YouTube is the UK’s most popular video streaming app

New data from App Annie reveals that YouTube still tops the SVoD platforms when it comes to time spent streaming in the UK via apps.

Precise metrics aren’t offered, but we wouldn’t be surprised to learn that YouTube was miles ahead of the rest. Not only is it free, but many people, especially children and teenagers, actively prefer the kind of user-generated content they find there to high production-value proper telly and movies.

Netflix is next, which also comes as no surprise, followed by the BBC’s catch up service – iPlayer – and then Amazon video, which is free to anyone who already has an Amazon Prime subscription. In at number 5 is MX Player which, we have to confess, we had to look up. It’s an Indian SVoD platform, so clearly there’s a lot of demand for content from that part of the world in the UK.

Rounding off the list we have a bunch of other catch-up apps and Twitch, which is mainly used to stream computer games. Another data point that would have been interesting to see is total time spent on streaming apps compared to previous quarters. There must surely have been a significant increase.

Network outages costing enterprise customers millions

In years gone, internet downtime would have been considered a first world problem, but now it is costing enterprise organisations millions every time a digital baron period emerges.

With connectivity as the foundation of almost every business nowadays, few can operate without a stable internet connection. From the delivery of mission critical data to the functioning of tills and credit card machines, a digital blackout will cost businesses money.

According to a survey from Open Gear, only 8% of respondents suggested network downtime had cost them nothing. 31% stated outages had cost their business more than $1.2 million while a further 17% said such shutdowns hit revenues by more than $6 million. It should come as little surprise 83% of the respondents said network resilience was their number one concern.

With the coronavirus pandemic further increasing dependence on communications networks, thanks to coerced remote working practices, a stable network becomes ever more important. Another interesting element is the ever-increasing distribution of a network; problems are no-longer contained to the data centre.

Services like Netflix has found a more accommodating home on the network edge, with last mile services and remote locations being used to cache content for users. The idea is to reduce latency and remove choke points on the network, but redundancy cannot always be built into the site and on-site engineers are very rare.

42% of the survey respondents stated the problem in remedying the outage was getting engineers to the site, a challenge which will only be compounded as the network becomes more distributed and the edge becomes more prominent.

There are two key trends which could accelerate the edge which are worth keeping an eye on. Firstly, telcos are partnering up with the major cloud players to ensure more edge services can be offered to enterprise customers. Telecom Italia has an extensive relationship with Google Cloud, for example, while Verizon is firmly in bed with Amazon Web Services (AWS).

The second interesting trend is the cloud players gaining competency in the telco segment, perhaps reducing reliance on telco partnerships (relegating the telco to a commoditised partner). The cloud players also have deeper existing relationships with enterprise companies, maybe accelerating the edge trends. Microsoft acquiring Affirmed Networks and Metaswitch Networks are two examples, as is the hiring spree the cloud players have undertaken over the last 18 months.

The edge presents a significant opportunity for the telcos, assuming they are not designated the role of ‘dump pipe’ but it also presents major challenges. Network resiliency is a hurdle for a functional digital society, but it is one which can be addressed with the tools available today, such as artificial intelligence and network automation.


Telecoms.com Daily Poll:

Should privacy rules be re-evaluated in light of a new type of society?

Loading ... Loading ...

Apple belatedly looks to refocus on podcasts

The podcasting industry was shaken up this week with the announcement that JRE is moving exclusively to Spotify and it looks like it has caught Apple’s attention.

Bloomberg reports that Apple is looking to increase its investment in original podcasts, as well as buying existing ones, to augment its nascent Apple TV+ service. While its easy to view this as a classic case of shutting the stable door after the horse has bolted, Apple seems to view podcasts as either a by-product of video content or as material that could then be adapted to video.

Apple effectively invented the podcast format, which derives its name from the pioneering iPod digital audio player, but the pre-eminence of iTunes as a podcasting platform is under serious threat thanks to this recent development. You have to assume Joe Rogan (pictured) spoke to Apple before recently committing to Spotify, so it would be fascinating to know what led him to ultimately reject it.

If hearsay from Rogan’s friend Alex Jones is to be believed, the straw that broke the camel’s back was supplied by the podcast’s other main publishing platform, YouTube. In an article that seems to have since been taken down, Summit News claimed Rogan told Jones it was YouTube’s censorship of alternative views on the coronavirus pandemic that pushed him over the edge.

According to the piece, YouTube has been actively excluding popular content from its trending lists, including some of Rogan’s biggest. On top of that, YouTube has been taking down some videos from doctors and other experts that challenge the conventional narrative on things like COVID-19 pathology and the desirability of keeping society locked down. Rogan’s move is characterised in the piece as ‘a direct strike against the culture of censorship’.

We don’t know why that piece is no longer available, but it seems unlikely that Jones would have fabricated his conversation with Rogan, even if he is often inclined towards hyperbole. Our best guess is that Rogan either didn’t intend his views to be made public or regretted it once they were, and therefore asked for the story to be taken down. The publisher, Paul Joseph Watson, has close ties to Alex Jones and both of them were banned by Facebook a year ago for being ‘dangerous’.

Back to Apple, the podcasting industry will be hoping Spotify’s move will lead to the kind of spending arms race and bidding war for talent that has characterised the video streaming industry for some time. Not only do podcasts like JRE attract massive audiences, they cost next to nothing to produce. The only catch is that the best ones are completely uncensored and thus risky for prudish publishers. Perhaps that’s ultimately what pushed Rogan away from Apple.

Major blow for Google and Apple as Rogan podcast moves exclusively to Spotify

The streaming wars have opened a major new front with the news that Spotify has lured the Joe Rogan Experience away from YouTube and iTunes.

For those unfamiliar with the JRE podcast, it is the defining long-form, open discussion show, featuring completely unstructured conversations between host Joe Rogan and usually one other guest. As a comedian and martial arts commentator, those two topics are covered frequently, but the guest list is very eclectic, ranging from academics to politicians to showbiz figures.

JRE has 8.4 million subscribers on Google-owned YouTube and while that’s a massive number it’s nowhere near the top of the list of all YouTube subscribers. But if you strip out the music and TV brands, it must be right up there. The real traffic for podcasts, however, is from audio streams and downloads, which Rogan himself estimates are around ten times greater that video views. The biggest single platform for that is probably Apple iTunes, on which JRE is the second biggest in the US.

The raw numbers only tell half the story, however, with Rogan’s cultural influence extending even further, especially in the US. US Democratic presidential candidate Bernie Sanders used a claimed Rogan endorsement for political capital at the start of this year while, more recently, Rogan’s negative assessment of the eventual winner of the Democratic nomination, Joe Biden, sent shockwaves across the country and beyond. Most recently, his criticism of how California is handling the coronavirus lockdown seems to have made many residents consider fleeing the state.

So for Spotify to lure Rogan away from these two internet giants with a deal that will be exclusive from the start of next year is a major victory and a significant blow to its competitors. The WSJ reports that it cost Spotify $100 million, which is serious money. While that’s great news for Rogan, we will probably never know if it pays off for Spotify, but if Netflix (where you can find Rogan’s excellent standup) is anything to go by, paying for big names is the way forward.

As you may have gathered your correspondent is a big fan of JRE. At a time when public discussion seems to be more shrill, polarised and dumbed-down than ever, Rogan offers the kind of honest, nuanced, agenda-free discussion that is desperately needed. JRE fans not currently on Spotify will have some serious thinking to do at the start of the year and the Swedish streaming giant is betting a lot of the new users Rogan brings will upgrade to premium services.

The only thing that could go wrong is for Spotify to in any way try to alter the format or censor the often colourful content. Netflix hasn’t and it would be very surprising for Rogan to agree to any such interference. “While Spotify will become the exclusive distributor of JRE, Rogan will maintain full creative control over the show,” assures the Spotify announcement.

To date the streaming wars have largely focused on video content, but this move brings audio to the fore. Once people start commuting again, podcasts will be more important than ever and it increasingly looks like you need to be a Spotify user if you want access to the best ones.

Incidentally the only pod more popular than JRE in the US is currently in the middle of a drama over switching platforms. It may be no coincidence the YouTube recently lured its biggest star, PewDiePie, back from a rival platform. In these fractious times, authenticity has become a precious commodity, one that the internet giants are prepared to pay top dollar for.


France imposes 1-hour deadline on some social media censorship on pain of massive fines

A new law has been passed in France that allows it to impose draconian punishments on social media companies that fail to take down some content within 60 minutes.

The news comes courtesy of Reuters, which reports: ‘online content providers will have to remove paedophile and terrorism-related content from their platforms within the hour or face a fine of up to 4% of their global revenue.’ Other content that is deemed ‘manifestly illicit’ by whoever makes these decisions will have to be taken down within 24 hours.

“People will think twice before crossing the red line if they know that there is a high likelihood that they will be held to account,” said Justice Minister Nicole Belloubet, apparently oblivious to the fact that the law largest the platforms, not their users. It’s not clear whether the responsibility for identifying content that crosses this like will be the responsibility of the platforms too, but if it is, they will need to be provided with a comprehensive censorship manual if they’re expected to comply.

The matter of social media censorship is a very tricky one and nobody is saying illegal content should be allowed to remain in the public domain, but this looks like a very clumsy approach by the French. There are many alternatives to the imposition of massive fines and this smacks of yet another cash grab by the French state on the US tech sector.

Latest Quibi damage limitation exercise does anything but

The CEO of new video streaming service Quibi has turned to the press once more to address its faltering launch, but he continues to score own-goals.

Jeffrey Katzenberg has impeccable credentials as a video content exec, having founded DreamWorks and headed up Walt Disney Studio. He is the joint CEO of smartphone-focused streaming service Quibi alongside experienced tech CEO Meg Whitman and thus ultimately responsible for the success or failure of the venture, which has received billions in venture funding.

It would be fair to say that, right now, the numbers for Quibi are not what was hoped. Three weeks ago Katzenberg said the following in an interview: “Under the circumstances, launching a new business into the tsunami of a pandemic, we actually have had a very, very good launch.” Either that assessment was misleading, or Quibi’s fortunes took a dramatic turn for the worse since then, because he’s singing a very different tune now.

Speaking to the NYT, Katzenberg said: “I attribute everything that has gone wrong to coronavirus, everything. But we own it.” He seems to be trying to completely exonerate himself from any underperformance while at the same time claiming to do the opposite. Not a great start, regardless of how plausible the excuse is.

That wasn’t the last of the doublespeak. “If we knew on March 1, which is when we had to make the call, what we know today, you would say that is not a good idea,” said Katzenberg in response to a question about the timing of the launch. “The answer is, it’s regrettable. But we are making enough gold out of hay here that I don’t regret it.” It’s regrettable, but he doesn’t regret it, OK?

In response to the disappointing launch Katzenberg and co have been desperately trying to tweak the offering to broaden its appeal. They initially left out the ability to cast the content from your phone to your TV, apparently out of a desire to avoid diluting its smartphone specialness, but soon reversed that decision. Now the penny seems to have dropped that allowing some sharing of content online might help spread the word.

“There are a whole bunch of things we have now seen in the product that we thought we got mostly right,” said Katzenberg, “but now that there are hundreds of people on there using it, you go, ‘Uh-oh, we didn’t see that.’” Again, a perfectly normal part of refining a new product, but it’s hard to see how the previous ‘walled off’ approach was ever considered a great idea.

Part of the problem, on top of the pandemic, could be that Katzenberg is used to heading up operations that already have massive brand recognition and value. Disney can afford to limit the distribution of its content and over-charge for it because its unique and highly sought-after. The same it not true of Quibi, so acting all haughty and distant from the start would probably have been a bad idea no matter when it was launched.

A look back at the biggest stories this week

Whether it’s important, depressing or just entertaining, the telecoms industry is always one which attracts attention.

Here are the stories we think are worth a second look at this week:


O2 and Virgin Media are merging to form BT-busting connectivity giant

Telefonica and Liberty Global have confirmed plans to merge UK operations, O2 and Virgin Media, to challenge the connectivity market leader BT.

Full story here.


privacyHalf of Americans approve of using smartphones to track infected individuals

Pew Research Center asked thousands of US adults what they thought about how personal data should be used to help tackle the COVID-19 pandemic.

Full story here.


CSPs are being cut out of enterprise 5G projects – study

A new bit of research conducted by Omdia and BearingPoint//Beyond has found that only a small proportion of B2B 5G deals are being done by operators.

Full story here.


Streaming venture leads Disney to 29% revenue surge

The Walt Disney company has reported a 29% increase for year-on-year revenues thanks to its streaming bet, but COVID-19 has forced the team to withhold dividend payments.

Full story here.


Silver Lake pays a premium for a chunk of Jio Platforms

Private equity firm Silver Lake has shelled out $750 million for a 1.15% stake in the Indian telco, which represents a 12.5% premium on the price Facebook recently paid.

Full story here.


Online gaming seems coronavirus proof, but is it recession proof?

Online entertainment and gaming companies are seeing COVID-19 surges in revenues, but are these businesses in a position to resist the pressures of a global recession?

Full story here.

O2 and Virgin Media are merging to form BT-busting connectivity giant

Telefónica and Liberty Global have confirmed plans to merge UK operations, O2 and Virgin Media, to challenge the connectivity market leader BT.

Since the end of the Supply Chain Review, the UK telecoms market has been relatively mundane, operating as one would largely expect, however this merger throws a cat amongst the pigeons. All of a sudden, the UK has become on the most interesting markets to watch, with the promise of a second convergence connectivity business to rival market leader BT.

“Combining O2’s number one mobile business with Virgin Media’s superfast broadband network and entertainment services will be a game-changer in the UK, at a time when demand for connectivity has never been greater or more critical,” said Telefónica CEO Jose Maria Alvarez-Pallete. “We are creating a strong competitor with significant scale and financial strength to invest in UK digital infrastructure and give millions of consumer, business and public sector customers more choice and value.”

“We couldn’t be more excited about this combination,” said Mike Fries, CEO of Liberty Global. “Virgin Media has redefined broadband and entertainment in the UK with lightning fast speeds and the most innovative video platform. And O2 is widely recognized as the most reliable and admired mobile operator in the UK, always putting the customer first. With Virgin Media and O2 together, the future of convergence is here today.”

Talks emerged earlier this week, though they certainly got to the official confirmation stage quicker than many were expecting.

As part of the agreement, a 50-50 joint venture will be created, with the promise to spend more than $10 billion on network development over the next five years. Synergies are expected to be as much as £6.2 billion, with 46 million subscribers, 15 million homes passed for broadband, 99% population coverage for mobile, 18,700 employees and £11 billion in revenue.

Full details on the deal can be found on a new website, proudly proclaiming the creation of a national digital champion.

This all sounds very promising, but when the merger is complete in mid-2021, which brand will survive?


What should a merged O2/Virgin Media company be called?

Loading ... Loading ...

“In the long run, we believe it would be better for the JV to retain the O2 brand at the expense of Virgin Media,” said Kester Mann of CCS Insight. “Both have a strong presence, but O2’s respected customer service, highly loyal customers and sponsorship of the O2 arena mean it is impossible to drop. A multi-brand approach serves only to duplicate costs and risks confusing customers.”

For convergence to work, there can only be one brand which survives. BT’s £12.5 billion of EE has arguably not paid off to date as the two brands still exist, effectively creating two separate business units inside the same group. There might be convergence benefits from an operational perspective, but to realise the gains from a customer and commercial angle, the businesses have to be fully consolidated and coherent.

BT has never really been able to take advantage of its assets. It has the largest mobile network, the largest broadband network, the largest public wifi footprint and the largest bank accounts to throw cash at content. Its inability to evolve into a convergence-defined business has opened the door for O2 and Virgin Media. But the question is whether the duo can learn from these mistakes.

Ultimately this is a major threat to the BT business, not because this is a combination which can potentially match the scale and depth of BT services, but these are also two currently healthy businesses which are coming together.

Financial Results for O2 and Virgin Media to March 31 (UK sterling (£), millions)
O2 Virgin Media
Total Year-on-year Total Year-on-year
Revenue 1,739 2.9% 1,266 -0.6%
Profit 516 2.4% 84 >1000%

Sources: Liberty Global Investor Relations and Telefonica Investor Relations

Usually, when mergers and acquisitions are discussed, one of the parties is a significantly stronger position than the other. It can still be good news, but there is plenty of work to do during the integration stages to ensure the new company is fighting fit. This is not the case with O2 and Virgin Media.

Virgin Media might have experienced a bit of a downturn over this three-month financial period, but this could likely be attributed to dampened customer acquisition amid the COVID-19 outbreak, while O2 has demonstrated year-on-year increases once again.

While these are healthy businesses right now, some might have suggested limited success in the convergence game would have caught up eventually. This is a very encouraging move forward, getting ahead of negative impacts, though a renewed assault on TV/content is needed. Neither, despite what Virgin Media claims, have done very well in this segment.

Current subscriber numbers for O2 and Virgin Media
Mobile Broadband Content
O2 35,266,217 29,085 *
Virgin Media 3,179,500 5,271,000 3,687,400

Source: Omdia World Information Series

*Too early to tell how successful the partnership with Disney+ to add a content element to O2 bundling has been

One area which should be allocated to the risk column, though it is a very minor risk, is the prospect of regulatory intervention.

“Unlike when O2 attempted to join forces with Three in 2015 but was blocked by the European Commission, I don’t expect there to be any major hurdles to this deal going through,” said Dan Howdle, consumer telecoms analyst at Cable.co.uk. “After all, with BT’s purchase of EE given the all-clear in 2016, it’s difficult to see how a case could be made to block it.”

These are both telecoms companies, but service overlap is minimal. Core competencies lie in different segments, and while there have been attempts to launch into parallels, success has been woeful. These are complementary companies with little material service overlap.

When considering whether competition authorities will be interested, you have to ask whether the merger would make single business units stronger or is the company stronger by association with parallel services. O2’s mobile business will not be enhanced materially by Virgin Media’s MVNO proposition, and Virgin Media will not benefit from O2 at all in the fixed connectivity game. There does not seem to be any case for objection on the grounds of competition.

Aside from the direct impact for both Virgin Media and O2, the rest of the market could be spurred into action.

“Vodafone UK appears the biggest loser as the deal lays bare its weak position in the market for converged services,” said CCS Insight’s Mann. “It also looks certain to scupper its virtual network partnership struck with Virgin Media in 2019. We think this deal will trigger a ripple effect on the UK market: Vodafone, Three, Sky and TalkTalk will all be assessing their positions and further deal-making can’t be ruled out.”

This is a challenge to the industry and will create a rival to BT in mobile, broadband, convergence and enterprise. However, it is also worth remembering the ‘also rans’.

Unless the ambitions of rivals are inspired by this threat, the prospect of a tiered connectivity industry could emerge, with those offering bundled services on top and the pureplay service providers on the bottom.

The UK has quickly become one of the worlds’ most interesting telecoms markets, thanks to the permutations which could be inspired by this merger.

Tier One Tier Two Tier Three
  • BT (mobile, broadband, content)
  • O2/Virgin Media (mobile, broadband)
  • Sky (content and broadband)
  • Vodafone (mobile and broadband)
  • TalkTalk (broadband)
  • Three (mobile)
  • MVNOs
  • Alt-nets

Online gaming seems coronavirus proof, but is it recession proof?

Online entertainment and gaming companies are seeing COVID-19 surges in revenues, but are these businesses in a position to resist the pressures of a global recession?

With many countries around the world entering into recession due to the impact of the coronavirus pandemic, online gaming companies will face challenges like never before. Let’s not forget, this is a segment which did not exist during the last major financial downturn, the ‘Great Recession’ of 2008, and it is almost entirely reliant on discretionary income.

This is of course a massive question which should not be taken at surface value, but the up-coming recession has the potential to completely turn this industry on its head. However, for the moment, there is money to be made thanks to circumstance.

How are the gaming companies getting on now?

In short; very well.

Activision Blizzard has released its 2020 first quarter results, and while the figures might be down on the same period of 2019, outlook is considerably better than the forecasts provided by the company on February 6.

Total revenues for the three months ending March 31 were $1.79 billion, down 2.1% year-on-year, but 9% up on the guidance which was offered to investors in February. This guidance was offered before the full impact of COVID-19 was comprehendible, so it understandable that estimates were off.

The Call of Duty title has been credited with much of the success, most notably the mobile game which was launched in late-2019 and the Warzone addition. Warzone was launched under a free-to-play business model, with in-game purchases, and has attracted more than 60 million users.

Elsewhere, Electronic Arts has also released financial statements for the period ending March 31. Total revenues for the three months increased 14.4%, 3% higher than what was forecast in January while net income was up 5% on the guidance offered. Digital revenues now account for 78% of the total, a transformation which has been taking place over the last few years.

FIFA 20 and Madden NFL 20 both excelled for Electronics Art in the sports gaming segment, with the latter recording the “highest engagement levels in franchise history”, while Apex Legends was the most downloaded free-to-play game on the PlayStation platform in 2019 and continued to excel through 2020.

These are only two examples of gaming companies who have benefitted from societal lockdown protocols, but there are numerous others including Microsoft with Xbox and its cloud gaming platform Project xCloud.

In short, more people are locked in doors and need entertaining. More are turning to gaming.

Telco data backs up the financials

With more people staying at home, there was a risk strain would be placed on broadband networks as these are assets which have not been deployed with the current societal lockdown in mind.

Video conferencing is on the up, content streaming is skyrocketing, and gaming is entertaining adults and children alike. All of these elements add up to pressure on the network, though many are performing admirably.

In March, Telecom Italia Luigi Gubitosi suggested network traffic had increased by as much as 70% in some regions, with Call of Duty and Fortnite usage some of the more prominent contributors. Performance of the networks were a worry, but these fears have now been addressed.

Who should we be keeping an eye on?

There are a lot of companies who will be releasing financial statements over the next week, all of which will be inclusive of at least some of the lockdown period.

  • 7 May: Nintendo
  • 13 May: Tencent
  • 13 May: Nexon
  • 13 May: Sony
  • 14 May: Ubisoft

Due to the number of private companies and start-ups in this segment, it is difficult to gain full visibility into the financial gains, but usage reports and download statistics can help. Ultimately, it is a fair assumption this is a segment of the technology industry which is benefitting from the on-going COVID-19 pandemic.

The financial risks have been predicted

In October 2019, the International Monetary Fund (IMF) held a press conference during which the risk of indebtedness was discussed in detail.

“In the event of a material economic slowdown, the prospects would be sobering,” said Tobias Adrian, Director of the Monetary and Capital Markets Department of the IMF.

“Debt owed by firms unable to cover interest payments with earnings, which we refer to as corporate debt at risk, could rise to $19 trillion in a scenario that is just half as severe as the global financial crisis.”

$19 trillion would account for 40% of the total corporate debt in the worlds’ eight largest economies. Of course, much of this rhetoric refers to traditional organisations and those who are already in precarious situations, but it does demonstrate risk.

Adrian stated six months ago that there was a corporate debt bubble building. The accessibility of borrowing facilities over the last decade, as well as tendency to stretch asset valuations, has led to a tsunami of debt. External debt has risen to 160% of exports according to Adrian, compared to 100% in 2008.

This does not necessarily directly correlate to the online gaming sector, but it is good to place the current situation into context. Last October, the IMF warned of a corporate debt bubble which would burst during a recession, compounding the misery and extending the financial downturn. This is the reality which the world is facing today.

Could be a short, but sharp downturn

Coutts bank has recently suggested the financial downturn would be a recession, but the depth would not extend to a depression.

“The current recession will without doubt be very deep and widespread,” the company said in a blog post. “Unemployment has risen significantly, and a wide range of sectors are affected.

“But we think the recession will be short-lived, and that’s the key to our cautious optimism. With economic activity plunging so deeply, even a slow, partial re-opening of the economy is likely to lift activity from these extreme lows.”

Although financial data demonstrated the downturn has been dramatic, there are few deep-seated systemic problems standing in the way of a recovery. The economy will not bounce back overnight, but recovery should be swift assuming there is not a secondary wave of infections.

This is the big question which many companies will be facing; how long will the recession last?

There will be an inflection point on the horizon

Companies who are benefiting from the societal lockdown will have to be wary of the inflection point in fortunes.

People being locked indoors is fine for a while, but soon enough it will start having a very material impact on the economy. When this happens, unemployment could rise, and consumer spending habits are altered. Discretionary income could disappear, and belts would be tightened as a result.

In this scenario, money spend on online gaming habits would almost certainly be cut back, turning the fortunes into flounders.

What is worth noting is this is based on assumption. The online gaming segments were nowhere near as prominent as they are today. In 2008, online gaming was a niche, it was pre-4G hitting mainstream markets while few console games had the internet appeal they do today. eSports would have been considered an absurd idea.

We cannot explicitly state what would happen to the gaming industry during a recession, as there is no precedent, but it is a safe assumption that it would not do very well.

What could happen?

Speculation is always a good bit of fun and should the gaming industry head towards uncomfortable times there certainly could be a dramatic amount of disruption.

There are of course multinational corporations who have profited from the shift to online gaming, but there are numerous start-ups who have shot to fame on the back of a viral hit. The likes of Angry Birds catapulted Rovio to fortunes, while Imangi Studios has experienced sustained success from less complex games such as Tempe Run.

Outside these blockbuster hits, there are thousands of developers who have profited handsomely from online gaming, ensuring the ecosystem is incredibly wide and diverse. Many of these companies are still private, spurred on by revenues flowing through the app economy. Should a recession halt this flow of cash, these companies would suffer.

Industry consolidation could be a reality, with multi-nationals snapping-up cut-price opportunities. Tencent is one company which has grown via acquisition, taking up stakes in the likes of Riot Games, Supercell, Activision Blizzard, Glu Mobile and Grinding Gears Games. Organisations like this must be licking their lips with a prospect of a recession; an opportunity to grow a digital empire through the acquisition of distressed assets.

Venture Capitalists will also have an eye on this area, though this would allow the start-ups to maintain some level of independence. They may have to hand over stakes at depreciated valuations to do so, however.

Interestingly enough, a recession could also present a significant opportunity for the ad-supported, free games. Online advertising demand might decrease, but it certainly wouldn’t disappear entirely. And consumers will still have to be entertained. This could supercharge a segment which is often overlooked in favour of more attractive cousins in the online gaming ecosystem.

Just enough but not too much

The fortunes of the online gaming industry are hanging in the balance somewhat. Yes, societal lockdown is benefiting this segment right now, but recovery will need to come before the inflection point.

The longer this lockdown persists, the greater the risk of a longer-term recession and a downturn for the online gaming segment. Just enough lockdown is a profit machine, too long could mean a very detrimental net loss.