David Fenlon, Proxima GroupDavid Fenlon is a consultant at Proxima Group, a company that specialises in advising clients on their third party partners. They have conducted some in-depth research on where some main global brands and publishers have been investing their budgets for the 2012 to 2017 period, and have found a number of industry trends which will have an important impact on both gamers and esports.Overlaying this research with their experience of working in both the music and gaming industries they predict that prices for mainstream games will drop significantly; pricing to attend esports events will rise rapidly; and that there will be a general leap forward in quality of games in the next 24 months.Below is a guest piece by David Fenlon of Proxima Group. Commoditization of gamesAs gamers we appear to have split personalities when it comes to our gaming demands.On the one hand we expect an established franchise to blow our collective minds (and we complain bitterly if even a tiny aspect does not meet our expectations), whilst at the same time being perfectly happy to spend hours on a mindless app which has atrocious gameplay.Established publishers previously ignored this odd behavior as they could point out how much better their game was compared to their mobile counterparts and charge accordingly. However, the lines between the two standpoints are blurring as everything becomes more digitized, and more companies exploit this demand discrepancy. This changes the dynamics of the market and is very good for gamers in terms of bang for your buck.Gameplay on mobile has come a long way since Snake 2The quality of gameplay on smartphones is improving very quickly. Comparing Honour of Kings to League of Legends (both part of the Tencent portfolio) is a case in point. There is very little difference between them visually, and the gameplay is practically identical.The complexity of the more intricate console games are out of reach of the smartphone segment of the market for the moment, but one wonders how long this will last. This does not bode well for the high -nd console publishers whose dominance is being challenged by the converging of these markets.It seems as more money flows into mobile from a rapidly expanding audience this converging trend will continue at pace.“The good news is that buying games is going to get cheaper and the potential experience is going to get a hell of a lot better”Gamers will pay less and get a better experienceSo what does this all mean for gamers? Well, the good news is that buying games is going to get cheaper and the potential experience is going to get a hell of a lot better.Reports from the media world have suggested that we have hit content saturation point i.e. we don’t have the capacity to consume more content across any channel, even if we dual screen. So, the landscape has changed from grabbing a gamer’s attention to retaining it. This means that the current price of c. £50 for an installment of a franchise is unsustainable because the audience will drift to far cheaper mobile games which derive their profits from in-game revenue. Crucially, once they are hooked in, they’ll stay there. So the big franchises are going to have to drop their prices and try to make up the difference from revenue in-game.Also, Proxima’s own research into the big players shows that publishers are piling money into R&D. Annual R&D budgets have risen in excess of 40% over the last five years and this trend is accelerating. It’s an arms race to provide the most awesome experience possible. This is great for gamers as they’ll be paying less for a much better experience.“Our experience from the music industry suggests that when the big publishers lose margin on the main product sales, they raise prices at live events to drive growth”It also suggests that meaningful in-game purchase enhancements are being considered from the outset of production, rather than as an afterthought to screw more money out of the consumer.Unfortunately, esports will become more expensive very soonSadly, these trends are not necessarily good news for those who want to continue to attend or watch esports cheaply.Our experience from the music industry suggests that when the big publishers lose margin on the main product sales, they raise prices at live events to drive growth. This is particularly acute when they engage someone else to organise the event for them. In the instance of esports both professional teams which have been franchised, and series organisers tasked with delivering the event, will be looking for their money back quickly.That said, esports are great advertising opportunities for brands, meaning that budget on the experience is likely to go up as well. So, you’ll be spending more but the event should be better. The sun is shining, so it’s time to make hayIt turns out that the industry catering to gamer’s “odd behaviour” has created a situation where we as gamers have more choice, better prices and better gaming experiences. This is all happening whilst esports is still relatively cheap. However, this is only a transitional state, not a permanent one. Once a new order is established prices will rise again. It’s time to take advantage whilst the going is good!
David Fenlon – Proxima Group – The price of esports will rise