Game Changers

February 3, 2022
Written by: Mike Gedye, Head of Tech Media & Telecom (TMT) Sector Vertical at CBRE, EMEA
State of Play

The gaming sector is on fire!  Rocketing demand (fueled by pandemic lockdowns and new delivery channels), fierce competition between companies (including formidable newcomers) and exciting new technology capabilities have thrust the gaming industry into an accelerated growth trajectory.  Huge market opportunity and rewards awaits companies able to adapt and embrace the next round of the sector's evolution.

Just a phase, or still set to stun?

 The big question now is will demand continue at the same pace of the past few years or gradually start to seep away? Structural trends in play suggest the outlook remains positive:

–       More players than ever:  The growth in numbers of gamers globally is still predicted to rise, despite the end of pandemic related lock-downs, spurred on by new platforms, emerging 5G networks and the rise of the Metaverse. New research suggests the diversification in the demographic of gamers, with up to half the world’s population becoming gamers by 2024.

–       More investment: Gaming companies acquired a record breaking 220 companies globally in the first nine months of 2021, up from 165 in 2020 and 142 in 2019, according to Crunchbase data. Already in 2022 it has been announced that Microsoft is to buy Activision Blizzard in the biggest ever takeover in the tech and gaming sectors.

–       More ways to play: Technology innovations and improvements give players a greater choice of how to access games and content. This is creating new revenue models, gaming segments and user behaviours. Digital-only and subscription services are increasingly being adopted. The rise in mobile games, gaming as a social platform, and streaming services means there are seamless connections between PCs, consoles and mobiles.

–       Meteoric rise of Metaverse and Gamification: The Covid-19 pandemic  has resulted in an  intensified focus on the ‘Metaverse’, where ‘content, commerce and networking exists virtually’. The Gamification of work (both inside and outside the ‘metaverse’)  is also on the rise. Simply put: ‘the craft of translating all the factors that make video games super addictive and immersive and using them for apps or web platforms that are trying to solve real-world problems’, such as helping to engage, train and motivate staff working from home. 

Fierce opponents

With all these positive structural trends in play and the allure of greater rewards, the gaming landscape is being transformed along new battle lines. Record levels of studio acquisitions are taking place as companies seek to expand their player bases by bringing in new franchises. As well as traditional competitors, established gaming companies must grapple with small indie developers, benefiting from lower barriers of entry as well as famous tech and media giants joining the action, spurred on by the trend towards cross-media integration and multi-channel storytelling.

Talent crusade for Game Crafters intensifies

Growth of gaming, gamification and rise of the metaverse will see demand for highly skilled, game crafters intensify. Traditional gaming companies must compete for talent with the tech and media giants as well as other industry sectors working to develop and deploy gamification solutions. According to one study gaming job vacancies in the UK could increase threefold by 2025. A recent annual members’ survey by UK games body, UKIE, revealed that 76% of the participating video game companies reported difficulties in finding skilled staff. 

Power up with Strategic Real Estate to win Talent

With gaming talent thin on the ground and so fiercely fought for, companies must use every tactic to attract and retain the highly skilled people that are essential to business growth plans. Key to this is location selection and space design.

Lock on to best Locations

Perhaps counter-intuitively, ‘hot’ locations where gaming talent settles does not correspond with the locations of the most important education institutions for the gaming sector. Once qualified, graduates of gaming courses have a very marketable skillset, affording the luxury of being able to pick and choose the best places to live, work and play in the UK. 

Our research indicates that when gaming companies start to expand and mature, they tend to gravitate from smaller markets to larger ones. The key advantage of larger cities across the UK is diversity and access to a wider talent pools.

Get your Game space on!

Aside from making the right location choices, winning workspace design is also a primary weapon in the gaming sector’s war to attract talent and build loyalty.

Gaming companies do not necessarily seek accommodation in the most prominent, shiniest Grade A office buildings. Some even prefer to go without signage and can be found in a wide variety of spaces from character buildings, to warehouses, manufacturing plants or even old airplane hangars. Companies will pick from a range of spaces to suit their own culture and circumstances and shape the design and support services to promote employee productivity, team engagement, collaboration, alongside health and wellbeing.  Getting the right space supported with the best services and amenities is a key differentiator in the war for talent.

No time for losers! Activate a winning property strategy

Take-up of workspace by the UK gaming sector in 2021 was at its highest level on record (272,000 sq ft). Expansion of the global gaming sector will continue to bring increased requirements for office and studio space into the UK in 2022, but the implications for the real estate industry go far beyond this. Growth in the gaming sector will also trigger additional growth across supporting ecosystems, from Data Centres to eSports retail concepts and arenas across the country.

Switched on companies with a future vision to support their growth aspirations and having a well-devised real estate strategy in place will undoubtedly have the competitive edge on their rivals.

See the recently published CBRE Gaming report here:
https://www.cbre.co.uk/research-and-reports/The-Gaming-Report-January-2022