Play to Connect: Gaming is Engendering Social Connection in the Age of ‘Shelter in Place’
By all accounts, the U.S. gaming industry is booming due to shelter-in-place ordinances systematized throughout the country. From video game consoles, like Microsoft’s Xbox or Sony’s PlayStation, to mobile apps and board games, consumers are turning to gaming not only to escape the onslaught of COVID-19 headlines, but also to connect with friends and family safely and responsibly.
Video game consoles have reported large spikes in usage. Sony recently reported throttling game download speeds for its PlayStation platform in order to “ensure internet stability.” Microsoft’s Head of Xbox, Phil Spencer, commented on Twitter that “usage is up on almost everything,” referring to the many online titles offered on the platform. Steam, an independent digital distribution service that allows consumers to purchase games directly from developers, reported the highest average concurrent users ever on the platform last month, an increase of 20% over the same period last year. The popularity of traditional console games combined with the desire for players to interact has put a strain on supplemental communication services, like Xbox Live and Nintendo Online. These services, which allow gamers to chat, joke, and coordinate strategies live while engaged in multiplayer games, have reported multiple short-term outages over the past month due to the burden of increasing demand. While the ability for gamers to ‘meet up’ online is not new, the widespread shelter-in-place mandates make these services a unique draw for many who are looking to connect with peers. As such, the world of online gaming is seeing many new faces, as well as some familiar faces, more often.
On the mobile app front, the usage of gaming apps on phones and tablets is up 75% according to March 2020 data published by Verizon, with 23% of those users playing newly downloaded games(1). The increase in usage is double that of social media, web, or video streaming apps like Netflix, Amazon, and Hulu, over the same period. According to the data, card, word, and board game categories saw the largest increase among new game downloads, respectively. The increase in card and board game app downloads may correspond with a similar uptick in the use of virtual services, such as Zoom, Skype, or FaceTime, where friends and family can converse in real-time while also playing the same virtual board game. Or, as I can attest, weekly poker nights using Zoom to add some jokes and banter to our app-based group poker game.
Demand for traditional board games has also increased. Ravensburger CEO, Filip Francke, reported last week that puzzle and board game revenue is up 10x over March 2019 – numbers typically seen only at the height of the holiday shopping season(2). One reason for this may be as families and parents seek wholesome entertainment for their kids, board games have become a great, non-screen-based option. Another indicator of the popularity of board games can be found at Hasbro, whose stock has strongly outperformed the broader S&P 500 over the past month due to increased demand for the Company’s traditional board games such as Monopoly, Operation, Jenga, Life, and Risk. Capitalizing on their products’ increasing popularity, last week Hasbro launched the ‘Bring Home the Fun’ program, offering parents and caregivers resources to keep kids engaged and challenged and offering tips to ensure families stay connected during these difficult times.
Natural disasters and economic crises tend to accelerate underlying trends, business models, and business practices that were sustained by a strong economy. Gaming has been growing its share of consumer time and entertainment spend for years. As we find ourselves in the throes of maintaining social interaction during the age of COVID-19, gaming has developed from being a convenient form of escapism, to a useful tool for nurturing our social relationships. As we look ahead towards eventually exiting this crisis, it will be interesting to see if the accelerating trends in gaming and social connection maintain their trajectory going forward.
As consumer investment bankers, we are keenly following the evolution of online and in-person gaming in the age of COVID-19. For further discussion around the trajectory of consumer M&A and the current market environment, please feel free to reach out (Craig Lawson, firstname.lastname@example.org, Patrick Crocker, email@example.com, Gavin Daniels, firstname.lastname@example.org, Tara Smith, email@example.com, or Tom Gotsch, firstname.lastname@example.org).