Activate CEO and media analyst Michael J. Wolf chatted with Digital Journal’s Markos Papadatos about the gaming industry’s surge and why platforms are about to undergo a war that will transform our current ecosystem into digital hubs as we prepare to enter the metaverse.
What happens when technology, media, and e-commerce collide?
Streaming wars.
Wolf is the co-founder and CEO of the next-generation management consulting firm Activate Inc., which works with CEOs and senior management teams of the leading technology, media, sports, and entertainment companies to define strategies, drive innovation, and improve revenue performance specifically in the media landscape.
As the tech and media landscape swells to $2.5 trillion in the next few years, Activate is at the digital forefront of helping navigate clients in taking advantage of these growth opportunities.
Wolf, the former President, and COO at MTV Networks founded Activate in 2010, which has made a name for itself in its annual publication of Activate Technology and Media Outlook report, which provides the latest yearly insights on the state of technology, media, and entertainment industries.
The company released its seventh annual report, which focuses on the next era of gaming, the fight for the Metaverse, Super Users, cryptocurrency, NFTs, and e-commerce. According to the report, global technology and media spending surpassed $2 trillion in 2021, which is projected to balloon to $2.5 trillion by 2025.
The COVID-19 pandemic certainly accelerated gaming’s popularity, with a 29% rise in time spent gaming, according to Activate. Undoubtedly, gaming continues to be the fastest-growing sector and should see a CAGR of 8 percent, topping more than $220 billion in the next few years.
Despite the ongoing supply chain delays and semiconductor chip shortage, consumers still have that yearning to continue gaming, even if it’s not on the new Xbox-1 or PS5. It’s been over a year since the PS5 first launched, with consumers still struggling to get their hands on a unit, while Sony simultaneously struggles to get enough units to meet demand.
Are Gaming Companies the Strongest to Survive the Metaverse?
In our conversation, Wolf shared that in lieu of the hype surrounding the Metaverse, it is Activate’s belief that only gaming companies can succeed in the Metaverse, as it currently stands.
“The only viable path to the Metaverse is through gaming platforms,” Wolf added. “Anyone betting on a Metaverse platform other than gaming is betting on the wrong horse.”
Valued at over $2 trillion, the total market value of cryptocurrencies only continues to grow, with more Americans continuing to dip their wallets into blockchain technologies and NFTs, demonstrating how gaming will continue to be a significant driver in crypto and NFT innovation and proliferation.
Just look at the impact games such as Fortnite, Apex Legends, and Roblox – all of which have facilitated the battle royale climate and virtual currency opportunities for users.
However, not all players in the gaming economy are buying into the hype. Back in October, Steam, the world’s largest gaming platform, quietly banned the use of blockchain games and NFTs on its platform, raising new questions surrounding the ramifications of NFTs for videogame companies.
War, Good God Y’all!
Right now, we are witnessing the industry turn from selling individual games to offering subscription services on Google, Apple, and Amazon – hoping to compete with major gaming players including Microsoft and Sony.
“Activate found that 58% of gamers use or intend to use gaming subscription services, while 38% use or intend to use cloud gaming services,” Wolf explained.
This assessment can be evidenced by the increase in the number of virtual-reality headsets that were sold this year and throughout the pandemic. The firm further explained that spending on virtual reality and augmented reality games by U.S. consumers and businesses would grow eightfold between now and 2024, to $19.8 billion.
“We’re about to see the video game wars,” Wolf said at The Wall Street Journal’s virtual WSJ Tech Live conference. Right now, we are experiencing the streaming wars among and between major industry players, including Netflix, Hulu, Apple, HBOMax, NBC’s Peacock, and of course, Disney+.
“Every major technology company acknowledges that gaming is the next tech paradigm, where consumers will congregate, shop, and more. We are already enjoying many of these activities in-game, from concerts and weddings to university classes,” Wolf told Digital Journal.
Back in 2019, Wolf told CNBC that Apple and Amazon would emerge victorious in these streaming wars due to their services being so heavily relied upon by many of their competitors.
And two years later, his assessment seems to still hold true, adding that with Microsoft and Sony having virtually full gaming stacks, we can expect to see an increase in gaming M&A as others race to catch up.
The bottom line is that consumers have many choices now and they’re finally exercising their rights to consume content the way they want, where they want, and when they want. “There are trade-offs with every scenario, but the consumer is in control now, subscribing to multiple services simultaneously to create the bundle they want.”
