At the moment, all signs are pointing to a recession in 2023 — and the gaming and esports industries are already feeling the pressure.
In esports, brands such as BMW, once a major sponsor of organizations such as Fnatic and OG, have pulled away from the space, spooking investors and leading some observers to proclaim that an “esports winter” is coming. In BMW’s case, that means cutting the brand’s esports partnerships spend to exactly zero dollars — at least according to the brand rep who told Digiday that “BMW has finished their activities regarding esport[s] from end of 2022 on.”
And while the broader gaming industry has long been perceived as somewhat recession-proof, the rise of free-to-play, ad-supported games such as Roblox threatens to subvert these expectations.
As economic headwinds grow stronger, all eyes are on the gaming audience as developers and esports orgs alike wait to see how they might impact gamers’ spending habits. To shed light on this critical topic, Digiday worked with YouGov to poll gamers on how they might respond to a recession, supported by key data points provided by GWI.
Gamers are split between free-to-play and premium titles
According to a survey of 19,630 gamers toward the end of 2022, YouGov determined that interest in free-to-play games and interest in so-called premium titles, which offer higher production value for a fee, was nearly evenly split among the cohort. (YouGov’s survey went out to thousands of self-identified gamers across international markets such as the United States, Europe, and Asia, with respondents providing their answers via email.)
48 percent of gamers indicated that they were interested in free-to-play games, while 53 percent stated that they were not interested. It’s worth noting that gamers’ preferences don’t seem to be trending in either direction, either: 12 percent indicated that their preferences had shifted toward free-to-play, but 11 percent stated that they had lost interest in free-to-play games over the past two years.
Among gamers who prefer free-to-play, the price of premium games and consoles is the main factor
Of the 9,271 respondents who responded to a question about why they were interested in free-to-play games, 3,248, or 35 percent, indicated that their direct reason for prioritizing free-to-play games was the prohibitive costs of either premium titles or gaming consoles and PCs. Another 33 percent indicated that they preferred to play many small games over fewer large ones — another cost-based factor, as each individual premium game purchase typically costs at least $60.
On the other hand, only 15 percent of gamers said they preferred the gameplay of free-to-play titles. It’s clear that the highest-quality gaming experiences are happening in premium titles, not free games — but the rising costs of console games could keep interest in free-to-play high as a potential recession gets closer.
“When a lot of us in the industry think about premium games, we ultimately jump to the $69.99 PS5 titles — but if you have people who are, for example, mobile-only gamers, they would actually think about a premium game as a $2.99 paid no-ad game, as opposed to just the free version,” said YouGov head of global gaming and U.S. sports Nicole Pike. “There’s some kind of underpinnings of what platform they prefer to play on, and that helps to drive things — so we’ve seen a ton of data that shows a direct correlation between only wanting to play free games and being a primarily or exclusively mobile gamer as well.”
The majority of gamers who avoid free-to-play titles don’t like seeing ads in their games
It turns out gameplay isn’t a big source of concern for the gamers who aren’t interested in free-to-play games, either.
Only 4 percent of respondents to this question stated that their distaste for free games was a result of the superior gameplay of premium titles. Gamers made their preferences clear: A whopping 66 percent said that they had avoided free-to-play titles over the past two years because they didn’t like seeing advertisements while playing.
With free-to-play on the rise, console manufacturers such as Sony and Microsoft have increasingly begun to view in-game advertising as a promising potential growth area, with both reportedly starting to create their own in-game ad departments in 2022. But if brands want to start truly placing ads inside premium games the way they are currently placed in many free titles, game developers will have to determine how to serve them without putting a bad taste in gamers’ mouths.
Monthly spending on games is decreasing
According to data provided by GWI, the amount of money that gamers spend on games and in-game purchases has decreased since Q4 2021, though not precipitously. Although spending increased across the board between 2020 and 2021, fewer gamers in the United States and Canada spent more than $50 on games per month between 2021 and 2022 — a statistic that inherently reflects a decrease in purchases of premium titles, which are almost always priced at $60 or above.
While this data doesn’t include gaming-related products such as console peripherals or gaming accessories, it certainly indicates that gamers are spending less money on their pastime of choice, which validates developers’ embrace of in-game advertising and free-to-play as the business models of the future.
“All told, it’s a mixed bag. Overall consumer confidence is down and is having an impact on the gaming sector, but the signals aren’t completely clear,” said Chris Beer, a data journalist at GWI. “I’d say the big purchases — of things like consoles and gaming PCs — are likely to fall, but the number buying individual titles or microtransactions will be less affected. Gamers may cut back their monthly budgets, but I don’t think they’ll stop buying completely.”
Why gamers are flocking from premium titles to free-to-play, ad-supported games in this unstable economy