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Let's Play 🎮 | On the video game industry

On My Mind
Let's Play 🎮 | On the video game industry
By Martin Wiesemborski • Issue #18 • View online
🎮🕹 Video games are a big thing, making tons of money

All the way back in 2012 I was studying abroad in Seoul, South Korea. It was a crazy time, with many memories that I hold dear. 
One of these memories is of GomTV.
As you might know, Koreans are obsessed with video games. They play on their smartphones in the subway, on arcade machines with friends in the mall and of course at home on their computer. Games are everywhere, played by everyone no matter the age. GomTV was one of the first tv channels that broadcasted video games live. Curious about this new type of entertainment, we went to the GomTV studios and got tickets for the show. 
Boy, this is was something else!
Back then, I couldn’t imagine the type of fame and hype a game like Starcraft II could generate. About 200 Koreans attended the show, all of them hardcore fans of either one of the two teams that were about to compete. They screamed when their team walked in, accompanied by pyro and a catchy song - it was the entrance of superstars.
At GomTV in Seoul, 2012
At GomTV in Seoul, 2012
Big business e-sports
Now, a few years later, e-sport has become mainstream and a worldwide phenomenon. 
While writing this, I’m watching the Dota 2 world championship ‚The International‘ in Shanghai. Although I don’t understand a thing about what’s going on, I find it fascinating to see the spectacle and how this supposed niche thing has become a multi-billion business. 
The winning team will get about $15,390,000, with a total prize pool of over US$33 million. One team is sponsored by RedBull, another is a spin-off of famous football club Paris Saint-Germain (PSG), the tournament takes place in the Mercedes-Benz area. These are major brands. In comparison: the winner of Wimbledon, one if not the most prestigious sports competition gets a merely $2,983,748. 
Dota 2 #TI9 Opening Ceremony
Dota 2 #TI9 Opening Ceremony
And if you think these are crazy numbers, get this: A few weeks ago, 16-year old Bugha won the Fortnite World Cup and with it a cool $3 million.  
Talking about Fortnite: Ninja, the biggest streamer of Fortnite, signed a supposedly multi-million dollar deal with Microsoft to switch from his previous streaming platform to Microsofts ‚Mixer‘. 
E-Sport has become professional
There is no doubt, video games are no niche anymore, reaching broad audiences and bringing in billions of dollar in (advertising) revenue.
Almost all competitive games, from FIFA to LOL, DOTA2 or Starcraft have professional leagues now, with professional players that have management and sponsoring deals. 
Further proofing the mainstream-nes is the Gamescom. Last year, well over 300.000 people came to Cologne to play games. 
The major theme for this year is cloud gaming, something Google is pushing really hard with its Stadia offering that I wrote about a few weeks ago. And so are many more, even Deutsche Telekom.
A ever-changing business
Although the industry is growing, it’s also a very dynamic one where you have to evolve to survive.
Smartphones had a massive impact on the game studios as free to play apps with in-app purchase completely changed how their business model works. It didn’t take long until this became common practice in major AAA titles for gaming consoles and PC as well, against the will of the players who feared ‚pay to win‘ would become the go-to approach. Fortnite is probably the biggest success story of this approach, though. It’s free to play, everyone can download it, but to get custom costumes, dances, and skins you need pay. Which many do. The developer Epic has made close to $4 billion from the game already, but revenue is slowly declining as the hype as reached its peak. Now, everyone is turning their attention to cloud gaming as the new big thing that could happen to the video game industry.
Coming in hot: Apple Arcade
Another interesting approach comes from Apple, which beginning in fall, will offer a sort of subscription services for games called Apple Arcade. It’s supposed to cost 4,99€ a month and will give you access to exclusive titles by award-winning studios and game makers
The German market
To compete in these challenging conditions, you need money, And in Germany this also means public funding. 
Just like with movies but to a much lower degree, the German government used to provide funds to game studios. At least for now. In the federal budget for 2020, the 50 million EURO that were provided last year, were cut (in comparison: the German movie industry received 340 million EURO in 2018 through various public initiatives). Why is unclear, especially as it’s also part of the agreement between SPD and CDU to help the German video game industry reach international level. Andreas Scheuer, Federal Ministry for Transport, Building and Urban Development, attended the opening ceremony at Gamescom and promised to fight for funding, but given his reputation, this is hard to believe. 
Lastly, a link that I wanted to share for a while now that fits in perfectly today.
No limit: AI poker bot is first to beat professionals at multiplayer game
Fun link of the week
The Twitter Emoji Mashup Bot is now available as free iMessage stickers
Did you enjoy this issue?
Martin Wiesemborski

I'm a freelance UX strategist. Think of this newsletter as everything that is on my mind (hence the name): New and emerging tech and design trends, tools and ideas that I stumble upon and think are worth talking about.

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