Business of a Gaming 101.
Understanding the gaming industry can be challenging for those outside of it. However, as we prepare to share our studio with the world using NFTs, it's important to understand how the industry operates and how games generate revenue.
To provide some context, let's consider the budgets and earnings of two popular franchises. Grand Theft Auto V, for example, cost Rockstar Games a staggering $266 million to develop. This makes it more expensive than most Hollywood blockbusters, including Avatar 2.
While some may wonder why a game would require such a significant investment, it's essential to consider the potential returns.
- For instance, Avatar 1 made $2.9 billion in all-time revenue.
- Avatar 2 has already earned over $2 billion worldwide.
Turning our attention to Grand Theft Auto V
- $800 million in just its first 24 hours, followed by $1 billion in three days.
- It has generated a lifetime revenue of $7.68 billion, making it more profitable than both Avatar movies combined. In fact, in 2019 alone, Grand Theft Auto V generated $5 million per day.
The gaming industry is bigger than Hollywood and music combined, making it a highly lucrative and attractive space for investors and developers.
The gaming industry is experiencing rapid growth, with projected revenues surpassing $365.60 billion in 2023. Moreover, revenues are expected to increase at an annual growth rate of 7.17% (CAGR 2023-2027), resulting in a projected market volume of US$482.30 billion by 2027.
This industry comprises several segments: console, mobile, PC, and online games. And it has a variety of monetization models to generate revenue from games, including one-time purchases, in-app purchases, subscriptions, advertising, and Game as a Service (GAAS) (the focus of MetaStudio). The success of Grand Theft Auto is not unique; Call of Duty: Black Ops 2 made $1 billion in just 15 days.
On a smaller scale, indie games, some developed by only 5-7 team members, such as Bastion, Valheim, or Cult of The Lamb, made over $20 million, and solo dev projects like Minecraft sold for a cash deal of $2.5 billion.
Furthermore, esports ad revenues are growing at around the same rate, and it is predicted that they will exceed a quarter of a billion dollars in 2023.
Typically, when assessing an industry, people examine the cause-and-effect correlation of what generates revenue, where sales equals money. However, the gaming industry has two main factors contributing to its prosperity, which are impossible to replicate in the movie industry.
- 2.Less Piracy
Games Respect YOUR Time.
The gaming industry has an advantage in respecting players' time, as games offer more flexibility than movies or TV shows, requiring a significant time commitment. With games, players can access fun in shorter, manageable sessions.
Why Gaming as a Service?
Piracy is a problem in the entertainment industry, and while gaming is not immune, it is less affected. Pirating a Playstation or Xbox game requires the device to be jailbroken, which can be challenging. However, it is easier to pirate games on a PC.
You can't pirate the service.
The GAAS model allows game studios to provide ongoing online services rather than a one-time product. With GaaS, games are frequently updated, and players can create user accounts and log in to servers to play, allowing for social gaming experiences and real-time connections. This model has become increasingly popular with the rise of massively multiplayer online games (MMOs) and other online multiplayer games like Fortnite. Additionally, the GaaS model financially benefits studios as it allows for multiple revenue models in a single game and ongoing support for games long after their initial release.
Overall, the gaming industry presents enormous potential for investors and game developers as it continues evolving and expanding with new technologies and platforms. However, developers must balance creativity and innovation with monetization strategies and business considerations to create games that attract and retain players.