An interesting, yet not surprising, side effect of the numerous stay-at-home directives issued during the COVID-19 pandemic is the tremendous increase in streaming entertainment and video gaming. For companies that provide these and other digital content offerings, the competition is increasing, which means advanced data-driven analytics is becoming a necessity to capture and continue to engage customers. Indeed, the ability to leverage data and personalization will be a key differentiator moving forward.
According to Verizon’s reporting of network usage, there was 36% more video usage, 39% more downloads and a staggering 115% more gaming activity during a typical day after COVID-19 stay-at-home orders than there was pre-COVID-19. But these numbers had been climbing even before the pandemic, reflecting the recognized value in grabbing and holding onto customers’ attention. The business of entertainment is huge; according to Perspectives from the PWC Global Entertainment & Media Outlook 2019–2023, there is 4.3% annual growth in global Entertainment and Media expenditures, with the annual global revenues predicted to increase from $2.1 trillion in 2018 to $2.6 trillion by 2023.
It’s clear that there has been erosion in customer spending on “traditional” media (such as newspapers, magazines, books and over-the-air television broadcasting), and both industry veterans (such as Comcast/NBCUniversal, Disney and ViacomCBS) and new upstart companies (such as Netflix, Amazon Apple, Hulu and Quibi) are ramping up the production and delivery of newer products and services such as Internet access, video games, eSports, OTT (over-the-top) video, and virtual and augmented reality experiences.
At the same time, interest in video games is experiencing considerable growth. According to the Entertainment Software Association’s report “2019 Essential Facts About the Computer and Video Game Industry,” total video game sales in 2018 exceeded $43.4 billion, with more than 164 million adults in the United States playing video games. Other reports nearly triple the 2018 annual sales (to $131 billion), with expectations of tripling that number within the next five to six years.
Despite the high expectations for the size of the market, it is currently competitive and is expected to become more competitive as cloud gaming evolves into a global phenomenon. With an increasing demand for digital content, consumers are more likely to take advantage of services that are uniquely tailored to their own personal preferences, giving them greater control over their own experiences across a range of devices. This is why data and personalization are becoming increasingly important.
There are some fundamental characteristic dimensions for success in the game, entertainment and media industries, including (but not limited to):
- Customer experience: Ensuring that the delivered entertainment experience meets or exceeds customer expectations, and providing a unique, positive customer experience
- Customer lifetime value: Leveraging customer satisfaction and loyalty to establish a long-term ongoing relationship
- Revenue maximization: Determining the best ways to deliver services that can maximize the value for the entertainment provider
- Operational optimization: Determining ways to reduce operational costs
- Regulatory compliance: Ensuring compliance with data privacy laws and protecting customer information from unauthorized exposure and use.
Organizations that succeed in maximizing the overall value across all of these dimensions will have the competitive advantage, and there are opportunities for using advanced analytics techniques such as data science, machine learning and artificial intelligence to drive innovation across these dimensions. Examples include customer profiling, personalization, optimization of content delivery across multiple channels, elongating customer lifetime value, maximizing channel revenues, and influencing the creation and development of content in alignment with other business drivers.
Naturally, we can expect that there will be a growing need for trained data scientists and analytics professionals with specialized training in applying their skills to the games industry. As part of my role as a program director for graduate programs in information management at University of Maryland, I am currently developing new courses that focus on analytics techniques for the game, entertainment and media industries. In upcoming columns I will share additional thoughts on the socio-technical aspects of blending the results of analytics applications with entertainment consumer behaviors to explore how advanced analytics can benefit these exploding industries, and how organizations in other industries can apply best practices to increase their own growth and competitiveness.