Impact of the COVID-19 pandemic on the video game industry


The COVID-19 pandemic has had a substantial impact on the video game industry. The video game industry has been impacted by the outbreak in various ways, most often due to concerns over travel to and from China or elsewhere or related to slowdowns in the manufacturing processes within China.

Overview

In contrast to many other economic sectors that are drastically affected by the pandemic, the video game industry has been generally more resilient to the pandemic. Most video game developers, publishers and operators have been able to maintain operations with employees working from home remotely to sustain game development and digital releases, though as movement control orders persisted, some productivity issues have arose. Further, with many people globally at home and unable to work, online gaming has seen record numbers of players during the pandemic as a popular activity to counter physical distancing for society, a practice recommended by the World Health Organization which helped boost revenues for many companies in the gaming industry.
There have still been negative impacts on the industry, notably with major trade events like the E3 2020 cancelled or postponed which may have impacted relationships between the smaller developers and publishers. This has particularly impacted indie developers who typically use these events for face-to-face meetings with potential partners to gain funding and publishing support, and caused them to have to delay or cancel projects. Further, many esport leagues had to alter plans for their games, transitioning from live events to remote play or cancellation altogether. Portions of the sector that relied on physical products, such as retail stores and peripheral makers, as well as those dependent on in-person activities such as quality assurance through playtesting, ratings evaluation, and marketing, also struggled with global stay-at-home orders.
The origin of the pandemic in China is also expected to impact the supply chains for electronics for the year which may limit hardware availability once the pandemic begins to slow down. This may impact plans for Microsoft and Sony Corp. to release their next-generation consoles, the Xbox Series X and PlayStation 5 in the part of the year.

Cancelled or affected industry events

Many trade events and expositions for the industry have been cancelled or postponed due to banned against public gathers during the pandemic. Of note, the largest trade event E3 2020 was ultimately cancelled by March 2020 by the Entertainment Software Association after several weeks of doubt. However, on March 11, 2020, the ESA affirmed that they cancelled the physical E3 show amid the fears of the outbreak as they are looking to arrange for virtual presentations from its exhibitors. However, by April 2020, the ESA determined that the logistics of arranging a virtual event was too difficult due to disruptions from the pandemic, fully cancelling the show in 2020, but with plans in place to return in 2021. The ESA offered the E3 website to help partners to support product announcements in lieu of the E3 show. Additional events have been arranged in lieu of E3, with Geoff Keighley having arranged a four-month Summer Game Fest with several game developers, publishers, and other industry leaders to provide announcements and game demos from May to August 2020 as a replacement for the E3 and other cancelled events.
Other cancelled or postponed events include:
Most esports events are based on online games, but are typically played in local arenas to reduce network latency between players as well as to provide an audience. The pandemic caused many of these vents to either become cancelled or switch to a fully online format for the year:
On the other hand, while many traditional physical sports games, seasons, and playoffs were cancelled due to the pandemic, the organizing leagues turned to video game equivalents as alternative entertainment, using the professional athletes from their leagues within the games. Some examples of this included:
Television networks which normally would have shown the sporting events that were cancelled have turned to both these replacement sports programs as well as other esport tournaments as replacement programming during the pandemic. On June 14, 2020, BBC reported that about 22 million sports viewers turned to virtual races when lockdown was put into place. Questions over the future of esports are rising with Formula 1 returning in July 2020.

Hardware production

Generally, sales of video games have increased as a result of stay-at-home and lockdown orders from the pandemic, as people turn to video games as a pastime. The NPD Group reported that video game sales in North America in March 2020 were up 34% from those in March 2019, video game hardware up by 63% - which includes more than twice the number of units of the Nintendo Switch console. Net spending across the first quarter of 2020 in the United States reached, up 9% in 2020 compared to 2019 according to NPD. Such an increase at this point, near the planned end of the eighth generation of video game consoles, is unusual and attributed to actions of the pandemic. By July 2020, NPD Group that total sales of video game hardware and software within the United States in the first six months of 2020 reached, the highest since 2010.
Some specific examples of game software and hardware sales affected by the pandemic include:
Game publishers and developers have expressed concerns that further extensions of the movement control orders from the pandemic may incur additionally delays. One major factor that may cause delays is the ability to capture voice acting without access to studios during physical distancing for society, even though some of members considering working from residence remotely to avoid troubling situations. Another factor may rise from any possible delays in the release of the upcoming console hardware for next-generation due late in 2020, as some publishers would only want to release milestone titles alongside these console releases.

Services

Because much of the world's population is quarantined due to the pandemic, video game playing and other Internet use has grown greatly. Steam, the main digital storefront for personal computer video games saw over 23 million concurrent players during March 2020, surpassing all previous records while the streaming service, Twitch saw over three billion hours of content watched over the first quarter of 2020, a 20% increase from the previous year's. Microsoft reported a substantial increase in users of its Xbox Game Pass service in the months of March and April 2020 bringing it to over 10 million subscribers. GeForce Now capacity was temporarily exhausted in Europe before additional server capacity was added.
The additional bandwidth from video games and other Internet services created concerns that critical bandwidth would not be available for medical and other key infrastructure elements necessary to mitigate the spread of SARS-CoV-2. To help reduce demand during peak hours, the Akamai content delivery network for many video games and major digital storefronts such as Xbox Live, PlayStation Network and Steam capped download speeds and encouraged the users to download at off-peak hours.

Retailers