The word “escapism” tends to bring a lot of negative baggage with it, but I’m not convinced that escaping is bad or wrong. When diving deeper into the word and how it’s applied in our daily lives, we humans tend to escape from or into almost everything… Think about it… Your work, exercise, books, food, movies, long walks, good conversations, and video games. There is an endless list of ways someone can escape from one reality into another, it’s just some forms of escapism are easier to point out over others. 

This week we’ll wander into one of the more popular forms of escapism… Video Games. 

Even though escapism is seen by the majority as a negative there’s plenty of proof that this activity refreshes and expands the imaginative powers of one’s brain. 

Before diving into the world of gaming, I want to disprove some common myths around this space… 

Mythbusters of gaming

There are many myths around the video game industry and community, so here are a few I wanted to debunk before we get started on this journey… 

I could write an entire piece on the ridiculous amount of misconceptions society has about video games, but I’ll leave it here for now. 

Next, let’s take a look at the gaming industry and how it all runs… 

Looking under the “Gaming” covers

Ben Sawyer from Digitalmill has a simple breakdown of the gaming industry… 

  • Publishing layer: They pay for the creation of new games and seek returns through licensing the games out… Examples of this would be Activision Blizzard, Electronic Arts (EA), Ubisoft, Tencent, etc. 
  • Talent layer: This includes developers, designers, and artists, who may be working under individual contracts or as part of in-house development teams.
  • MOD Layer: This is an emerging layer. “MOD” is short for modification, which is basically when the fan of a game modifies the game in a subtle or drastic way. I’ve personally included this layer because a lot of the talking heads in the gaming industry mention MODs as being an emerging part of the overall value chain with 600,000 community developers contributing in 2012. Fun fact! Two of the most popular games League of Legends and Dota 2 were originally MODs of “Defence Of the Ancients”… Crazy right?! 
  • Tools layer: Most game developers need some kind of tool that helps with rendering, physics, dumb AI, and scripting in the virtual worlds they’re creating. Most gaming geeks would’ve heard of Unity or Unreal Engine. Both of these tools provide a lot of what’s needed to create the captivating worlds we all love to immerse ourselves in.
  • Distribution layer: This part of the chain is where most games (& businesses more generally) fall flat on their face, no matter how great they are… Here is where you generate interest in the product through marketing, partnerships, etc. 
  • Hardware layer: These are things we gamers use to interact with the world the designers created… Such as Game consoles (e.g. Xbox or Playstation), Computers, Smartphones, Virtual Reality headsets, etc. This layer is evolving as well… The three musketeers (Google, Amazon, and Microsoft) are doing their best to push gaming into the cloud, lowering the barrier for gamers to play high-quality games anywhere on any device. We’ll come back to this topic in a bit. 
  • End-users layer: This is where you and I sit… The gamer. 

It might seem like a lot, but I promise it’s pretty easy to wrap our heads around… Think about it as a pyramid. We need money (publisher), people (talent/MOD), software (tools), marketing (distribution), and devices (hardware) to get a completed game. Without any of these layers, the whole thing would collapse (not literally, but let’s generalize).

Now that we’re familiar with the landscape, let’s see some numbers. 

Gaming is big, but how big? 

I’m sure you’ve heard people on the news, friends, or co-workers mention that gaming is a big thing now and it’s growing, but what does that really mean… Is it actually big or is this just another case of people regurgitating what they’ve heard without questioning the source? 

Let’s see… 

  • In 2018, the gaming industry generated $135 billion in revenue, more than the music and movie industries combined (I know profits are more meaningful, but this is still impressive)
  • The expected revenue for 2022 is $196 billion 
  • More than a ⅓ (2.5 billion) of the people on planet Earth play video games… A third! 
  • The 2018 League of Legends Finals attracted 200 million viewers, more than the Super Bowl and the NCAA Final Four combined… That’s people watching other people play video games. Ha!
    • Even crazier! 11 million people attended Fortnite’s live, in-game Marshmello concert earlier this year… Yes, 11 million people logged onto their virtual accounts to watch a virtual character, give a virtual concert. This might seem silly, but Reed Hastings (CEO of Netflix) sees this as a serious competitor for consumer eyeballs. 
    • Even crazier! 11 million people attended Fortnite’s live, in-game Marshmello concert earlier this year… Yes, 11 million people logged onto their virtual accounts to watch a virtual character, give a virtual concert. This might seem silly, but Reed Hastings (CEO of Netflix) sees this as a serious competitor for consumer eyeballs. 
    • Even crazier! 11 million people attended Fortnite’s live, in-game Marshmello concert earlier this year… Yes, 11 million people logged onto their virtual accounts to watch a virtual character, give a virtual concert. This might seem silly, but Reed Hastings (CEO of Netflix) sees this as a serious competitor for consumer eyeballs. 
  • The most shocking number of all is the Esports unit economics, basically how much money is being sucked out of each Esports fan… When compared to traditional sports ( football, soccer, basketball, etc) and the amount of revenue they’re making per fan, gaming is still in its infancy, with only $3.92 of revenue per fan. This number just shows how much opportunity there is in the entire gaming industry.  

Ok! That’s enough numbers. 🙂

The question here is… Why? Why in the f*** is this so big and continuing to grow like crazy?

I have a hypothesis, which is most likely wrong, but when has that ever stopped someone from hypothesizing? Haha!

I think there’s a perfect trifecta of three things meeting in this world of gaming that creates a kind of cultural zeitgeist where people fall in love with something. The three things are… 

  • Competition: Video games provide the perfect amount of dopamine to keep us coming back for more. 
  • Community: As I mentioned before in the “Mythbuster” section, gaming is one of the most social things a human can do these days… When you spend hours with a virtual friend guarding each other’s back and traveling on magical journeys, there’s an extremely strong bond being created between that group. 
  • Narrative: Games are becoming more and more detailed with their impressive graphics, but more importantly in the storyline. A person can easily “escape” into the mind-blowing worlds being created by hundreds (sometimes thousands) of talented game designers… These worlds have characters that almost anyone can connect with and immerse themselves in.  

When getting just the right mix of these three ingredients, the gaming industry is slowly, but surely creating a diehard consumer base that will spend their time and money on whatever is created. 

“Gaming” of the future

To end this piece we’re going to take a look into the future and see what changes are happening in the gaming industry… 

After my week of wandering, I stumbled across three big trends.

Pay as you go

  • Back in the day, games were shipped through discs or cartridges, sold at a retailer (either GameStop or Walmart), shoved into a machine, and then played… But today they’re virtually downloaded most likely from Steam or some other platform for free. Gaming companies have moved their business model from making all their money upfront to a slow and steady stream of payments. These payments come in the form of a thing called a “micro” transaction, which is inside the game. A gamer could pay for different “skins” (what the character is wearing), weapons, “expansion” packs (basically new maps or quests a gamer could go on), or something else to improve the overall experience. This new business model has actually proved to be way more profitable, but sometimes a bit unethical. The interesting thing about this new revenue source is that half of it is coming from only 0.2% of gamers (1 in 500), which are called “whales” (e.g. big spenders).  
  • SciFi Future: I came across an interesting idea from Jane McGonigal, where she played out a future where gamers get paid to play video games, instead of traditional work… And the funding all comes through the “whales”… You should definitely take a look!

Data-centric games 

  • Games have always had major honeypots of data, but most gaming companies lacked the ability to make use of it, but that’s all beginning to change thanks to machine learning. Many game companies today are tracking every move made by the gamer… This data is fed back into a pool of ML models that are either improving future versions of the game, keeping the player in the game, or seeing how they’re able to get them to spend a little more. Yeah, I know… It’s cool, but at the same time creepy and not nice. 
  • One other real ML trend I came across in the world of gaming is “Procedural Content Generation” (PCG)… When creating a game it can take days, weeks, or even months to build a single building in the virtual world you’re creating, but with ML models game designers are reducing that down to hours. Procedural Content Generation is pretty simple to understand… Basically, when a game designer wants to create a building, spaceship, person, or whatever else they throw in some criteria and out pop a few choices they can use. For example, imagine a game designer who wants to create a mystical fantasy building with a set height, width, color, and a set number of doors/windows. They just put in the criteria for that building, then a machine spits out a list of possible options… Now the designer can choose from the list and customize it for themselves, saving a ridiculous amount of time and effort. 

Move to the Cloud 

  • Earlier I mentioned I would come back to our three lovely musketeers (Amazon, Google, & Microsoft) and here we are… These three attempt to push all computational complexity to the cloud, enabling any device to play really high-quality games, anywhere. The idea is that if they’re able to do all the hard computation in the cloud, then the device (Xbox, Playstation, Computer, Phone) you use to play the game is almost irrelevant. The most well-known announcement around this idea is Google’s Stadia, which hasn’t really taken off, but this trend seems inevitable (as I’ve mentioned in a previous post). Latency (e.g. how fast the “cloud” responds) will be the biggest hurdle these three face. In the world of gaming, any delay is “no-no”… There needs to be extremely high bandwidth and low latency. As a gamer, you wouldn’t want there to be any lag between you and that tasty victory. Luckily, with the advent of 5G and “fog compute”, this reality is much closer today than it’s ever been.

… Escapism… 

Is it really such a bad thing? … In moderation, I think we all could use a little escape. 

Thanks for wandering with me, until next time! 🙂