Viacom VIAB0.0%CBS VIAC-0.1% announced today a new distribution agreement that adds ViacomCBS content to Hulu’s live TV subscription streaming service, Hulu + Live TV. This distribution arrangement will cover a wide variety of content such as news, entertainment and sports. In all it represents content that will be seen over 14 new channels on the paid Hulu live TV service. This deal is just another example of media companies placing their content on as many possible platforms, and with as many possible business models, as they believe makes sense for their overall business.
The deal was described by ViacomCBS as a “multi-year deal” which includes continued carriage of CBS broadcast stations, CBS Sports Network, Pop TV, Smithsonian Channel, and The CW, as well as continued distribution of ViacomCBS’ premium subscription service, SHOWTIME®. The deal will also introduce fourteen additional ViacomCBS networks to Hulu + Live TV, including BET, Comedy Central, MTV, Nickelodeon, Paramount Network, VH1, CMT, Nick Jr., TV Land, BET Her, MTV2, NickToons, TeenNick and MTV Classic.
“We are excited to have reached an expanded agreement with Hulu that underscores the value of our powerful portfolio of brands to next-generation TV platforms and viewers,” said Ray Hopkins, President, U.S. Networks Distribution, ViacomCBS. “Hulu continues to be a great partner, and this agreement ensures that Hulu + Live TV subscribers are now able to enjoy the full breadth of our leading content across news, sports and entertainment for the first time.”
The CBS All Access service is generally seen as a successful paid VOD service for CBS. Plans have been announced to expand that service, and presumably substantial Viacom content will go on the new, expanded, ViacomCBS SVOD All Access service, which presumably was worked out with Hulu as part of the deal, though no such arrangements were announced at this time.
The merger of Viacom and CBS last year has brought together two companies which have had different approaches to digital distribution of their content. As TechCrunch points out: “Offering the ViacomCBS cable lineup to live TV streamers represents a different strategy than Viacom had in the past, before the 2019 merger with CBS. In previous years, it allowed a deal with YouTube to fall through, as well as those with other streamers, like the now shuttered PlayStation Vue. In the meantime, the company focused on more traditional carriage agreements with pay TV operators.”
As distributors take on new content, and new costs for their content, it is expected that pricing for various digital packages and alternatives to traditional TV will be changing. For instance, YouTube TV raised pricing by 30% in the middle of last year as it added more content from ViacomCBS channels.
ViacomCBS did not reveal the financial terms of this deal with Hulu. In November Hulu announced that the price for their Live TV service was going up to $65 per month.
When I made 12 predictions for 2020 on January 1, little did i know about Black Swan events, and I certainly didn’t expect one (by definition). I wrote these predictions for 2020 with no idea that we would spend most of the year in our homes away from work,
school, travel, etc. Now it is time to look at this coming year, 2021, knowing that major changes are underway in our society and economy, including those changes catalyzed by the pandemic and recession.
Some of the trends I have been writing about in general, and in my 2020 predictions, were clearly accelerated by the Covid pandemic. Overall most of my predictions were spot on. I evaluated those predictions a few days ago on Forbes.com and I got a solid B at 3.25 out of a 4-point scale. Feel free to read last years’ predictions and my self-evaluation.
OK, here goes for 2021:
1. Gaming will yield some of the most exciting IPOs of the year and I expect we will
see Roblox, Epic and Discord completing successful multi-billion dollar IPOs in 2021.
2. The growth of podcasting will continue strongly as this technology reaches more and more consumers with a wide variety of content, including emerging video-podcasts. Additional acquisitions will probably occur too, such as the likely purchase of Wondery by Amazon AMZN+0.7% announced today and reported in early December as a likely deal by Forbes.com.
3. The “creator economy” will prosper in 2021. New tools and platforms will enable more professionals, semi-pros, and amateurs to make successful apps, games, or other software using creator tools from companies like Unity, AppOnboard/Buildbox, Overwolf, Roblox, Manticore, as well as TikTok, Triller, YouTube, Snap and the many video-centric digital platforms. As has been seen on many of these platforms, people are finding new ways to make money (some even support themselves and their families fully) due to the creator economy.
4. Home voice platforms will move toward ubiquity in the U.S. and many more services, content, gaming and other features will be offered through voice platforms,
including services using artificial intelligence and machine learning which will advance the complexity and the quality of games, information services, interactive content, and social interactions.
5. Everybody coming out of high school and college wants to be a startup CEO. One well-known, venture capitalist, Peter Thiel, even supports a series of fellowship grants that encourage students to drop-out of college and start their own companies.
6. Disney+ is likely to be the big winner in terms of growth in SVOD services in 2021, but Netflix NFLX+0.3% will continue to grow, particularly internationally.
7. HBO and Warner Media/ATT T-1.3% have created a major disruption in Hollywood’s traditional show business by announcing all of the Warner Bros. films in 2021 will be released on HBO Max, simultaneous with in-theatre releases (to the extent theatres are open in various markets). This will put a big hole in the finances of traditional movie
theatres. The question is will it be a major driver for more HBO Max subscriptions? With the SVOD world full of powerful competitors like Netflix, Amazon, Hulu, Disney+, and others, this dramatic move may be just what is needed to give HBO a top slot in the SVOD industry. I believe other studios will follow suit and close or eliminate “the window” between theatrical releases and the ability to watch at home on a VOD service.
7. Snap will continue to dominate the social media usage of teens and young adults, but TikTok will also continue to grow strongly, probably at a faster rate than Snap. Both services play to the video-centric, user-generated interests of a wide range of kids and adults. YouTube may well start to feel the heat of these competitors.
8. Cord cutting will continue to grow as traditional cable/satellite subscriptions are replaced in many homes by skinny bundles, SVOD, AVOD, and other digital content. Companies like Comcast CMCSA+1.7%, Spectrum and others will need to figure out new ways to make money with consumers, as well as how to drive more revenue and profit in their Internet and TV businesses.
9. Mobile advertising revenue will grow considerably in 2021 as the demand
continues to increase from brands and products that want to reach the “mobile-first” power-users of smartphones, such as the Millennial and Gen Z populations. I expect to see a big increase in mobile advertising in gaming too, as the gaming companies seek additional revenue beyond the virtual goods sold in their “free to play” games.
10. Gaming will continue to grow, in part due to exposing more people to more games during Covid. Game companies will also grow their revenue derived from selling extra content and items, or virtual goods as they are often called, “in-game” and this source of revenue will grow by double digits around the World.
11. The stay at home orders for parents and kids has exposed most families to remote learning, at all levels of education. The “remote cat” is out of the bag and I don’t think the traditional educational system will be able to put the “toothpaste back in the tube”. Remote learning will grow considerably in 2021, and potentially more kids will be officially home-schooled. For colleges and universities the tough question is will people still spend and borrow big money to pay huge tuition bills for four or five years?
12. Security and privacy concerns will continue to dominate the high-tech news in Washington, D.C. and the European Union. Governments and companies (look at Apple’s changes about device identifiers) will take steps to protect consumers from security breaches, as well as from invasions of their privacy, including some of the targeting of advertising that is used today. I do not expect any government to successfully force the break-up of companies like Google or Facebook, despite the predictions of others.
Last year I presented my predictions in technology and media for 2020 in Forbes.com. As one would expect, in some cases I was right on the nose, in other cases, I was a few steps behind, and in a few cases, I was just plain wrong. I will be publishing on Forbes.com, in a few days, my predictions for 2021, but lets look first at how I did in 2020. This will be a “self-graded” evaluation. The prediction is in normal case below and the evaluation is in italics.
1. Grade: – A
Prediction: “Unity will be a very big, and successful tech IPO in 2020.”
Outcome: Unity was clearly one of the bigger and better tech IPOs in 2020.
While Snowflake (who had ever heard of them before?) and Palantir also had huge IPOs, exceeding that of Unity.
2. Grade: – B
Prediction: “Home voice platforms will move toward ubiquity in the U.S. and many more services, content, gaming and other features will be offered through voice platforms.”
Outcome: Though rates of growth for voice assistants and smart speakers slowed down this year, the market continues to grow by at least double digits. While not ubiquitous yet, these devices are moving in that direction, at which time the applications for these devices will flourish.
3. Grade: – A
Prediction: “The ‘no code movement’ will prosper in 2020. New tools enable the average consumer to make an app, game, or other software using creator tools from companies like AppOnboard, Roblox, Tongal, etc.”
Outcome: The “no code movement” is part of the creator economy – the idea that regular individuals can make profitable content with no professional education or training. Roblox is one of the hot examples of the creator economy where the development of games is so easy that thousands of people are regularly making new games for Roblox. Other companies such as AppOnBoard/Buildbox and Manticore have made numerous announcements of their growth and success this year, as well as AppOnBoard’s success with a number of the top games in the charts built on their platform.
4. Grade: C
Prediction: The App Stores will encounter more competition from other companies as we have seen with Steam, Epic, etc. This year will be the beginning of the Post-App Store competition for Apple and Google.
Outcome: While Epic, Steam, and others are launching their own app stores and offering better revenue splits with the developers, the Apple and Google App Stores have had another great year. Perhaps this will be one of those predictions that needs another year or two to mature?
5. Grade: A
Prediction: Everybody coming out of high school and college wants to be a start-up CEO.
Outcome: While it is hard to have data to prove this, ask anybody funding early stage companies, and it sure feels like everyone under 25 wants to be a CEO.
6. Grade: C
Prediction: The best days are behind for Netflix. They will see big challenges in 2020 from a wide variety of TV and film content services, including Disney+ who will be the SVOD winner in 2020.
Outcome: While I still believe that Netflix has some challenges (see my upcoming 2021 predictions), clearly this was another great year for Netflix, and I could not have been more wrong. I did, however, accurately note the big success of Disney+.
7. Grade: A
Prediction: Snap will continue to dominate the social media usage of teens and young adults in the U.S. and other high-value countries.
Outcome: Snap had a great year, growing in users, and clearly dispelling the notion that they were a “one trick pony”. The Snap stock has risen dramatically this year – 250%!
8. Grade: A
Prediction: Cord cutting will continue to grow driving skinny bundles, SVOD, AVOD, and other digital content.
Outcome: I was early, as an analyst, in predicting that cord cutting would become a major challenge to the traditional media companies. That has borne out to be true over the years and this year the cord cutting continued to intensify.
9. Grade: A
Prediction: The Internet and the Web are all about video. People don’t want to write, but they love pictures and video. The Web will be the strongest video platform ever. And the phone becomes both a camera and a TV with more video content being consumed on smartphones.
Outcome: When you survey smartphone consumers you find many people watching video on a regular basis on their “small” screen. The smartphone has become a TV and on all devices consumers are voraciously consuming “old” and “new” video content.
10. Grade: C
Prediction: 5G will present amazing mobile opportunities for publishers and consumers. The phone will become increasingly central to the production and consumption of video and other content. 5G will be a game changer, especially in markets where traditional IP connections are slow.
Outcome: While not my fault, 5G has not rolled aggressively this past year and we will see how deeply 5G penetrates in the year ahead. Once 5G is ubiquitous the power of digital content and services will grow even stronger.
11. Grade: B
Prediction: AI will be central to most big data problems, prediction solutions, discovery solutions, and management decision. AI will be proven to be big business that delivers value now.
Outcome: Artificial intelligence is at the core of so many big data companies and deals today. It seems like most new technology companies speak to AI in one way or another. While this is still the early days of AI, it is apparent that the best technology in this area will drive very successful companies.
12. Grade: B
Prediction: Tech and media companies will be challenged by the US, European and other government efforts to control data privacy and protect consumers from fraud and privacy breaches. Efforts will grow to break-up Facebook, Google, etc.
Outcome: Anyone running a Website or a digital app knows that the laws and rules are changing and growing in regard to consumer privacy and security. Big and small digital companies are all working hard to meet the demands of the regulators and legislators. It appears that the demand for more privacy and security regulations will be even stronger in the near future. And there is no reason to believe that the U.S. Government is going to push hard to break-up companies like Google or Facebook.
For a final grade I end up with a 3.25 out of 4-point grade average. So I guess I will settle for a solid B in the predictions department for 2020.
Advertisers are always battling against the seemingly innate feeling of people that “they just don’t like ads.” Advertisers are often looking for new angles, new twists, and new ad “products” that will grab the consumers’ attention and allow their brand, product or service to stand out among the population. Some advertisers have tried to make their ads look like “newscasts” or “content specials”, others regularly use known celebrities, as well as various “gags” to get consumers’ attention.
Sometimes I feel like the advertisers are focusing on just trying to “trick” people into watching an ad, rather than asking themselves a more fundamental question, “how can we make advertising more appealing to consumers?” One of biggest complaints consumers have about advertising, be it on TV or on digital platforms, is that ads interrupt, they get in the way, of content I want to watch, or listen to, or read.
Why then haven’t advertisers tried shorter ads? If an ad is 15 seconds and not 30 seconds on TV, then it is half as intrusive. Likewise, in digital video advertising, consumers might see 30 second and 15 second ads as “long”, but they will tolerate a 6-second ad (like many of the ads on YouTube.) We can’t force advertising our consumers, we have to make it at least somewhat inviting, and hopefully (and more advanced targeting will allow this) directly relevant.
So then what evidence do we have that shorter ads are better ads? I know many years ago I heard from a large media company that they had tested promo ads for their own TV shows and that they had tested 30 second ads against 15 second ads and found that the shorter ads drove better recall for the promos.
More recently, MAGNA, a well-respected business intelligence and consulting company, in collaboration with the IPG Media Lab, and one of the top companies in social media, Snap, conducted a study comparing 15 second ads against 6 second ads in the mobile video space. Even though the 6 second ads are MORE than 50% shorter that the standard 15 second ads, they still had the same impact (actually slight more) than the longer ads, as measured by key metrics.
Furthermore, this study found that both 6 second and 15 second ads were equally successful on mobile devices in driving the same level of aided recall for the product or brand, but the 15 second ads were considered more intrusive by the viewers.
Brands, products, service and all advertisers should seek to explain concisely and directly, particularly when advertising in the digital environment, what the value proposition of the item being advertised is and why it is relevant. The traditional TV ad world should look at trying much shorter ads on the TV platforms, and perhaps even less ads per show. Some advertisers might then pay a premium for shorter, better ads, that are not hidden away among the clutter of ads on TV and on digital platforms.
Wouldn’t it be great if the major advertisers followed the mantra by customer advocates to, “surprise and delight the consumer” by offering up shorter, more compelling ads.
Much has been written about how Americans (and no doubt people across the world) have changed their behaviors and habits, including their media and entertainment pursuits, due to the stay at home environment caused by the Covid pandemic. In my own research I see many consumers (25-30%) who report that they are spending more time on websites, digital services, streaming media, etc.
Ecommerce platforms, whether they are Amazon or ETSY, are more than just digital retail outlets – they are digital media and content companies too. Many consumers love to browse for products, services, vacations, etc. as a form of entertainment on digital services. Pinterest’s PINS+0.7% whole vision is based on sharing and enjoying pictures and videos of cool products, places and people. The old, out of home behavior, of window shopping is now online – “retail and shopping as entertainment.”
Etsy was founded in 2005 as a Brooklyn-based Website for hand-made goods, crafts, related supplies, and other products embraced by the “maker movement”. In fact, there is a media company, Maker Media, which promotes conferences and digital content regarding such products. People don’t just buy these products, they live a lifestyle around their roles as makers and/or buyers of local, specialized, “crafty” products. The Maker Lifestyle includes consuming and creating content around the maker movement or the “passion economy”.
Etsy’s traffic and revenue has increased over the last year. Revenue has more than doubled in that time period. No doubt this has been achieved through a combination of the tailwinds of the secular growth of the ecommerce market, as well as the “black swan” moment of the Covid pandemic. It is interesting to note that in Etsy’s third quarter over 10% of their revenue were masks – mostly from small manufacturers with a wide array of mask themes.
Etsy is also using the pandemic as an opportunity to reach new customers, including running major TV ads throughout the year.
Etsy has clearly been one of the many digital winners due to the pandemic and the related “stay at home” environment. Though their stock struggled in the early years, after their IPO on 2015, and continued to trade poorly for a number of years – hitting a recent low of less than $40 a share – Etsy has skyrocketed today to almost $180 a share, representing huge growth of 450%.
Below is a chart from Statista that shows the dramatic growth of Etsy’s revenue over the years. Clearly the Internet is providing more and more opportunities for small and medium sized businesses to reach consumers, as well as an opportunity for big brands and manufacturers to reach all types of consumers. Etsy, both as a product seller, and as a content site, has become mass market and the pandemic has catalyzed that growth.
Throughout the pandemic many people have talked about how their various behaviors have changed in terms of how they spend their time. Gaming has been one of the big areas where folks are spending more time. Recently one game studio, Nifty Games, who raised $12 million last year, announced that they were moving into the big leagues, with Peter Moore joining their Board of Directors.
Peter Moore has a long history of running very successful gaming companies from his early days at Sega to his leadership of Xbox, then his job as head of EA Sports, and then serving as EA’s Chief Operating Officer. More recently, Moore was the CEO of Liverpool Football Club. He recently announced he was stepping down from that position after Liverpool’s big win of the FIFA Club World Cup for the first time. Liverpool also won, under Moore’s leadership, the 2019–20 Premier League championship, their first top-flight league title in thirty years.
Peter Moore is perhaps the biggest name in sports and video gaming ever. Nifty Games looks forward to building on his reputation and connections as they build their mobile sports games, NFL Clash and NBA Clash. Nifty has licenses from both the Leagues and the Players Associations.
In an exclusive email question and answer exchange, Moore expressed big enthusiasm for the future of mobile gaming, even with his extensive background in PC and console gaming, saying he “couldn’t be more excited about what the mobile platform is able to bring in the coming years as regards even more innovative game experiences. Powerful devices, 5G connectivity, and even larger screens all point towards even greater adoption of mobile gaming.”
Moore has spent the last three years in his original homeland, the U.K., while running the Liverpool Football Club, but he is now returning to California where he spent many years. Nifty Games is based in San Francisco. When asked why he was returning to California, Moore expressed his love for California and his family saying, California is where I have spent most of my 38 years in the United States, and it’s where our children now all reside.”
Jon Middleton, the CEO of Nifty Games, said that Peter Moore is a gaming “trailblazer” in announcing the appointment of Moore to the Nifty Games Board. In an exclusive exchange with me by email, Middleton said, “In the mid 90’s, Peter ran marketing for Reebok and he left for Sega. He clearly saw the potential of gaming. Games climbed out of parent’s basements and migrated from dorm rooms to living rooms. Peter’s a proven market maker and has delivered gamers big leaps forward in gameplay repeatedly with Sega Dreamcast, Xbox 360 and EA SPORTS. As talented game creators were writing code and designing incredible digital worlds, Peter addressed gaming’s most fundamental aspect – building the gamer community. While running Xbox, he pushed for games which fostered competition, and then connected competitors online with the success of Xbox Live. Famously, he went so far as to tattoo the logo and launch date of Halo 2 on to his arm for unveiling on stage at the big gaming convention each year, E3. There’s a ton of reasons why gaming has grown from millions to billions of players worldwide, and Peter Moore is one of those reasons.”
A mistake is often made by the Silicon Valley “insiders” when they lump all traditional media into one big (failing) bucket. Newspaper advertising in print has been decimated, but TV advertising has actually held up quite well, even during the pandemic. While we are all watching a lot of Netflix NFLX+0.3%, advertisers know that millions of consumers are watching traditional broadcast and cable TV every hour of every day.
According to a recent report from MoffettNathanson, the firm named in part for Michael Nathanson, a long-time, well-regarded media analyst, reported a 3% increase in U.S. TV advertising revenue in the third quarter of this year. The firm compared that to national advertising spending that fell 3.5 percent. For this final quarter of 2020, Nathanson envisions an increase of 2% in TV advertising revenue.
The report is titled “That Was Unexpected!” and Michael Nathanson spoke to why TV advertising revenue was remarkably up this past quarter, “First, the third quarter has a once-in-a-lifetime wave of every major sport returning to the market. Second, the intense 2020 election cycle attracted huge local, regional, and national ad spending – which we estimate to be up roughly 75 percent over 2016 – in key presidential swing states and in the fight for the Senate.”
Nathanson forecast strong future revenue for the TV industry, saying, “The TV ad market will post strong results in the coming three quarters as sports events, including the Olympics, return to their natural cadence.”
In contrast, the newspaper companies continue to lose advertising revenue, and in most cases, subscription revenue too. The national newspapers, particularly The Wall Street Journal and The New York Times NYT+0.9% have avoided this value-destruction by successfully driving paid-subscriptions online.
The Pew Research Center recently issued a report that documented, to no one’s surprise, that advertising revenue from the major local newspaper chains, already suffering from plummeting print advertising revenue, have been slammed even harder during the pandemic and the resultant economic recession.
Pew reported, that among the six publicly owned newspaper chains — Gannett GCI.I0.0%, New York Times, Tribune, McClatchy, Lee and Belo AHC0.0% — who own and operate more than 300 daily newspapers, advertising revenue fell by 42% over year last year.
This past election was, as evidenced by the highest popular vote ever, very important to many people. Of course, no one cared more about the election results than President Trump and former Vice President Biden. Though the average voter also seemed very motivated this year to learn about the candidates as proven by the high ratings achieved for the Presidential Debates.
One of the many ways that Trump and Biden sought to communicate to their supporters, and to win over the undecided, was through social media, particularly Facebook. I am not talking about all the free attention that Trump, and to a lesser extent, Biden, got from their own posts on Twitter, but rather the hundreds of millions of dollars spent on paid social media advertising reaching out to all ages, gender and races in the U.S. through the social media giant, Facebook. In fact, each candidate hit all time highs in Facebook advertising expenditures.
Over the last 22 months, ABC 7 Los Angeles’ Eyewitness News, has reported that both Trump and Biden in this election, spent more INDIVIDUALLYon Facebook advertising than both Trump and former Secretary of State Hillary Clinton spent combined during the 2016 election. Reportedly, Biden spent over $94 million on Facebook ads in this election, and Trump spent even more – reporting $107 million spent on Facebook ads.
Not only was the 2020 election very good to Facebook, but Facebook overall has rebounded stronglyfrom the lower advertising revenue driven in the early months of the pandemic. There can be no doubt that social media and overall digital advertising expenditures are now rivalling TV advertising in importance.
The Wesleyan Media Project, an enterprise run out of Wesleyan University (full disclosure, I am an alumnus), has gathered and analyzed extensive data on the advertising expenditures of Presidential, Senatorial and Congressional candidates.
In the case of the Presidential race, they estimated that Trump spent over $426 million in advertising for his candidacy, and Biden spent $564 million. Despite Trump having less to spend on advertising, he over-spent Biden considerably in terms of digital spend, directing over $201 million to digital advertising, vs. Biden’s digital expenditure of $166 million. The same pattern existed in terms of TV advertising with Trump’s spend on TV being $222 million vs. $376 million was spent on TV advertising for Biden.
This year has been, obviously, a very hard time for most people economically, socially and psychologically. But thanks to Presidential espousals, at least the TV advertising and digital advertising businesses got big boosts (political stimulus you might say) from the 2020 elections.
With many of us at home, “spinning the dial” to find a TV show or movie that we want to watch, it is nice to know that more new content is coming to the TV world. Last week I reported that more sports content was coming to television viewers, including both professional Lacrosse, as well as professional Esports content.
NBC announced that its over the air and digital streaming channel, NBCLX, will be programming Esports content starting today. The local TV station group of NBCUniversal last year launched a digital news brand and streaming network, called NBCLX. The L stands for “Local ” and according to TechCrunch, NBCU says the Xstands for “exponential abilities.” The new digital network is going after Gen Z and Millennials – the younger demographics in the media world. These are also the age groups that are most likely to be cord-cutters, which has been confirmed for many years in my annual cord cutting online survey.
NBCLX was launched in 2019 to offer relatable content to younger viewers, and delivers local news and original programming. Audiences can access programming on LX.com or via Roku, Apple TV, YouTube TV and other platforms.
One of the hot content areas in the digital world today is streaming content and especially streaming of Esports competitions. NBCLX new esports content will include content about the big games in the Esports world today – such as Fortnite, Call of Duty, Apex Legends, etc. Some of the content will be mini-challenges and competitions. There will also be interviews with players and streamers, as well as some holiday season themed content. Other big Esports games include Valorant, Dota 2, Hearthstone, Overwatch, Rocket League, Counterstrike, PUBG and others.
“We are thrilled for NBCLX to present esports competitive entertainment to our audiences for the very first time,” said Matt Goldberg, VP of Content Strategy at NBCLX, in a statement. “Esports is a global phenomenon. We cannot wait to welcome the esports community and fans to our network.”
There are approximately 500 million people in the U.S., Europe and Asia that watch or attend Esports events. In the U.S. my annual research shows that about 60 million Americans attend or watch esports events.
Esports is very popular worldwide. For instance, a few weeks, ago the 2020 League of Legends (from gamemaker Riot Games owned by Tencent Holdings) World Championship was played in Shanghai and it was anticipated there would be approximately 200M viewers,totaling over 130 million hours of viewing. Others have reported the viewership at closer to 100 million people. Either way, it either matched or beat the last Super Bowl viewership. Esports is clearly a mass media content area.
Vorhaus Advisors found fans don’t care if items are virtual. They’ll spend money on them.Image Credit: Vorhaus Advisors
Sixty-three percent of gamers say they would spend more if virtual goods had real-world value,and could be traded or sold. And 64% say they would also play more often. This is all according to a survey by digital media consulting firm Vorhaus Advisors. This suggests players could have real demand for games that adopt blockchain, the secure and transparent decentralized ledger technology, that enables virtual items to be tied to real-world goods.
Blockchain-based items can be uniquely identified and verified, allowing people to take them outside of a game to other virtual worlds or perhaps cash them out. Blockchain games produced a lot of hype, but they have been slow to impact the larger mass market for games. Overall, the report said that people are interested in developers enabling players to make money from the exchange of virtual goods inside games.
The survey analyzed the opinions of more than 2,000 consumers (interviewed in the summer) to evaluate how they viewed virtual goods and blockchain features in games. The target group that is most attracted to blockchain is the 18-year-old to 34-year-old demographic.
“It’s fair to say that blockchain had some fad moments and will continue to have fad moments in the future,” said Mike Vorhaus, founder of Vorhaus Advisors, in an interview with GamesBeat. “I think blockchain is less of a fad, even if it’s not as well known. I think when people start to learn about it, they discover that it’s a very deep, real, elegant technology.”
The independent survey commissioned by Forte also said that 24% of gamers say they’ve purchased virtual goods while playing games, spending an average of $168 over the last year. At the same time, a third of gamers (32%) think that the prices of virtual goods can seem arbitrary and are not necessarily a true reflection of rarity or value.
Above: Mike Vorhaus, the CEO of Vorhaus Advisors.
Image Credit: Vorhaus Advisors
Blockchain still has a way to go. It’s still a broadly unfamiliar concept to most U.S. adults, Vorhaus said. And that means that companies are just beginning to scratch the surface on how to monetize their games, he said.
“Blockchain is really a function of consumers getting accustomed to it,” Vorhaus said. “It’s more about getting used to it. One of the really interesting things in the study is when you explain to people that blockchain could make it possible for people to trade goods that they worked on and built in virtual environments, then they like it. Blockchain makes it possible to do that trading with transparency, safety, and without duplication. They already love virtual goods. And now they can make a virtual good they can buy, sell, trade, and make money on. If you look at games like Animal Crossing, we are halfway there.”
Nearly half (46%) of virtual good buyers expressed interest in having real ownership of their virtual goods. Virtual good buyers also expressed interest in being able to sell their virtual goods to others on an open marketplace. That’s one of the big advantages of blockchain. If a game shuts down, a player can take the goods that they have purchased and take them to another game that supports those items. By contrast, if someone wanted to sell an item that they bought in a game today, the publisher might call them out for violating the terms of service.
“We know that in a metaverse one would need to maintain the same identity throughout it, and there are a lot of people who believe blockchain will be useful for that,” Vorhaus said.
Since goods can be uniquely identified, developers can create scarce one-of-a-kind items that players can collect and resell using verified peer-to-peer transactions.
More than half of virtual goods buyers (51%) expressed interest in earning income from playing games. The capability to create, own, and trade digital assets might allow the lines between play and work to blur more than they already have, the survey said.
Above: Vorhaus Advisors found gamers are accustomed to spending on virtual goods.
Image Credit: Vorhaus Advisors
Virtual goods buyers are most interested in the community-focused gameplay features of blockchain. Peer-to-peer trading of virtual goods (40%) and a universal marketplace that works across any game (39%) were the features virtual goods buyers expressed the most interest in.
Virtual goods buyers see the most benefits of blockchain. Gamers who buy virtual goods are 26% more likely than U.S. adults as a whole to cite the economic benefits of blockchain; 52% of virtual goods buyers are more likely to see it as a way to guard against removal or tampering.
“Blockchain is clearly growing in awareness and experimentation,” Vorhaus said. “I would add that certain things can be done to make it grow more. Education is one of the biggest ones, as well as the assurance of safety. If the gaming industry works hard at educating consumers, we could be on the verge of a massive breakthrough. I agree that a couple of key games will make a difference.”