While many industries are currently struggling with closedowns, layoffs and months of hardship, the tech industry has experienced rather opposite results as gaming, app and streaming companies have noticed substantial growth in the past month or so.
Most notably, the travel and retail industries have seen the largest public downfall. In the UK, high street shop Laura Ashley became the first public casualty of the coronavirus pandemic by going into administration on March 17th, while Virgin Atlantic came under scrutiny for asking staff to take eight weeks of unpaid leave and has now asked for a state-funded bailout.
Whereas travel and fashion have usually been big spenders on influencer marketing, the ongoing uncertainty has caused these industries to put a total halt on their marketing spend. But while they are doing what they can to keep their head above water, the pandemic is still wreaking havoc on their shares and top line.
So, who is there to fill that hole left in the advertising world by these brands? Who are these influencers going to turn to for collaborations? What industry can take advantage of a situation where consumers are forced to stay at home? – The gaming, app and streaming industries.
Smartly.io has noticed the CPM and CPC cost averages are at a 5-year low; around a third lower than normal [Smartly.io]. These rates are usually not seen except for the few weeks following the Christmas period. It looks like people are turning to games, apps and streaming sites to keep themselves entertained while needing to stay at home, to cure the boredom of being stuck at home for weeks on end [Appsfigures].
And this need for games to keep entertained while staying at home has been reflected in the stocks of game publishers. In March, while shares at NASDAQ fell around 19.6%, stocks for companies such as Activision Blizzard and Take Two only fell around 6.5% [Yahoo! Finance]. While the current pandemic is creating a massive downfall on stock markets, Wedbush analyst, Michael Pachter argues that “share prices for game publishers have held up well” [Yahoo! Finance].
Game downloads have increased exponentially, especially in those countries which are in lockdown [AppAnnie].
China, which was the first country to go into lockdown in January 2020, saw average weekly mobile game downloads increase by 80% in February, compared to the weekly average for the whole of 2019, according to AppAnnie, while also seeing a 25% increase of iOS downloads per week compared to the month before. This was an indicator for other countries who would soon follow China in going into lockdown, as we can see for example in South Korea. In February 2020, the average weekly downloads were up by 35% compared to the 2019 weekly average. On the week starting 23rd of February 2020, the average weekly downloads exceeded 15 million during that week, up by 25% compared to January 2020 [AppAnnie].
In the US, gaming usage has increased by 75%. Along with this, Twitch viewership has increased 10% and YouTube Gaming has seen a 15% uptick [Hollywood Reporter]. However, the top games downloaded in lockdown regions are those that have seen large amounts of advertisement on social media platforms, with Slap Kings and Brain Test being in the top four. So, it is apparent that in today’s current climate, the publishers who put their games in front of customers, should experience an increased number of downloads, due to the extra time the consumers currently have.
While in other industries like the movie industry, where a lot of releases have been pushed for later this year, the COVID-19 pandemic has not stopped gaming companies from releasing new titles. A recent example of this is ‘Call of Duty: War Zone’ [Activision] which saw 15 million players just in the first four days of launch, compared to competitor Apex Legends, which had just over 2 million downloads in its first days in 2019 [Yahoo! Finance]. This could very well prove to be an indicator for any gaming companies trying to push for earlier releases.
Source: 2020 Activision Publishing, Inc
On the PC side, Valve said that it saw over 20 million users online simultaneously on Steam during March, a new monthly record. On the console side, Xbox proclaimed it was working tirelessly to keep Xbox Live running, as it was experiencing an overload of traffic during March [Yahoo! Finance]. And with the anticipated release of the new Sony PlayStation 5 and the Xbox Series X in Q4, experts are predicting market value to increase further later this year, as new consoles often lead to increased game sales.
Keeping it social
While many countries are pushing for stricter lockdown measures, people are spending more time online, not only watching videos or playing games but also keeping social with their friends and families. Italy went into lockdown at the beginning of March, and the need to stay social and keep connected online there has been apparent, with web traffic up by 70% [Yahoo! Finance]. And as we saw a similar figure in China, this could be used as a possible indicator for other nations that have just introduced lockdown measures, such as Spain, France, Germany, the USA and the UK, as well as those who may introduce such measures in the near future.
Houseparty, an app which allows video calls for large groups of people, has replaced going out and meeting friends and family outside, and has seen tremendous growth in Italy and in other countries. In Italy alone, Houseparty wasn’t even in the top 150 apps in February but now it currently sits comfortably on #3, right after Zoom and Hangouts – other socialising platforms. The feeling of staying social and connected is felt all over the world, and in the USA 22% of people had already taken part in a virtual hangout with friends or family members, with 17% planning to at some point in the future, especially now that the USA has also introduced strict lockdown measures [eMarketer].
However, this need for staying social hasn’t just been confined to streaming apps. Engagement rates on sites such as Facebook and YouTube are expected to increase by around 63% according to Smartly.io and to add to that, the marketing agency Obviously argues that there has been a 76% increase of daily accumulated likes on Instagram posts with the #ad caption. [Smartly.io]But one social media app that has really benefited and seen an increase in the past month or two has been TikTok. In January and February 2020, TikTok saw an average of 100 million views each month, almost double the average monthly downloads for 2019 (60 million views)[eMarketer].
People spending more time playing and watching YouTube videos have had the upside of record low CPM and CPC rates in all countries. While it is uncertain how long these measures to seal coronavirus will take, advertisers can expect lower prices for influencers for weeks, or maybe even for months to come. Especially when it comes to micro- and nano-influencers, who might have lost their day jobs or might be made redundant during this period are looking for more work with lower CPM and CPC deals.
The ability to react quickly is key for advertisers right now as consumer behaviour changes toward products they can use and play without leaving their houses. While this is an uncertain time for everyone, software companies have been presented an opportunity to seize a stronger foothold in the market, as the data shows that people are watching more videos and playing more online than ever before, and we here at Matchmade urge people to stay home, stay calm – keep playing and carry on.