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Rick Kelley has a unique window on gaming trends as vice president of global gaming at Meta/Facebook. And so we asked him what to expect in gaming in 2022 at our second annual GamesBeat and Facebook Gaming Summit. And he noted that some gaming trends are being pulled back down to Earth by gravity.
I interviewed Kelley a year ago at our previous went, and now the vice president of global gaming at Meta came back to talk about the latest research Facebook Gaming has collected on gaming during COVID.
A year ago, Kelley said with some relief that millions of new gamers had come into gaming during the pandemic to play games in lieu of other activities. Those players stayed with their new gaming habit and helped mobile gaming grow to new heights. (App Annie said that mobile games grew 20% to $120 billion in 2021; Facebook’s own data will be released soon). He noted there are still about three billion people playing games.
“Compared to last year, many of those trends have really sustained,” he said. “But playing time and spending habits are two that have actually slipped back, not quite to pre pandemic levels, but certainly have retrenched since 2020,” Kelley said.
The volume of downloads are down about 10% year over year in part because people may have less disposable time than they did when they were in the initial lockdowns. A lot of games have been delayed, and perhaps some aren’t resonating with the market.
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Game genres are shifting. Hypercasual is still the predominant in terms of volume of mobile game downloads. But there is more growth in immersive games, such as role-playing game, strategy, simulation games, and sports games. Hypercasual may be introducing players to more genres and that is turning those new players into more engaged players.
He noted we had huge acquisitions already with Take-Two buying Zynga for $12.7 billion and Microsoft announcing it would buy Activision Blizzard for $75 billion. That puts us ahead of the dollar value for acquisitions for all 2021 already. and it’s only January.
“How do these things create value for these companies? What new opportunities are they able to realize as a result of coming together?” Kelley said. “We’re watchingthese things come to life and it’s pretty exciting. And then you’ve got the emergence of all these new type of game monetization techniques, NFTs. What’s going to happen in that space How will they play a part in monetization efforts? And how will game design support a lot of those things? What type of games are going to really be able to leverage the NFT use and which are the ones that will try and maybe not see success in its initial stages?”
A lot of the activity around gaming, not just gameplay, but, for example, participating in gaming groups, watching gaming videos, talking about metaverse activities — those are all really growing, he said.
“VR has had a massive jump in interest,” Kelley said. “It’s been big in terms of [growth] of the installed base. We’ve had a really strong 2021, and we’re excited about what that means for .”
He noted that players are more diverse than every before, with many younger players and a higher percentage of underrepresented individuals. This means that game developers should keep diversity in mind when creating game characters.
“That emphasizes the importance of authentic character representation to really build a meaningful relationship between the player and the game developer,” Kelley said. “That seems to be a trend that’s really materialized this year. You’re seeing that be a real focus of developers.”
IDFA in hindsight
Kelley said there was a “massive shift” in the advertiser landscape in 2021. That was because Apple prioritized privacy over targeted advertising with its new approach to the Identifier for Advertisers (IDFA), where it made it easier for users to opt out of being tracked. This is why the game industry saw some “choppy waters” in 2021, Kelley said.
In terms of total downloads, hypercasual games slipped a little bit from year over year, and whether that’s the impact on user acquisition from IDFA, or maybe players are now moving into the the more engaged realms of more immersive gaming experiences.
“Nobody needed a crystal ball to be able to say that it was going to be a difficult year to have to navigate the impact of iOS 14 and what App Tracking Transparency (ATT) was going to have on people’s marketing efforts,” Kelley said. “The game industry was maybe 18 months further ahead than everyone else in the way they used data and the way the measured everything. So when you take some of that data away that we’re used to, that’s a material change that a lot of people to try and navigate.”
But there could be some movement away from the dominant mobile platforms ahead. Even so, he noted Apple has said it will still charge a royalty fee on third-party transactions that take place off the app store.
“You’ve got App Store fragmentation that’s happening, away from just Apple and Google, and you’ve seen Samsung making investments there,” Kelley said.
IDFA has forced a diversification in marketing to gamers. Advertisers (in this case, game companies) have to think harder about what motivates players to play, how to connect with them, and what to communicate to them. Advertisers have to change media channels and they are building internal teams to better measure performance.
“Companies are being really aggressive with trying to figure out how to be successful in this new world,” said Kelley. “People are still downloading apps, they’re still playing games, they’re still paying within games, and it’s just a matter of what type of communication strategy you use to reach them.”
Rather than fight the IDFA changes, companies have to respect users’ desire for privacy and evolve their approaches. This is happening not only in games but across e-commerce, tech, telecommunications, financial services, and more. They have less specific knowledge about a user and more aggregated data.
Facebook Gaming delivers a play platform for developers, a livestreaming platform for creators, and a discovery engine for advertisers, Kelley said. Its aim is to connect people around their favorite games. Facebook is adding crossplay capabilities that enable seamless social play on native mobile and instant cloud platforms. Its upcoming Facebook IQ report on diversity and inclusion will be out at the end of the month.
“I’m really proud of the work that we’re doing to democratize data and insights, and bringing them to the community,” said Kelley. “There’s a drumbeat of more content coming out over the next couple of months.”
The shift to Meta
Facebook’s change to Meta and the new focus on the metaverse will have big implications for Facebook Gaming itself.
“I think it certainly has validated that the entertainment and gaming is a big business and a big opportunity,” Kelley said. “And I know our team feels really proud to be at the epicenter of where the company is moving for the next 10 years. And certainly, it’s going to expand far beyond gaming and entertainment, and it’s going to have usefulness in the way that people communicate with their friends and family that they can’t be in the same physical space with. It affects the way they consume everything from live sporting events or movies to feeling like you’re at the pub.This is the evolution of social media into a 3D space.”
He said the using Horizon Workrooms for his own work really makes you feel like you’re in the same room as other people.
“You can see people’s hands moving, you can see them typing on their laptop, you can broadcast in the virtual reality room what’s on their laptop is if they’re presenting in a boardroom itself,” he said. “I mean, none of us have been in a conference room for two frickin years. And the first time I put that headset, I was like choked up. This feels so much like a conference room.”
The metaverse will have a lot more social tools and a more immersive 3D environment. Facebook Gaming will build more bridges from games to the meteverse, Kelley said.
NFTs in games
Kelley said that NFTs in games are going to go through a trial-and-error phase. He said that the early impression was that everybody was going to make a lot of money on NFTs.
“That’s probably the wrong way [to think about it],” he said. “We need to educate the audience that that’s not the purpose of this. Yes, they will have residual value. Yes, you can take it from one game to another, so that it has more lasting power. But [we have to temper] some of what everybody sees, like the first tweet being auctioned for a couple of million dollars. I think we just need to ground people that that’s probably not likely [they will get rich from NFTs], you know, in most instances, and then and then we’ll have a better conversation.”
Social impact in games
I asked how we can improve gaming social impact. He said that in the next few weeks, Meta will be releasing a responsible gaming white paper. The company collaborated with partners to figure out what that means.
“It tries to really express what does it mean to really look deeply at the industry that we’re in and how can we drive more diversity within some of the gaming companies that are out there and create a society that people feel safe participating in, protecting them from harm, and enabling user controls and support all types of users,” Kelley said.
He added, “We all really have got to make a commitment to prioritize inclusion, representation and accessibility. Do we have seats at the table to help us make decisions on game design and how we market those games? That’s all really, really important.”
Last year, Facebook said it was dedicating $10 million to fund the next generation of black gaming creators, and the program includes mentorship, training, early access to different features and products, and open communication between the creators and its development teams.
“We’ll weave that into different products like our tournaments and charity streams, and make sure that we’re raising awareness for important issues across the world,” Kelley said.
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