Research about a changing video marketplace tells us more than 30% of U.S. adults now maintain a subscription to a video streaming service. The penetration level is especially impressive among younger consumers, and the total population of users is growing by the month.
Before you toss this aside as one of those “I already knew that” metrics, here’s the punch line: The 30% figure from Deloitte’s 2019 Digital Media Trends Survey is the penetration level for video game subscription services, not Netflix-style SVOD. For millennials, game-subscription penetration is even higher, with 53% of the population paying for a service like Google’s Stadia or Sony’s PlayStation Now – roughly twice the current penetration level for Disney’s Hulu.
Why should video industry participants care? One reason is that video game services vie for attention on the same glass surfaces where TV networks and SVOD services jockey to commandeer screen time. One thing the gaming enthusiast who’s locked into a four-hour Overwatch marathon isn’t doing is watching streaming video.
The competitive role of video gaming is coming into sharper relief as financial transactions provide a sense of momentum. This week Bloomberg reported a new investment funding round valuing Fortnite developer Epic Games at $17 billion – roughly equal to what investors think the parent of Fox News is worth. Electronic Arts, the maker of Madden NFL and The Sims series, is worth $36 billion based on closing stock prices earlier this week. That’s more than 3x the market capitalization of television’s Discovery Communications. The superior performance of game companies during the recent stock market upheaval could give AT&T pause as it reportedly considers selling its Warner Bros. Games unit for as much as $4 billion, per recent published reports, to raise money to pay down AT&T’s debt.
Next? Subscription-based gaming deserves attention because at an elemental level providers do the same thing that Netflix, Disney+ and CBS All Access do: collect a monthly fee for the ability to enjoy moving pictures and sound on glass screens. What’s more, there’s a steady convergence of the two mediums, as video game streaming services like Sony’s PlayStation Now integrate traditional television offerings alongside game access. Another example is Amazon’s Twitch, which has made a business out of pairing video gaming with video streaming content. A report released this week by investment researcher Needham & Co. estimates Twitch generated $1.49 billion last year from selling subscriptions.
The kinship between video games and video streaming is reflected in a secondary finding from Deloitte: More than half of millennials pay for both a subscription-based gaming service and a video streaming subscription. Knowing that, it’s not difficult to make a leap of logic. Why not marry both into a single app? If that happens, and there’s a further melding of mediums, the competitive concern is that video game streamers may be able to integrate traditional television storytelling faster than traditional television providers can add gaming experiences. Should these two form factors continue to merge – with subscribers able to both play games and watch content within a single app – legacy television might struggle to, as the gamers like to say, level up.
