Advances in technology are rapidly overhauling the way games are developed and played. From Nokia’s Snake to the ninth gen consoles, the industry has never stood still. Here we’re going to look at some of the biggest trends that will mold the future of the gaming industry.
Technological leaps such as the emergence of mobile gaming, AI, AR and VR, 3D graphics, and cloud gaming have led to an ongoing evolution in the industry. Computer games have progressed a long way from pixelated screens, becoming more life-like than ever.
The skyrocketing growth of this industry, in harness with the latest technology, is attracting innumerable investors, all wanting to enjoy a slice of the pie. By virtue of groundbreaking technology and widespread adoption, further expansion in the gaming area is inevitable.
It’s time to show you what is happening in this industry today and what technologies are contributing to its development.
What does the gaming industry look like at the moment?
The gaming’s commercial origins can be traced back to the 1950s when it was considered a technological anomaly. Today, the gaming industry leads the way as an adopter of new technologies. What first began as gaming consoles (attached to the television) later evolved into computer games and it has undergone a further revolution thanks to the internet and mobile versions of games.
Gaming has become a mainstream entertainment option for children and adults alike. In 2020, gaming outperformed sports and movies combined to become the biggest moneymaker in the entertainment industry, with reported revenues close to $179.9 billion.
In its latest report (April 2021), Accenture estimated that the combined direct and indirect value of the gaming industry now exceeds $300 billion. We can broadly classify the revenue streams in the gaming industry as follows:
- direct revenue from the sale of consoles, software and subscriptions, in-game purchases, and mobile ad revenues;
- indirect revenue from related industries: mobile, laptop devices, peripherals, gaming PCs, etc.
The sudden demand for mobile gaming and the urge for social interaction during the COVID-19 pandemic has contributed to the gaming industry’s rampant development. With about 2.7 billion gamers active worldwide, the opportunity for businesses to cash in is hard to resist.
Popular mobile games like Garena Free Fire and PUBG Mobile have capitalized on the heightened consumer popularity of Battle Royale genre games, which have seen a 42% YoY growth. Free Fire overtook PUBG Mobile in mobile platform downloads, garnering over 1 billion downloads. Free Fire also showed a steady and higher Q1-2021 revenue growth of $100 million compared to PUBG’s $68 million. Free Fire has gained popularity because of the adrenaline rush it provides to users over a short, action-packed runtime, and because it is technologically designed to be less resource-consuming than PUBG Mobile.
While companies like Nintendo, Sony, and Microsoft continue to innovate in the console space, tech giants such as Google, Apple, and Facebook are catching up via games using cloud and AI technologies. Additionally, technologies and trends such as 3D graphics, AR and VR, and blockchain are expected to shape the future of video games. Let’s take a look at each of them!
Augmented Reality (AR) and Virtual Reality (VR) are raising the stakes for companies building immersive mobile gaming experiences. While VR gaming has been around for longer, AR gaming has blossomed more quickly. VR is still a niche gaming segment, expected to enjoy its big moment over the next ten years.
AR/VR gaming: definition and examples
An augmented reality game superimposes a pre-created digital environment over the user’s environment in real-time. AR games require simple devices like smartphones, tablets, or portable gaming systems. Some more advanced AR games actually build a digital environment using the player’s surroundings.
Despite several prior attempts, AR games took off only with the release of Pokémon Go in 2016. This AR game used the smartphone’s camera, clock, GPS, and gyroscope to enable a location-based augmented reality environment. Since its launch, the free-to-download game has generated $3 billion in revenue, primarily from in-app purchases. It has garnered over 1.1 billion downloads and has an estimated 166 million active users as of 2020.
The stage had been set by Niantic’s Ingress Prime, launched back in 2013. This game made use of GPS to locate and interact with “portals”, which were designed to coincide with popular landmarks, much like the popular Pokémon GO. Ingress works on a freemium business model and generates revenue from in-app purchases. Ingress never hit it off unlike Pokemon GO and has only a modest 20 million downloads, but it still got people to come together to engage, socialize and spread social messages.
Virtual reality games immerse players in an alternative gaming environment with the help of special VR headsets. The gaming industry tried to implement VR in games as early as the 1980s. However, consumer-ready VR headsets appeared only in the 2010s. In 2013, the launch of Oculus Rift, a consumer-friendly, low-cost VR headset, marked the real beginning of VR in gaming. Shortly after, in 2015, Valve and HTC launched their HTC Vive, while Sony released its PlayStation VR in 2016. As of 2021, the top VR games are Star Wars: Squadrons, Half-Life: Alyx, Superhot VR, and Room VR: A Dark Matter, to name a few.
Half-Life: Alyx, for instance, has made a monumental impact in the VR gaming Industry by adding 950,000 VR headsets into Steam and popularizing the adoption of these headsets. Its marketability can be attributed to its unique design ethos, the synchronization of the mechanics with the VR system, and the storyline that addresses the prequel’s cliffhanger.
The current challenges for AR and VR
A few concerns are hampering the widespread adoption of VR among the masses. Firstly, the headsets are bulky and pricey. Developers are already working on these aspects, and we can soon expect low-priced, lightweight VR headsets to be available. Another concern is that VR gaming entails socially isolating experiences. However, experts believe that the future of VR gaming lies in VR gaming experiences that are both social and hyperreal.
The challenges in relation to the widespread adoption of AR stem from the fact that the user’s AR experience is quite limited in nature because a smartphone is unable to display visuals accurately. Disturbances can arise due to electrical signals in urban areas. Moreover, regulations concerning the collection, use, and processing of data are something of a gray area, which is having a negative impact on the adoption of AR technology.
Future of AR/VR gaming
The demand for AR/VR games spiked last year as people sought an escape from the restraints of the COVID reality. Reports estimate that the market could reach a staggering $26 billion by 2026. Since traditional gaming companies like Sony and Electronic Arts began to splurge on AR/VR, they have seen a steep rise in their stock price. Therefore, giants such as Amazon, Apple, Google, and Facebook are preparing to ride this growth wave by gambling in hot spaces like AR/VR game engines, consoles, and platforms.
AI in gaming
Artificial Intelligence (AI) is deployed in gaming to enhance the player’s experience. AI has a significant role in enabling developers to deliver console-like gaming experiences across multiple devices such as smartphones, tablets, and smart TVs. Whether it’s racing, strategy, or shooting, any game can have features enabled by AI.
What is AI in gaming?
AI in gaming refers to generating responsive, adaptive, and intelligent behaviors, particularly from the Non-Player Characters (NPCs). AI adds a unique feature to these NPCs — the ability to learn. This helps to make them act intelligently and creatively as if controlled by another human player. AI constantly records and tracks the behavior of the players and uses it to predict their future actions.
The use of AI in video games dates back to the 1950s. Most NPCs back then lacked the learning ability. Video game developers programmed the NPC’s behaviors but now, thanks to the evolution of AI and machine learning, developers can train games to study their patterns and processes for themselves. It means that AI games now shift control of the game experience to the player, by allowing the gamers’ behavior to help produce the game experience. This function is known as AI procedural generation: the game data is generated algorithmically instead of the developer specifically coding individual elements.
Examples of AI in gaming
AI not only personalizes the whole gaming experience but also saves on game design costs. These qualities put AI at the cutting edge of how games are developed and played. Some popular games that use AI are Counter-Strike, Need for Speed, Civilization, and Minecraft.
Counter-Strike has been making use of AI in its games by introducing bots. Bots are essentially AI-controlled player characters standing in for real players. By the systematic collection of feedback, CS has been able to develop bots with multiple aggression modes, each having its own skillset, precision, and accuracy.
Is there anything stopping AI in gaming from forging ahead? There remains this one important curb: game developers and designers want to limit the AI algorithm to ensure that the NPC can still be beaten by the player.
Predictions for the future of AI gaming
AI will continue to impact the gaming industry. With data becoming the new oil, AI algorithms are becoming ever more efficient. Maybe we can expect to see a massive shift to more advanced visuals and NPCs that could create their own storylines. Whatever happens, advances in AI will continue to make video games more challenging and exciting.
Latitude, Osmo, and Krike are prime examples of AI-based gaming startups. The trio has received whopping fundings of $3.3, $32.5, and $22 million respectively. The booming investments in these startups are a testament to the growing popularity of AI in gaming and its potentially big contribution to the growth of the gaming industry, which as a whole is set to grow at a CAGR of 12% between 2020-2025.
Blockchain technology has the potential to revolutionize the experience of developing, managing, and playing games. The idea of using blockchain and NFTs in gaming has not taken off yet, but it is reckoned to be a perfect combination because it promises to monetize the concept of gaming for players.
What is blockchain gaming?
Most games have an economy inside them in the form of assets or gaming currency. To date, these assets have always remained stuck inside the games. Blockchain and non-fungible tokens (NFTs) will allow players to own and transfer their in-game assets to the real world. Blockchain can also secure the user’s account within the games.
Blockchain offers to solve some legacy problems of the gaming industry. Firstly, modern games offer a range of in-app purchases. However, these virtual assets can be scarce and also lacking in transparency and verifiability. Blockchain enables the tokenization of these virtual assets and creates decentralized gaming asset markets. What’s more, the ledgers of these market transactions are open for everyone to verify. Secondly, NFTs can help store unique gaming assets in crypto wallets and even trade them in the open market. Lastly, phishing scams have to date plagued the free-to-play gaming world. Blockchain can create an immutable gaming economy, banishing these security threats.
Innovators like Atari and Enjin have already implemented crypto coins and NFTs to keep fraud at bay. Games like CryptoKitties, Spells of Genesis, and Gods Unchained have successfully adopted blockchain solutions within their environment. The Binance Smart Chain (BSC) became the most popular blockchain protocol for gaming in July 2021, with 658,000 unique users.
CryptoKitties owes its popularity to the fact that you can purchase, collect and breed your own cats with its proprietary “Cattributes”. Each cat is an NFT, the value of which moves with the market. In October 2018, CryptoKitties reached the milestone of 1 million cats bred, with a volume of close to 3.2 million transactions executed on its smart contracts.
Gods Unchained is winning fans because the gamer doesn’t need to incur expenses in order to play. In fact, players can actually earn money by playing with trading cards. Each trading card held by a user is an NFT with a real-world value based on the GODS token. A total of 6.8 million trading cards have been created as of September 2021.
The challenges of blockchain in gaming
The main challenges to the wider adoption of blockchain and NFTs in games are firstly the increased transaction costs, and secondly the convenience of centralized servers. Smart contracts do not sustain complex games, which are easier to develop on centralized servers.
Developers also need to dive deep into the storyline, graphics, effects, and the overall gaming experience to attract gamers who are looking for leisure activity and are not just focused on the collectibles aspect of it. Therefore developers must ensure that every individual game has different economic incentives. The best solution is to shape the blockchain’s functionality around the developers’ expectations of the game.
Future of blockchain gaming
With a few successful crypto games up and running, blockchain is already at the heart of the digital gaming era. The main reason for this is that blockchain gaming allows people to attach value to their time spent in gaming. With the increased adoption of blockchain technology, cryptocurrency, and NFTs, the crypto gaming industry is expected to explode over the coming decade.
The cloud has been a game-changer in the online gaming world and an indispensable advance on the traditional console or personal computer game. What makes it revolutionary is that it turns the gaming experience into an activity that needs only a stable internet connection and the devices we use almost every day.
What is cloud gaming?
Usually referred to as gaming-on-demand or gaming-as-a-service, cloud gaming uses remote cloud servers and streams instead of local devices to run games. With cloud gaming, there is no need to download games onto consoles or PCs. This not only frees up space on computers and gaming consoles but also makes games more accessible than ever. Additionally, the cloud allows gamers to pick up where they left off on AAA titles like Call of Duty or Counter-Strike.
Cloud gaming has been around since the early 2000s. At first, the technology and internet speeds were not sufficient to support them properly. The first cloud gaming platform, OnLive, was launched in June 2010. In the same year, Sony acquired another cloud-based gaming platform, Gaikai, and incorporated it into the PlayStation network.
Over time, the success of cloud gaming increased alongside the widespread adoption of the technology worldwide. Today, the cloud influences the way video and mobile games are created, delivered, and played. Keen not to miss out, Microsoft transitioned its Xbox gaming consoles to Xbox Cloud Gaming services in 2018. Accessible in 22 countries, its games were very warmly welcomed by users because they were run on powerful servers which reduced the load times significantly.
Similarly, in October 2020, Amazon introduced Luna, a cloud gaming service that provides all-you-can-eat game access, though currently, it is only available for users based in the US.
Apple likewise launched its cloud and subscription-based games bundle, Apple Arcade, in September 2019, accessible in over 150 countries. It is estimated that Apple Arcade subscribers will contribute up to around 10% of Apple’s consumer base and generate $4.6 billion in revenue by 2024.
Future of cloud gaming
With the introduction and adoption of the high-speed 5G internet services, the cloud gaming industry is expected to grow by a whopping 29% over the next three years. As rumored, the entertainment giant Netflix is also set to expand into the cloud-based video gaming market. With technology that could potentially mark the end of consoles, cloud gaming is geared up to change the face of e-gaming as we know it.
By the end of the 20th century, owning a mobile phone had become a ubiquitous necessity. With developments in mobile technologies, the first mobile game launched was the Snake by Nokia in 1997. This game was among the most played in the world. It was pre-installed in more than 350 million devices. Fast forward to today, the mobile gaming industry boasts a massive 2.5 billion players.
What is mobile gaming?
Mobile games simply refer to video games played on mobile devices. The term also covers games played on portable devices like smartphones, PDAs, tablets, portable media players, or graphing calculators.
With the evolution of the internet and applications, mobile games are now mostly downloaded from the app store. After the launch of in-app purchases on the iOS App Store in October 2009, monetization of mobile games started to escalate. Developers and publishers began earning through premium gaming applications, subscription models, in-app purchases, and in-app advertising. The demand for mobile games has shot up during the pandemic.
Currently, the mobile gaming industry is among the highest performing industries, with revenues close to $77.2 billion as of 2020.
Examples of the most popular mobile games
As of May 2021, the top-grossing mobile game was Honor Of Kings. Well known for its friendly and interactive community, it was boosted by Tencent, which made use of its huge user base from QQ and WeChat. These collectively led to player spending being close to $264.5 million.
PUBG is the second most grossing game, with players spending close to $237.7 million: its success can be traced to the enriching experience the game provides and also to the presence of a strong gaming community on various social media platforms. PUBG Mobile is frequently updated, thus maintaining the quality of gameplay and increasing engagement.
Mobile games have an advantage over other forms of gaming: the cost of developing them is lower compared to VR games, consoles, and similar models. At the same time, the publishers enjoy hefty returns.
Future of mobile gaming
Thanks to mobiles, games are now accessible from our pockets 24/7. With the widespread availability of 5G and 4K screens, we can only expect the mobile gaming industry to grow exponentially in the years to come. With growth projections close to $153.7 billion by 2027, mobile phones are undoubtedly where the future of the gaming industry lies.
With the development of groundbreaking technologies, the possibilities in the world of gaming have become boundless. The games that we play today have never been so fun, challenging, and compelling. What has fueled the fire of addiction is the concept of cross-platform games. Introduced in 2006, these games have become more and more popular over the past five years.
What is cross-platform gaming?
Cross-platform (widely known as cross-play) games are played by individuals online against others, regardless of what platform each participant is using. Cross-platform games are still in their early stages, but they already offer higher versatility and increased choice. However, it’s the cross-play feature itself that makes the game stand out from most other competitors.
Cross-platform is also the term used to describe games that can migrate across several platforms, be it an Apple or Android mobile, PC, tablet, or console. An important consideration for developers is that the gaming experience should remain consistent across all platforms. No single platform should give players an advantage over the others. As a result of this challenge, developing cross-platform games is definitely easier said than done.
Examples of cross-platform games
The most popular cross-platform games include Battlefield 2042, Call of Duty, Fortnite, Minecraft, Among Us, and Rocket League. Their success is driving the sector as a whole. At the same time, cross-platform game developers are striving to make their games cross-generation and cross-progression.
Cross-platform gaming gained popularity during the COVID-19 pandemic as it offered people a medium for socializing and interacting while the world was maintaining social distancing. The live-streaming of the gameplay also attracted a multitude of users and became a viral hit on YouTube and Twitch, with viewers immersing themselves in the tense environment, adventure, and shared sense of achievement that victory in these games can provide.
Among Us was one of the largest beneficiaries: it boasted 60 million daily active users in 2020, compared to just 1,800 back in 2018. Roblox added 50 million users to its original 100 million user base in 2020 and grossed almost 33.4 million daily active users, seeing a 100% YoY growth; it has also seen an 850% increase in its stock price following its IPO in 2020. Fortnite, another world-famous game, likewise witnessed a massive influx of users, running up a tally of 350 million in 2021 compared to 250 million in pre-pandemic 2019.
Cross-platform gaming and challenges
Ideally, all cloud-based games connected to the internet will be cross-platform. However, that remains a distant dream. The first hurdle is that developing cross-play games can get very expensive. The second is that developers need to consider a great deal more than just the smooth running of the game across platforms. Apart from the coding and programming, developers have to be prepared for the player’s input and to work out how that may interfere with other players’ actions. Put simply, developing cross-platform games is an experiment only big companies can afford to conduct.
Future of cross-platform gaming
The large-scale adoption of cross-platform games suggests that these are fast becoming the future of the gaming industry. The draw of thrilling, enhanced experiences is grabbing the attention of more and more players. The day is not far off when every game available online is cross-platform or cross-play.
The gaming industry has completely evolved in the past decade. The six most significant areas we have looked at are only set to grow in the years to come. With both traditional and non-traditional companies, from Apple to Google and Amazon, targeting the e-gaming industry, fierce competition will lead to the development of cutting-edge games, the likes of which we’ve never seen before.
As digital spending in gaming continues to rise, we will encounter awe-inspiring gaming experiences full of social interaction. There’s just one way forward for developers — and that is to capitalize and innovate with every new technology and trend, and to create hyperreal games that are both easily accessible and highly entertaining.
If you are looking to create an innovative gaming app, don’t hesitate to contact our professional team. PixelPlex developers who have honed their skills in AI, AR/VR and blockchain technologies over the years are always ready to help you develop your own gaming application. We will make sure that your game meets all modern trends.