The explanation for gaming’s recent surge is straightforward. “People are at home, they have nothing to do, they are not commuting,” says Michael Pachter, an analyst at Wedbush Securities, explaining the growth. “You have more time and you’re bored.”
At least at a financial level, the giants of the video game industry — including Microsoft, Nintendo, Twitch and Activision — have thrived in the conditions created by the pandemic. In April, Microsoft disclosed that the number of subscribers to its Game Pass service (think Netflix-for-gaming) cracked 10 million. Among those subscribers, Microsoft reported a 130-percent increase in multiplayer engagement across March and April. Last week, Nintendo announced sales of its Switch console were up 24 percent year-over-year, while its new game, “Animal Crossing: New Horizons,” had sold 13.5 million copies since its release in late March.
The same is true of engagement numbers. Twitch, the most popular video game streaming platform, saw 1.49 billion gaming hours watched in April — a 50% increase since March — according to data from Arsenal.gg provided to The Post by StreamElements. Steam, a popular PC gaming platform, hit its all-time high concurrent user count at over 20 million people in March. Epic Games’s Fortnite has also grown to new heights: An in-game Travis Scott concert saw over 12 million concurrent views from players, and in April alone, players racked up a combined 3.2 billion hours in-game. (Twitch is owned by Amazon, whose CEO, Jeff Bezos, owns The Washington Post.)
Overall, video game sales in March approached $1.6 billion, representing a 35-percent year over year increase, according to NPD. Though Pachter sees core gamers reducing their pandemic-level gameplay when the world’s covid-19 crisis ends, he thinks the long-term value to the industry comes from acquiring new fans to their consumer base.
“A person who was playing zero hours a week and they’re now playing one or two, you may have won them over forever,” he said.
But even if the industry gains new converts, questions around what comes next — in terms of development and releasing new games and even the sustainability of gaming’s newfound popularity — loom large. Facing inherent challenges brought about by the pandemic, some developers have been forced to make tough decisions regarding how to satisfy their audience while also adhering to schedules set before the virus hit. And some elements of video game production cannot be completed without in-person interaction or expensive equipment and studio space. These challenges threaten to uproot carefully plotted timetables, and diminish some of the industry’s otherwise impressive gains.
Challenges, delays and compromises
When Riot Games’s “Valorant” entered beta in early April, it seemed to be on a path that would enable it to stand out as more people stayed home. For one, Riot Games had teamed up with Twitch to make beta access to the game contingent on watching games of Valorant on the streaming service — a makeshift tutorial, or a way to juice Twitch’s numbers, depending on who you ask. On its first day, the game hit a peak concurrent viewership figure of 1.7 million viewers, almost breaking the record set by the 2019 League of Legends World Championship.
But the pandemic has “compromised” the game’s initial release timeline, according to Anna Donlon, an executive producer for the game. Riot Games has been unable to record certain voice-overs, as recording studios are closed. Donlon also mentioned increased stress on Internet servers, travel bans and shipping delays as obstacles the company now faces.
“We’re having to get creative in how we approach launching a game, since this one might be launched from our homes,” Donlon wrote in an email to The Post.
Game delays are not uncommon in the industry: Ubisoft and CD Projekt Red announced delays around prominent titles last fall and earlier this year, respectively, for reasons other than the covid-19 outbreak. But more delays — this time directly tied to the virus — may be on the way. Pandemic-related delays have already been announced by game developers at Amazon, a Sony-owned studio and Square Enix.
Some developers have found ways to adapt — albeit not without compromise. Gearbox Software, which makes the Borderlands series, has avoided delays on deadline they had already committed to by deprioritzing certain projects, some of which are unannounced. But therein lies a cost — one that will likely require payment down the line. The studio’s ability to make up for lost time on projects now set on the back burner is unclear.
Gearbox has managed to increase its output despite the pandemic, according to Randy Pitchford, who founded and heads the studio. The Texas-based company has put out four patches for its latest major game title, “Borderlands 3,” since the start of March. In April, the studio published a new minigame, Borderlands Science. It also completed and launched 13 patches for two other games — despite their teams working from home since early- to mid-March.
“What will break?” Pitchford recalled thinking about the challenges of remote work. “We weren’t sure of the impact.”
Pitchford cited challenges such as data transfer of massive files, security, communication, and overall culture. “A huge amount of our work, which is creative, occurs from connections that happen dynamically.” Now, Pitchford said, “we’re looking at each other through a screen, which is not the same. … It’s been challenging and stimulating but also frustrating.”
Pitchford said his studio is emphasizing the present. “We’re shipping stuff and doing more immediately. People are playing the content, now more than ever,” Pitchford said.
Potential hardware worries
Supply chain issues connected to the virus have already delayed the manufacturing of Nintendo’s Switch console. Perhaps the pandemic’s must-have gaming item, especially given the widespread popularity of the game “Animal Crossing: New Horizons,” the Switch had been pervasively sold out for weeks and is only now available again at major retail locations across the U.S.
Should Microsoft and Sony encounter the same type of setback, there may be delays around or shortages of both companies’ highly anticipated next-generation consoles — the Xbox Series X and the PlayStation 5 — due out for the 2020 holiday season.
Consoles are composed of a plethora of raw materials and components, the sourcing and manufacturing of which were impacted by the pandemic. One company, which supplies cords to Microsoft’s Xbox division, reported their factory in China operating at 40-percent capacity in early March. Another supplier said it was at 80 percent by mid-March, while others reported no reduction in output. These figures have certainly changed since March, and back in March, suppliers contacted by The Post cautioned against making predictions around output, given the complexities around supply chains and sourcing parts.
Via a spokesperson, Microsoft said the company has no current delays to announce. Sony did not reply to The Post’s interview request, but an earlier report suggested Sony would be limited in producing PlayStation 5 units, making fewer than the company had initially anticipated.
Pachter said he thinks the industry will be able to smooth out any delays in short order, for the most part.
“In most jurisdictions where games are made, Europe and the U.S., you probably have the governments opening up the economies with social distancing,” he said. “If they [game developers] can sit around a table wearing gloves and masks, it can be done.” However, he also noted that games that require motion capture — a practice utilized by many popular, more cinematic games — might present unique challenges given the requirement of both actors and a crew to be present on a set.
The rising tide of video games over the past couple months has also buoyed esports, as cable networks look to fill airtime that once belonged to now-idle traditional sports programming. Officially licensed video games of Major League Baseball, the NBA, NFL, FIFA, Formula 1 and NASCAR have aired on, variously, Fox, Fox Sports, NBC, ESPN and ESPN 2 during prime slots over the past few weeks. In the case of eNASCAR on Fox, it drew over 1.3 million viewers. The NHL’s video game is being used to play out real-world schedule of the Finnish Hockey League, which struck a deal with that nation’s top TV broadcaster to show the finals.
ESPN recently announced it will be airing the NBA 2K League, committing to air matches on ESPN2 through May 19. Matches throughout the season will be distributed on ESPN’s digital platform. For years, the network has aired League of Legends and Overwatch League matches, among other esports competitions. During the pandemic, they have aired League of Legends, Rocket League, NBA 2K, Madden NFL, MLB The Show and F1 tournaments.
While the boom time has been enjoyed, industry leaders are sober when assessing the post-lockdown landscape.
“I think as the quarantines are lifted, esports’ current surge will correct, and some ratings will drop as we see a return to normal,” said Jason Lake, founder and CEO of Complexity, a gaming organization. That said, there figures to be a sustained gain from this time period of increased attention. “Esports has been forever popularized in a meaningful way,” he added.
Beyond getting attention from the biggest patron of traditional sports — TV networks — esports are also seeing deeper investments from their biggest source of revenue: sponsors. And those gains are more likely to be sustainable.
“We see the stabilization of the market on a level of close to 100% above norm,” said Doron Nir, CEO of live-streaming services provider StreamElements. He believes that the increases will be solidified by an influx of advertising dollars to influencers, as well as live entertainment companies evaluating how online events can serve as a component of their long-term strategies.
BMW recently announced a deal to sponsor four esports organizations in the United Kingdom, Germany, South Korea, and China, in addition to the org they have been sponsoring in the United States. Zenni, an eyewear company, also expanded its footprint by renewing a current deal and adding two additional esport organizations.
“We’re not necessarily trying to sell cars to [gamers]. The reason is we want to create advocates in the next generation of demographic that comes through,” said Albi Pagenstert, BMW’s U.S. head of brand strategy and communications. “We want to stay relevant not to just the established segment, but at both ends of the spectrum. … In this new normal, esports is going to accelerate even quicker than it already was.”
Still, these rosy auguries have not been enough to induce Fox Sports nor ESPN to make long term commitments to airing esports events. Fox Sports has been at the forefront, ratings-wise and cultural awareness-wise, in this esports moment thanks to its airing of eNASCAR events. The events have hit more than one million viewers multiple times, a number higher than many midseason traditional sports programs, but one that remains about 1/4 of a normal Sunday race audience, according to a Fox Sports spokesperson. The regular NASCAR schedule is set to resume May 17 with a race at Darlington in South Carolina.
Though acknowledging his network’s involvement with esports been “positive on every level,” Brad Zager, an executive producer and head of production and operation for Fox Sports, said that “When sports comes back, a lot of these time slots will be filled with sports.”
An emailed statement from John Lasker, ESPN’s vice president of digital programing, said the network would “continue to pursue opportunities in esports.” No major TV network has yet announced new commitments to air esports events in the post-quarantine era.
“I’m not sure esports needs linear TV to succeed,” Zager said. “Esports have done a really nice job building an industry without it.” To wit: Twitch saw a 20-percent boost in gaming hours watched on the site from February to March, pushing to over 992 million hours, according to StreamElements.
Much like with newly indoctrinated gamers, the long-term gain from this period for esports figures to be its introduction to a new, larger audience.
“You’ve seen millions of people exposed to it who didn’t know it existed,” Lake said. “Next time they see it, they’re gonna know what it is, and might want to tune in.”
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