To See the Future of Video Gaming, Look Online w/ L.E.K.’s Dan Schechter


There is a bit of a panic
in the market right now caused by a great success. So Fortnite with Epic Games
is a great game. A game that has
proven this model of free-to-play action games. And it sucked some
of the revenue and sucked some of the wind
out of EA and Activision and the stocks are down. So there’s a pause
in the market, people are worried
about gaming, and people are thinking
about bailing but this is just
a small bump in the road as you have a transition between
different types of gaming. First, this free-to-play model
is opening up new demographics. Poor, young people
who don’t have the money for shrink-wrapped games
can get into the ecosystem. That’s gonna be a big expander. The other thing
that’s expanded the market is smartphones. The iPad Pro
has the same processing power as an Xbox. So you’re able to get
action gaming on new portable devices and instead of tens
of millions of people having access to a console game, hundreds of millions of users are available to the game. So that’s gonna drive
huge new growth on a go-forward basis as the processing power, the graphics, the sophistication
of the games, the action of the games, just get better and better and are accessible
to more demographics and to more devices. There are few businesses
like this: 20 years of over 10% growth; $140 billion in total sales
in the ecosystem; a product that has
universal appeal; a product that is
expanding its demographic not just to youth
but everybody; investment by the biggest
tech companies around, not only
the mobile phone companies like Samsung and Apple, but the big tech giants
like Microsoft and Google who are investing
in their games divisions. Amazon, Microsoft, and Google are all putting
cloud-based processing, so those big servers
you’ve heard about in the cloud for processing
your credit cards, et cetera, are now being devoted to gaming. So you’re going to be able to
run off of an Amazon web server your favorite action game
on your mobile device. And you have this new thing
called 5G. That’s a fancy term
for a better, more responsive mobile phone
network in the cloud that allows what’s called
faster response, or the technical term
is “latency.” So that when you click
on the game, there’s a fast response
from the game. All this is happening right now and there’s a pivot happening where you have new people
coming into the ecosystem, new processing power
putting into the network and these cloud-based servers, lower latency network, all of these
being mixed together that is going to drive
even faster growth and even more people
into the ecosystem.


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