2015 was another year of evolution and dynamic growth in the social media and game industries.
- Market Growth – Game market revenues, including revenue from mobile and other platforms, continues to grow. Digi-Capital forecasts that games software revenue will grow from $88 billion in 2015 to $110 billion by 2018. The growth in mobile games compared to online or console also continues to grow. Digi-Capital forecasts that mobile games revenue will grow from $29 billion in 2015 to $45 billion by 2018. Big game companies are focusing more efforts on fewer games. For example, mobile game giant Kabam made a strategic decision to sell-off some of its older games to focus its efforts on its top games.
- Convergence – The social media and game industries are converging with traditional entertainment, including film and television and other broadcast media. The industries are also seeing rapid advancement of eSports, fantasy sports, virtual reality and augmented reality games. These developments will inevitably lead to further evolution of the technology and hardware platforms that support social media and games.
Trends for 2016
- Virtual Reality (VR) and Augmented Reality (AR) – Analysts expect the sale and adoption of VR platforms, such as VR head-mounted displays, and AR platforms, such as augmented heads-up displays, to continue to increase. While the industry will certainly see some winners and some losers, overall development of games and other applications for VR and AR platforms will continue to increase.
- Social Games, Gambling and Gamblification – Many of the top revenue generating games in the app stores are social casino games. Several of the leading companies in this space have been subject to class actions for allegedly using illegal gambling mechanics, but some of these cases were dismissed in favor of the game companies based on the courts’ rulings that the games did not include illegal gambling. Nevada’s passage of SB9 and New Jersey’s legislative action promoting real-money, skill-based games may lead to tremendous new business opportunities, balanced by the need for careful legal structuring of these offerings.
- Fantasy and eSports – The rapid growth and success of fantasy sports and the emerging business models, particularly daily fantasy (and other short-term models), has led to intense regulatory and legislative scrutiny. Some states have moved to expressly legalize certain forms of fantasy sports. Some states have sought to impose limits and/or impose reporting and other requirements on fantasy sports companies.
- Mobile Game Platforms – Analysts have predicted games will continue to migrate from game consoles to mobile platforms. This may require legal protection of emerging technologies and/or business models. There is likely to be significant investment activity, from private equity and other sources, in mobile games.
The rapid growth of the different forms of interactive entertainment, hardware and software platforms, and business models related to the games industries requires a comprehensive understanding of legal issues companies are likely to face.