At The Montgomery Summit presented by March Capital in 2021, I sat down with EA COO Peter Moore, Pearl Abyss America CEO Jeonghee “JJ” Jin, and Zynga President Bernard Kim to discuss the long-term outlook for gaming amid technological disruption in the post-pandemic environment and how we can look to the past for guidance.
One of the most important questions on everyone’s mind focused on how the gaming industry experienced an extraordinary step change in growth over the past year due to extenuating world conditions in terms of both market capitalization and player count—will this trend persist into the future?
JJ approached the question from a social perspective. For JJ, building games is about community philosophy, and the past year was a great opportunity to expand Pearl Abyss’s demographic. According to JJ, “[gaming] is a forum of community whether it encourages people to form an in-game community or outside just talking about their favorite games or hobbies with each other.” Companies cannot expect new gamers to act and behave like their historical counterparts. Instead, new games need to be designed to retain across the increasingly broad spectrum of user preferences as entirely new segments are being welcomed into the fold.
Peter remarked that the social capability of games has evolved accordingly over the years, and the gaming industry is an ambassador to cloud technology. For example, games have not always had 24-hour update and live service capability. These features are a stark comparison to building the early social games in EA’s history when the primary concern was how to make a game run smoothly on dial-up modem. The infrastructure of the past would not have been either capable or scalable enough to handle the surge in modern gamers. Peter sees a positive trend in spreading gaming technology, citing examples such as in-game concerts and contributions to the automotive industry based on driving games. However, the real excitement is for the next step of “how can we take gaming technology and improve the way we watch sports [or] improve the way we go to concerts. [Advancements in games-as-a-service platforms and philosophy along with the shift into virtual experiences allows for] creating a 24/7 experience instead of going to a concert, enjoying for two hours, and then forgetting about it after a few weeks.”
Bernard added that there has been a fundamental shift in what players can do over the past few years as well as a shift in the average gamer based on mobile adoption. People are able to have a social/hardcore gaming experience almost everywhere today, and mobile-native gamers now outnumber those on console. Bernard stated, “at Zynga, they’ve actually done studies with people with some of their players that say, ‘hey we’re not gamers.’ Then, they get on their phones and see they are playing Words with Friends.” The goal is to design broadly appealing games that can be marketed to everyone rather than self-defined or specific segments of gamers.
The discussion then transitioned to discuss the financial implications of the past year for studios. Over the last year, there have been a series of high-profile M&A transactions from large studios such as Zynga, Embracer Group, and EA, culminating with Microsoft’s recent announced acquisition of Activision Blizzard $68.7 billion. Many of these acquisitions have been talent acquisitions, as there is not an immense pool of talented AAA developers.
“Balance sheets are healthy, and so companies are using them accordingly to beef up for next phase of growth over the next two or three years. [I’ve] seen this in the industry for 30 years,” according to Peter. If the positive momentum and healthy returns continue for gaming, then consolidation will continue.
At March Gaming, we love the creativity, storytelling, exhilaration and passion that comes with building the next big gaming business. As enthusiastic life-long gamers, we are excited about the future of the gaming industry, and look forward to working with entrepreneurs that are building industry-leading content, technology and platforms.
For more information on the past and future of gaming, check out the entire discussion: