Variety Presents: Gaming on TikTok Leadership Summit featuring conversations with executives and creatives on the leading edge of video games, entertainment and content.
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00:00You know the Variety brand, you may not know the Variety Intelligence Platform brand.
00:05That is a market research extension of Variety that I launched about three, four years ago.
00:11And we dig deep into the issues that matter most to the industry.
00:15So, you better believe when it's talking about the booming growth of the video game business,
00:21talking about social media, social video in particular, these are the things that we dig deepest into.
00:28So, what I'm about to share with you is some of the charts and data that we've assembled from two of our recent reports on this subject.
00:38And just to give you a sense before you drill in further in the day on these subjects, a bit of an overview.
00:45So, we got to start with the global games market, which is pretty incredible when you think about that this is now projected to grow to a north of $200 billion business.
00:59But as you can see from that little shelf between 2021 and the last year, it's not guaranteed to just go up and up.
01:09We saw disruptions like the pandemic, which once that sort of obviously with so many people sheltering at home and such, that sort of drove consumption very strongly.
01:22But once the pandemic came away, there was a bit of a fall off.
01:27Nevertheless, still poised for a lot of growth.
01:30This, of course, is data that includes PC, console, and mobile.
01:36And just so you know, for gaming across those three platforms, PC and console together equal about as much as what mobile is.
01:46And mobile is the big one.
01:48However, mobile also is in a slight decline right now.
01:53But still, we think that coming out of 24, you're going to see more growth.
01:58And also, when we're talking about global, gaming truly is a global business.
02:03Actually, if you look at it on sort of a continent by continent basis, the U.S. is actually from a consumer base the smallest when you compare the amount of gamers out there to what's going on in, say, Asia or Europe.
02:18But from a revenue perspective, I think only Asia is greater than the U.S., which is about a $50 billion business on the U.S. all in.
02:31Actually, I'm going to skip ahead first to this consumer spend, because it's obviously a big part of what's going on here in terms of the growth of the business.
02:40And it's a mix of content, hardware, and accessories.
02:45And what's interesting is 2024 was actually, or it's not over yet, shaping into a bit of a down year.
02:53Nevertheless, only slightly down from the previous year.
02:57And with 2025 coming, there is a lot of bullishness for growth.
03:01You might realize why.
03:03Think about some of the big launches.
03:05Grand Theft Auto 6 is, I mean, this is going to be the biggest launch in game history.
03:12You've got a new platform coming from Nintendo.
03:15Doesn't mean we haven't seen some hits this year.
03:18Power World in mobile, of course, would probably be a good example.
03:22So the video game business didn't have the best year from a sort of hit-generating perspective, but there was some.
03:30And so that's something to take note of as well.
03:34Is there anything else I want to add about consumer spend?
03:38No, I mean, I think that's, you know, I think there's just a bullishness for 2025.
03:43But I also want to go back to M&A here because another thing that I think was big in terms of growth in this marketplace is live services.
03:54You know, microtransactions in game.
03:57This is such a tremendous growth stream, revenue growth stream for major companies.
04:05And the reason I call that out when I'm talking about M&A is, first of all, obviously, huge deals going back several years.
04:13In 2024, I don't think we necessarily saw deals of the greatest volume.
04:19But in terms of just the number of transactions that were taking place, stronger than ever.
04:25Private equity actually played a big role in a lot of the M&A that we have seen this year.
04:31And we don't expect that to stop anytime soon.
04:35It's been, I think, about three or four straight quarters of pretty robust growth in the amount of M&A in this space.
04:43So something certainly to keep an eye on.
04:47Unfortunately, however, I'd be remiss in not pointing out as well that layoffs have been a big part of the video game industry in 2024.
04:57A really remarkable number.
04:59And I think it's precisely because of the amount of M&A.
05:02Other factors as well.
05:04But we all know the story here in Hollywood as well.
05:07When companies come together, unfortunately, what happens?
05:11So let's keep going.
05:13I want to talk about the intersection of video games and Hollywood.
05:18Which, I mean, it's really remarkable what's going on in the past few years.
05:23Especially for those of us with longer memories of what's gone on in this space.
05:29It used to be that, you know, video games as intellectual property.
05:33Which, as you can see, IP licensing is just one area.
05:37That has, of course, exploded in recent years.
05:42And I'll show you more on that in a bit.
05:44But first, it's not just about IP licensing.
05:48There's so many different ways that companies, whether they're media or tech, are in the video game business.
05:57Netflix, obviously, a very prominent example.
06:00What we've seen in terms of the growth they've driven on their platform by adding games.
06:06I mean, I think it was unthinkable that Netflix would have done something like this, I don't know, three or four years ago.
06:12But they're smart.
06:14You know, when it's talking about where particularly young demos are, you can't just be in the video entertainment space.
06:23Gaming's got to be part of the mix as well.
06:26And production companies like Bad Robot that you would think have nothing to do with this space, they're there as well.
06:33So I think it's going to be interesting.
06:36And I would point specifically to Disney's investment in Epic earlier this year.
06:43That Hollywood knows, I think, that it's been sort of behind the ball in terms of how involved they've been in the video game business.
06:51And I expect there to be some more integrations of various kinds, whether it's acquisitions or whatnot.
06:59Precisely because at the end of the day, video games and video entertainment, it's all about mindshare.
07:06And you can't be precious about, oh, we're not in that business.
07:10It's just the same thing with TikTok or other social media.
07:14Social video, video games, and premium entertainment are all vying for young eyeballs.
07:22I had mentioned intellectual property.
07:25And that's really where a very unlikely explosion is.
07:29Think back to maybe 10, 15 years ago.
07:34Remember the title Prince of Persia, which got turned into a Hollywood movie that was this famous bomb that actually took down that franchise as a video game property, too.
07:46It just seemed like these businesses could not get on the same page and create great IP.
07:53But, man, as you can see from the examples here, that has changed tremendously from the emergence of Fallout on Amazon, The Last of Us on HBO Max.
08:04Which isn't to say that everything these industries touches turns to gold when they merge together like that.
08:13Recently, I think Borderlands was an example.
08:16Then coming out of Lionsgate of a property that did not do well.
08:19So don't want to say it's entirely bomb proof.
08:22But video games are perhaps second only to superheroes in terms of the value that in this day and age in Hollywood as IP.
08:34And I do not think that that is a trend that is going to burn out anytime soon.
08:39I mentioned superheroes.
08:41We did see some serious, let's say, erosion in the value of those properties in recent years.
08:47Although this summer it came, I think, roaring back.
08:50That said, I think video games is just at the beginning of that kind of arc in terms of, I think, years and years of lending itself to very successful IP.
09:02And take your pick.
09:04What's also interesting here is so many different kinds of companies getting involved.
09:09And I think those who haven't yet still will.
09:12So a very hot area.
09:16So let's turn now to the social video side of the equation.
09:20We've sort of set the stage on the gaming front.
09:23We put out a report, Variety Intelligence Platform, just a month or two ago called The Race to Replace TV.
09:32And we dug deep into the data talking about the growth of social video, which in this weird way, kind of in the same way that Hollywood, I think, has always sort of bucketed or ghettoized gaming as this other thing.
09:50Social video as well, I think, has sort of been always sort of, oh, well, that's a separate bucket of content from premium entertainment.
09:57We don't need to worry about that.
09:59Of course, everyone in Hollywood does.
10:02Via social video, we have data from that report that will show you that it is actually beginning to cannibalize premium entertainment.
10:12And I think that's a trend that's just beginning.
10:15And if you want to dig deeper into that, I recommend finding that report.
10:18Find me later.
10:20As I'm walking around here, I can show it to you.
10:22In this particular instance, we used a data provider called Midge that has an incredible set of data, very, very granular, that allows you to make apples-to-apples comparisons in terms of all different kinds of entertainment and how they are doing on a generation-by-generation basis.
10:45And the truth is, as you look at this data, not particularly shocking that TikTok is so well represented in terms of the younger demos, Gen Alpha, Gen Z.
10:57Instagram, obviously, seems to have a very strong lead with millennials.
11:04But I think as you all know, when it comes to demographics, it's really all about the younger audiences.
11:10And the data here speaks for itself.
11:13TikTok is very well positioned in that regard, though not alone.
11:18Other players as well that are active in this space.
11:23And video consumption is pretty strong.
11:28When you look at what this data shows, this is actually from eMarketer taken from earlier this year, the gulf, the gap between just total social networking time and the social video consumption within that time, that gap closes a little bit more every year.
11:48And I think you as social media users, you probably see that in your own feeds, how in recent years video has become so much more dominant.
12:00TikTok, of course, it is the main attraction.
12:04And this, of course, is not just TikTok.
12:07This is all the major social media platforms.
12:11They're all riding this wave.
12:13And to some degree, I would argue that they've taken their cues from TikTok in that respect when you think about the short video trend in particular.
12:22And the way that, say, Instagram or others with reels have sort of, frankly, copied the TikTok format.
12:30That said, I think there's also another interesting battle that TikTok is in as well but may not necessarily be as well positioned as, say, YouTube, which is long-form content is more and more becoming a part of the video diet for social media consumers on all platforms.
12:50But think about what that means in terms of social media and the typical distributors of Hollywood entertainment, both in long-form video.
13:04Obviously, Hollywood's doing it a much higher, more premium, some might say more costly effect, but video of all different kinds of durations is resonating on these platforms.
13:18And that data is undeniable.
13:21And, of course, social video advertising, that's really the name of the game here.
13:27And the data, of course, is pretty clear that this is where the growth comes from.
13:33Social video advertising, of course, is just sort of one bucket across a very broad range of places where ad dollars go.
13:43And you better believe that this is a zero-sum game.
13:47This is not as if there's an infinite amount of dollars in a rising tide.
13:52Linear television is probably losing money to social video advertising.
13:58There is just only so much dollars to go around.
14:03And this is going to be one of the big growth areas.
14:07And that's why I think TikTok is well positioned here.
14:11And gaming, in general, is well positioned here.
14:15You've all seen just the tremendous value that gaming is, not just as an activity, whether you're on a console or mobile, but when you think about sort of eSports and the like, watching others playing gaming, tremendous.
14:32And it's really on these social platforms where it all happens.
14:37One last thing I wanted you guys to take a look at was Hollywood knows what's going on here.
14:44And in terms of all this growth, and they're not just going to sit on the sidelines.
14:50And so the video uploads that we're tracking here is the kind of content that major streaming services are putting on these platforms to market this content.
15:03I'm sure you've seen not necessarily whole episodes, but chopped up into particular little clips.
15:09There's been some famous examples going past the past 12 months.
15:14TikTok is great discovery for Hollywood entertainment.
15:18And I think, obviously, the same is probably true for the gaming space.
15:23So no reason that we're not going to see gaming content follow this.
15:28Of course, TikTok is not alone in that respect as well.
15:32Anyway, that's all I've got.
15:34If you have any questions, I could maybe have time for one.
15:37But otherwise, I'm going to turn it back over to the folks.
15:42Okay.
15:44Yeah.
16:12I think just like media companies, gaming companies are going to be watching this election with great interest because they know who is in office is very much going to dictate the climate for the M&A market, whether it's going to be conducive to these kinds of deals.
16:28So, you know, I think we'll have a lot more clarity come early 2025 and there's a new president in place.
16:37I'm not going to make any predictions, but in terms of a president who comes in with a more deregulatory bent, yeah, sure, that's going to have a major impact here.
16:49I would not be surprised to see continued M&A, major gaming M&A activity as well as in other industries.