Finnish developer’s flagship game Clash of Clans to its portfolio. The mobile title raked in nearly $490 mn in 2021 through in-app purchases. Tencent has consistently made the most of the mobile gaming platform – 60% of its $19.3 bn gaming revenue in 2019 came from mobile games, and in Q2 2021, the company’s mobile games raked in $6.3 bn – 30% of all gaming revenue.

The Billion-Dollar Deals Today

Gaming M&A today are notable for the massive, billion-dollar amounts in play, and how they have catapulted companies into market-leading positions. In the past, Tencent’s buyout of Supercell or Activision Blizzard’s $5.9-bn purchase of King were the exception rather than the norm, but today, even the low-profile deals – such as EA’s acquisition of smaller mobile gaming companies – run into billions of dollars.

In 2020, Microsoft purchased Zenimax for $7.5 bn, giving it control over some of the world’s greatest franchises, such as Fallout, The Elder Scrolls, Doom and others.

Electronic Arts, the third-largest Western gaming company, has largely built its success on desktop and console titles. The studio bought into the mobile gaming market in 2021 with the acquisition of Glu Mobile for $2.4 bn in April 2021, followed soon after by the purchase of Playdemic for $1.4 bn.

But it was in January 2022 that the gaming industry went on a purchasing spree. Take Two acquired Zynga for $12.7 bn. Microsoft bought Activision Blizzard for a whopping $68.7 bn. When Sony acquired Bungie for $3.6 bn, its stock surged by nearly 6%.

When Microsoft completed its purchase of Activision Blizzard, it announced that it was the third largest gaming company in the world by revenue, behind Sony and Tencent. Microsoft now owns 24 first-party studios, while Sony owns 19.

Various reports have led to speculation that Ubisoft may be the next studio to be acquired. A Bloomberg article reports that a few private equity firms have been scrutinizing the business, and employees have also claimed that various company divisions are under audit. In 2018, the studio fought off a hostile takeover play by French company Vivendi, but Ubisoft’s CEO has said in a recent earnings call that the company is open to offers for purchase, amidst plummeting stock prices.

In the next section, we discuss the reasons why gaming companies are making such high-profile deals today.

Platforms, Metaverse, Tech and Users: Why the Industry is Consolidating

The industry’s M&A frenzy is not just about capitalizing on growth during the pandemic. By consolidating, companies are attempting to make their mark on new platforms, jump-start the metaverse, enrich gaming with new technologies and assimilate vast user bases spread out among multiple IPs and platforms.

Platform Plays: Staking a Claim in Lucrative Platforms

The high-profile deals made by Take Two, Microsoft and Sony do share a common thread – the acquisition of first-rate IP’s. However, Take Two and Microsoft are also making multiple platform plays with their acquisitions.

Take Two grew on the back of console and PC gaming, powered by franchises such as Red Dead Redemption and Grand Theft Auto. It is now looking to grow on the mobile platform by acquiring Zynga.

Take Two has unsuccessfully tried to build an in-house mobile gaming market strategy by acquiring small companies such as PlayDots. By buying Zynga, it not only owns money spinners like Farmville, but can also learn from Zynga’s expertise in making free-to-play mobile games. Take Two also plans to launch more of its franchises on mobile platforms – will we be seeing a mobile version of Read Dead Redemption in the coming years?

Microsoft’s acquisition of Activision Blizzard not only gives it ownership over World of Warcraft, but also mobile games such as Call of Duty Mobile. It also gains mobile games such as Candy Crush Saga, because Activision Blizzard acquired the social gaming company King in 2015.

Microsoft makes about $250 million per month from its 25 million Xbox Game Pass subscribers, and Game Pass subscriptions account for 80% of the tech giant’s gaming revenue. With Activision, Microsoft now has 24 first-party Xbox studios and can offer even more content on a subscription service already known as the ‘Netflix of gaming’, reaping ever-higher profits from its XBox division.

And if that’s not enough, Microsoft boasts a steadily improving cloud gaming solution, Xbox Cloud Gaming. By purchasing Activision Blizzard and Zenimax, the tech giant could offer a wider variety of IPs on the cloud, drawing more users into its game streaming service.

The Chinese company Tencent has become the world’s largest gaming company by revenue largely on the back of its extensive portfolio of online games, targeted at its domestic audience. Games like PUBG Mobile and Honor of Kings regularly rank as top-grossing mobile titles, and as discussed above, its mobile segment has always been a rich source of revenue.

Now, it may be looking into desktop and console gaming. In 2021, Tencent acquired 11 gaming companies, including Turtle Rock (developers of Back 4 Blood) and Sumo Group (developers of many Sonic racing games). This is a bid to enter the console and desktop platforms, according to industry analyst Drake Star, which also expects the gaming giant to acquire many AAA studios and developers this year.

Platform plays are not restricted to high-profile deals – smaller acquisitions reflect similar objectives. Netflix is continually buying indie studios and adding to its gaming library in a bid to enter the mobile gaming sector, and it intends to use data from its gamers to enhance its video catalog as well. In a Gamopedia poll, 33% of the respondents expressed interest in playing games on the Netflix platform, while 26% said it depended on Netflix’s gaming library.

The Metaverse: Jump-Starting the New Internet

The metaverse is a combination of virtual and augmented reality where users fully inhabit a simulated world created by technology, interacting with each other within digital environments. It is considered the future of the internet and cyberspace. It is still in its infancy, and it could take more than a decade for a full-fledged metaverse to come into being.

When Meta (formerly Facebook) acquired Oculus in 2014 – years before the company had sold a single headset – it was staking an early claim on the metaverse.

Meta has also acquired many successful VR game studios, such as Ready At Dawn (the makers of the award-winning Lone Echo) and Beat Games (makers of the highly successful Beat Saber). These acquisitions are not just about adding IPs – but about offering more reasons to participate in the metaverse and ‘Social VR’.

Meta’s Oculus has also acquired many companies to accelerate development of the metaverse by improving the VR experience. In 2015, it acquired Surreal Vision, which recreates 3D environments in virtual spaces. A year later it purchased Eye Tribe, which specialises in eye-tracking technology that allows you to control the direction you look using your eyes alone.

Meta’s metaverse play has actually hurt profits and Reality Labs, the division behind augmented reality and virtual reality, lost more than $10 bn in 2021, despite impressive sales figures for the Oculus Quest 2 headset in the same year. This has not deterred investment in the metaverse.

According to Bloomberg, even Microsoft’s acquisition of Activision Blizzard is a metaverse play, because the company’s new IPs give it access to massive gaming communities, which have come closest to creating metaverse-like experiences. Both Roblox Corp, publisher of Roblox and Epic Games, the publishers of Fortnite, have organized immersive in-game experiences such as live concerts. Epic Games pioneered crossover events featuring an eclectic mix of IPs through custom skins. Such events were attended by millions, turning Fortnite into a metaverse community rather than just a battle-royale F2P game.

Technology First: Betting on the Cutting Edge

Sony’s reasons for acquiring Bungie, however, have little to do with the metaverse, but much to do with technical know-how: they want in on Bungie’s capabilities in live-game services, and its expertise with cross-platform play. Sony has not delved into the live-service platform, opting instead for narrative-driven games and open-world franchises such as Horizon Zero Dawn. Buying Bungie gives Sony the chance to get into the live-service platform, and move past a console-only strategy – in fact, the company wants around half of its games on desktops and mobile devices by 2025, indicating a significant change in its approach to making and distributing games.

Bungie has mastered the live service model after years of developing the Destiny series, which has drawn 187 million unique users over the course of its existence. Bungie also has pioneered cross-saves and cross-platform play, and has deployed a variety of revenue models to keep Destiny competitive against other F2P and subscription titles. Bungie’s complex infrastructure supports almost a dozen different hardware platforms for Destiny 2, including Google Stadia. Sony could not have chosen a better tech partner.

Bungie plans to extend Destiny beyond gaming as well – there is speculation that the company is working on a Destiny TV show or movie as part of its plans to create a Destiny Universe, just as Sony adapted The Last of US into a TV Show and Uncharted into a movie. Venturing into new mediums will draw more users toward Sony and Bungie’s franchises, and Sony may well lean on Bungie’s expertise in coping with enormous player communities.

Square Enix has sold off its western titles to focus on technologies such as the blockchain, AI and the cloud. Square Enix’s deal with Embracer Group involves the sale of 50 IPs, including classics like Tomb Raider, Deus Ex, Thief and Legacy of Kain, for just $300 mn. However, the company still has a strong library and has also retained some of its Western IPs. Its decision to focus on new tech could enhance their gaming titles as well.

Prior to the sale of its IPs, Square Enix invested in the Ethereum-based game developer TSB Gaming, creator of The Sandbox, a virtual world built on the blockchain, which allows players to build, own and monetize their voxel gaming experiences.

Square Enix’s president Yosuke Matsuda has emphasized the company’s interest in introducing blockchain technologies into gaming to incentivise gamers and modders, and the gaming firm may also look into including token economies in its titles. The sale of Western IPs will bankroll these endeavours.

Gaining User Communities and Data

Consolidation buys access to millions of users spread out among the popular franchises of smaller studios, and these user bases yield significant data-driven insights.

This enables bigger players to devise well-directed promotion strategies across an ever-increasing portfolio of games and first-party studios, thereby saving costs on marketing and ad campaigns. User acquisition and retention is a high priority across gaming platforms and a significant part of a game app’s marketing strategy. Microsoft not only gains lucrative IPs by buying Zenimax and Activision Blizzard, but it also buys into vast user bases and data across platforms such as desktops, consoles and mobile.

User acquisition is vital to the metaverse – big players are already taking notice of the huge user communities of Roblox and Fortnite and their metaverse-like experiences. Having access to data on these communities, their behaviour and their metaverse expectations might be a game-changer for tech giants who are looking to usher in the new internet.

Gaining users and their data will hence allow gaming giants to fine-tune their consolidation agendas. Indeed, user data and insights into behaviour tie into all the three objectives listed above: they will enable companies to maximize gains from new platforms, entice gamers into a new, as yet unpolished metaverse, and improve the user experience with new technology.

Impact of Consolidation on Gaming

Today’s gaming deals are not solely about acquiring high-performing IPs – companies have a complex agenda, ranging from platform plays to metaverse investments. In this section, we discuss how gaming could change as a result of such strategic moves.

More monopolies and exclusives: Microsoft’s acquisition of Activision Blizzard was not met with unanimous approval, and raised concerns that the tech company had suddenly risen to a position where it could dictate terms as a monopoly player with the largest number of first-party studios. Microsoft’s position of power over the gaming industry may also draw antitrust scrutiny according to some observers. Such larger players can also decide to keep lucrative IPs as exclusives – note that XBox chief Phil Spencer has all but confirmed that The Elder Scrolls VI will be an exclusive available only on XBox and PC.

Tech giants vs smaller players: Big companies have made gaming acquisitions that will cement their place as market leaders. This will make it harder for smaller studios to compete, but not to create, as they will get opportunities to be purchased in an industry that hungers for new talent and new experiences. Netflix has bought many mobile game studios, and Meta has done the same for VR game studios. However, industry behemoths may not allow such creators to maintain their independence. Studios with successful franchises may succumb to acquisition after a few failed experiments hurt their bottomline, and the dominance of a few large players may stifle innovation and the creative freedom of developers working within the confines of a larger corporate structure. In effect, smaller studios can still create in an era of consolidation – but what they create may be dictated by their corporate paymasters rather than their creative ambition, leading to less variety in gaming content.

Cross-platform play as the norm: The gaming industry has traditionally not been very keen on providing cross-platform playability. However, this is likely to change because of the various platform plays reflected in today’s gaming M&A. Thanks to its acquisitions, Microsoft already boasts a sizeable collection of games playable via the Xbox Game Pass and its cloud platform. Sony is looking to enter the live-service online platform with the help of Bungie. Take Two wants to launch mobile versions of its famous IPs. As the number of multi-platform franchises grows, cross-platform play could become the norm rather than the exception. At the very least, gamers can expect an enhanced cross-platform experience going forward.

Mobile gaming as default: Smartphones are already the most popular device for gaming, but the introduction of high-quality IPs on mobile platforms could make smartphones the default device for gamers, or at least provide an experience that transcends casual gaming. As cloud gaming on mobile matures, more subscription-based services featuring high-quality games can be accessed purely via smartphones – without any hardware apart from the mobile screen. In the future, a smartphone streaming to a HD screen or a headset may be all that you require to get a high-fidelity, immersive playing experience. Gaming could hence become ‘mobile-native’.

Forging the Metaverse and its community: Apart from its technological trappings, the metaverse is essentially an online interconnected space where individuals interact with each other. Acquiring gaming companies that have experience dealing with massive user communities, rather than just user bases (contrast WoW players vs Windows users), will enable tech giants to understand how to create the metaverse community. In many respects, WoW can be considered a successful proto-metaverse – from its earliest stages, it featured player-driven economies, social gathering points and virtual real estate. Technology companies are looking to integrate the immersive elements of gaming into the metaverse experience: Roblox, Epic Games’ Fortnite, and GTA Online already have metaverse-like platforms that incorporate player communities into their business models.

Conclusion: How Consolidation will Beget Consolidation

Microsoft’s purchase of Zenimax in 2020 sparked speculation that there would be more such major acquisitions in the future – and this has proved to be true.

Tech companies and game industry giants have harnessed COVID-period growth to make billion-dollar consolidation deals. To some observers, the consolidations are still very much underway and experts suggest that we are entering an era of mega-consolidation, where consumer demand for cross-platform experiences will drive further M&A. Even tech firms without a presence in gaming may enter the market because of the industry’s massive potential – 26% of the world’s population plays games and gaming is the most lucrative entertainment industry by a wide margin.

Acquisitions lead to acquisitions, according to analyst Brandon Ross. Successful publishers and studios can expect to be bought – the industry may become the fief of a few large players, but studios that create quality games will not lack for customers, be they gamers or tech giants.

Mergers and acquisitions are about spending money to make money. Big players can create or simply buy more content. With more content comes more players, and with more players arises the need for more and diverse content – a virtuous cycle where high-profile acquisitions constantly transform the gaming market so that it can keep pace with rising consumer expectations and the demand for more content.

The consolidation in the gaming industry may eventually propel it toward a new normal, with a thriving metaverse and a tech-enriched gaming experience that transcends platform limitations. For gamers, developers, independent studios and gaming giants, that is a win-win situation.

06 JanuaryVideo Game IndustryVideo Game Sentiment Analysis

Using Sentiment Analysis For Video Games

by Kaavya Karthikeyan0 Comments

In today’s markets, the customer is at the top of the food chain. There are plenty of products which are your competitors as well as new ones being made. User opinions and reviews make or break a product and one of the industries where this is most apparent is gaming. A badly rated game has a direct correlation with the number of units of it sold. In comparing estimates of sales on Steam to aggregate review score averages, ArsTechnica found that better reviews do generally translate to more sales for games.

Sentiment analysis can be applied to all games, whether they’re successful or not, to improve them. It is a tool that can not only help you possibly fix your game, but by implementing it throughout your products’ lifecycles, you can improve the likelihood of success and overall quality.

Let’s say that you’re coming out with a new game. You’ve been working hard on it to ensure it’s what you imagined, and will be a hit with your audience. However, once it launches, it fails or just somehow, falls flat. You can think about why your game is failing but you might not be sure where the issues are. Sentiment analysis can help you with these problems.

What exactly is sentiment analysis, and why is it so important?

What is Sentiment Analysis?

Sentiment analysis is a powerful marketing tool that enables you to understand customer emotions. It detects positive or negative sentiments in text and is used to gauge brand reputation, gain insights on your customers’ needs, and see how your product is being received.

Sentiment analysis for video games involves tracking and analyzing real-time audience sentiments right from when a game is announced up till the present day. It uses Natural Language Processing (NLP) and Text Analysis techniques to highlight subjective information from text from your target audiences. It even anticipates your users’ actions. Sentiment analysis also monitors opinions for each individual aspect of the game ranging from the gameplay and graphics to the story, and more. Understanding what your users think can help you evolve your roadmap as needed to maximise success.

Gameopedia has created a detailed framework which takes the sentiments of not just customers, but also those of critics and influencers to provide a comprehensive view of the industry’s opinion of your game. This framework helps us track sentiments across various individual aspects of a game such as mechanics, audio design, and narrative.

How Sentiment Analysis Can Help Your Game:

Sentiment analysis can not only help you understand what people think about your product but brings way more to the table. When the insights from sentiment analysis are applied to your product roadmap, the benefits are myriad:

Useful for understanding what people feel about your product during the ideation and development stages as well as post-release through surveys, competitor analysis, and the like.
Helpful for analysing sentiments about your competition.
Boosts sales and product reputation by implementing insights from analysis.
Helpful for tracking sentiments across various individual aspects of a game like combat, characters, and the like.
Helps improve product and brand recognition with your audience.
Track the level of advertising success.– Measures customer loyalty and satisfaction.
Aids in increasing customer retention.

Sentiment Analysis Throughout a Game’s Lifecycle

Sentiment analysis is a valuable tool because it can tell you what your audience thinks of your game right from when you announce it till date. This enables you to constantly improve and enhance it based on feedback which can drive up engagement and sales. Factors such as the quality of gameplay and narrative, how efficiently the game performs, the standard of graphics, the value for money it provides, and more are considered across the game’s lifecycle. Opinions for the aforementioned factors are derived from a variety of places such as critic and influencer reviews, user reviews, posts on social media and forums, and more. All of these taken into account can make your game significantly better. Let’s take a look at the game lifecycle and how sentiment analysis comes into play.

Planning and Pre-Production:
Using sentiment analysis during this stage can help you understand what game to make, what features to include, and ideate better. Competitor analysis is also something which you can do with sentiment analysis to see where your competitors are both winning and lacking and create content on that basis.

Announcement:
This can tell you whether the general idea of your game as well as the genres/ideas you have for it are received well or not. It can help improve the direction your game goes in.

First Reveal Stage and Trailer Launch:
Sentiment analysis here lets you track the buzz about your game on social media and lets you know whether it’s positive. You can also track separate sentiments about your company as well. For instance, response around your game might be mixed but feedback about your company might be positive.

Gameplay Footage Launch: Once you release footage of your game, look for sentiments about your gameplay breakdown. You can find out what your audience is hyped about or hates, be it world and audio design, character abilities, game mechanics, and more.

Game Launch: You would want to look for sentiments, positive or negative, about the game’s narrative, length, performance, gameplay, graphics, replay value, as well as any bugs or issues which might crop up so you can hot-fix or deal with them.

Post Game Launch: Once you’ve launched your game, you want to know whether your audience feels like it’s good value for money, as well as the overall opinion regarding it.

Updates/DLC Launches: Here you consider user and critic reviews and ratings apart from sentiments on social media and forums. You want to find out whether your new releases provide your customers with value for money, as well as what they feel about the quality of the releases.

Who Sentiment Analysis can Benefit

Game Developers and Publishers: Apart from letting you know the overall sentiment about the game, negative feedback can help you identify specific problems that need to be solved while knowing your entire game isn’t negatively received. Positive sentiment about certain characters or mechanics can also be noted to create more content around them like DLCs.
E-commerce Portals and Retailers: You will get an idea before a game’s launch about how it’s being received. When pre-order time is coming up, if the hype and sentiment surrounding a particular game is good, you can highlight or promote it to ensure more sales. On the contrary, if a game’s sentiments are negative, you can remove them from your list of recommendations and replace them with better performers.
Advertisers/Marketers: Sentiment analysis is an excellent tool for knowing which games to market and promote, as well as help in identifying those with high click rates to focus on more. It can also help with monitoring brands and look at the volume of brand mentions, as well as the quality of those mentions.
Game researchers and analysts: Sentiment analysis can help you understand games better, how they work, and learn more about them by looking at what your audience likes or dislikes about them.

The Challenges Associated with Sentiment Analysis

The biggest challenge for a sentiment analysis tool is to find technology that can understand nuance. Things which machine learning and NLP might have trouble with are:

Polarity and Context: if you ask a question where you ask for likes and dislikes, even if a user likes your product, they might give sentiments based on whether your question is positive or negative.
Irony and Sarcasm: People can express their negative sentiments using words which are detected as positive by machines. For instance, if someone asks if you like a game you don’t, you can be like “Yeah, sure, it was really fantastic <puke smiley>” which technology can have trouble interpreting.
Emojis: When it comes to social media, especially tweets, a lot of them incorporate emojis which can be hard to read and interpret.
Comparisons: Sometimes it can be hard for ML tools to understand whether comparisons being made are positive, negative, or neutral. A statement like “This is better than having nothing, I guess.” can be hard to classify.
Individual Aspect Sentiment Identification: It can be hard to capture the sentiments for individual aspects of a game such as the gameplay mechanics, story, music, and the like.
We fact check our results manually to ensure we capture these nuances perfectly and to train our tool better.

Our Technology

Gameopedia’s vision for sentiment analysis is a hybrid of Machine Learning (ML) and Natural Language Processing (NLP) technology and human insights. The first two will help pick up on positive and negative keywords in text as our tool analyzes content from social media, forums, reviews, and the like, while the latter can help with nuance and things like sarcasm to make sure our analysis is accurate.

If you require sentiment analysis for your needs, Gameopedia can help you out. We combine the latest in AI, NLP, and human expertise to accurately measure consumer and critic sentiment across user reviews, social media, discussion boards, editorials, web stores, and more. Talk to our game data experts or email us at [email protected].

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Category: Video Game Industry

Advertising in Video Games

The History of Advertisements in Gaming

The Types of In-Game Advertising

Why Ads are a Necessary Evil

The Future of Ads in Games

How Gameopedia Can Help You

Monetisation In Video Games

Game Monetisation at a Glance

The History of Game Monetisation

Types of Monetisation

1. Pre-Acquisition:

Pay-per-Play

Buy-to-Play

Free-to-Play

Subscription model (Pay-to-play):

2. Post-Acquisition:

Downloadable Content (DLC)

Season Passes

Microtransactions or IAPs

Advertisements:

Play-to-earn Games:

The Impact of Monetisation

A Guide to Everything Metaverse and Gaming

What is the Metaverse?

Technologies That Play a Part in the Metaverse

The Role of NFTs and Blockchain Technology

Games in the Metaverse

The Costs and Processes of Populating the Metaverse

The Positives of the Metaverse

Challenges the Metaverse Faces

Current Investments in the Gaming Metaverse

What the Future of the Metaverse Looks Like

Why the Gaming Industry is Spending Billions on Consolidation

How Explosive Growth in Gaming is Powering Consolidation

Transformative Gaming Deals: Then and Now

The IP-centric deals of the past

The Billion-Dollar Deals Today

Platforms, Metaverse, Tech and Users: Why the Industry is Consolidating

Platform Plays: Staking a Claim in Lucrative Platforms

The Metaverse: Jump-Starting the New Internet

Technology First: Betting on the Cutting Edge

Gaining User Communities and Data

Impact of Consolidation on Gaming

Conclusion: How Consolidation will Beget Consolidation

Using Sentiment Analysis For Video Games

What is Sentiment Analysis?

How Sentiment Analysis Can Help Your Game:

Sentiment Analysis Throughout a Game’s Lifecycle

Who Sentiment Analysis can Benefit

The Challenges Associated with Sentiment Analysis

Our Technology

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