Gorgeous multicolor shot of people standing in a metaverse

Gaming Levels Up, and Into the Metaverse

Author

Nasdaq Index Research Team

Published

Dec 21, 2022 11:00AM EST

The U.S. gaming industry engages 164 million users across virtually every social demographic, an increase of nine million new users since 2019.¹ Gaming is driven by ingenious tech innovation that makes experiences deeply immersive, highly accessible, and very customizable. Gamers of all ages are flocking to consoles and cloud streaming services, spurring the industry to continuously level up their technologies to sate the public’s appetite for new virtual worlds and challenges.

Beyond entertainment, gaming now shapes how we teach, test, collaborate, and motivate across a variety of industries. Gaming software, platforms, and technologies enable rich experiences that have pushed significant growth in terms of revenue and user populations. Per the latest forecast from the Consumer Technology Association (CTA)®, gaming revenue will increase to $54.4 billion in 2023.² Additionally, some 73% of 224 million U.S. adults and adolescents now make up the active gaming population, according to CTA’s recently released study: The Future of Gaming 2022.³ These findings illuminate an industry buoyed by diverse and cutting-edge gaming options.

At CES^® 2023, game publishers, hardware manufacturers, and retailers will have a wealth of creative and technical opportunities to explore this growing market, one that CTA knows uniquely as the convener of innovation at CES. Further, we actively monitor trends in the gaming industry as part of our robust work on the Nasdaq CTA Global Video Games Software Index™ (PLAYR2™).⁴

Here are two key trends to watch as the gaming sector expands.

Gaming Soars to the Cloud

Advancements in cloud computing and gaming streaming services have whetted gamers’ appetites for new ways to access and interact with their gaming experiences.

With the similar potential for expansive libraries like audio and video streaming services, cloud gaming promises easier access to a wider range of titles on a singular platform. Further, the improvement of latency and performance in cloud gaming software provides gamers with the flexibility to stream and play games from a variety of compatible devices that include laptops, smart TVs, tablets, and even phones. The ability to capture mobile gamers is critical as it allows cloud gaming providers to tap into the double-digit growth in the adoption rate of mobile gaming in recent years.⁵

Despite the shutdown of Google Stadia in recent weeks, cloud gaming services are charting growth, with Microsoft’s Xbox Game Pass, Amazon’s Luna, and Nvidia’s GeForce Now emerging as leading platforms bolstered by their more expansive catalogs of gaming titles. Consequently, and according to CTA research, nearly half of gamers in the U.S. are paying for a gaming subscription service, in part as a result of heightened awareness of and access to new and varied cloud options.

Still, while Google Stadia may not continue to operate in its current form, the software behind the platform has already demonstrated success as a white-label product for clients like AT&T.⁶ With Google’s position as a leader in cloud infrastructure, it is very likely its expertise will be leveraged for another cloud gaming venture or to push the further advancement of this innovative technology into new applications for both consumers and enterprises across the entire industry. Gearing Up for the Metaverse Hardcore gamers and young people are also entering new digital realms via the evolution of the metaverse. Specifically, 62 million (37% of gamers) are excited to live out gaming experiences in the metaverse, with 38 million gamers self-identifying as metaverse enthusiasts, as CTA’s research has revealed.⁷

In fact, many consumers are experiencing the metaverse for the first time through gaming as their entry point. Fortnite emerged as an early leader in this nascent field through its combination of customization, licensing of major IP brands like Marvel, and the creation of unique in-game experiences such as concerts from artists including Ariana Grande.⁸

Meanwhile, Roblox, another metaverse leader from the gaming space, saw 57.8 million members on its online gaming platform, a 23% jump from last year, according to the company’s September 2022 metrics report.⁹

As a result, gamers anticipate that the future of gaming will see the increased incorporation of augmented and virtual reality to build even richer metaverse experiences. Nearly 30% will buy a VR/AR headset in the next 12 months.¹⁰

This is unsurprising, as the 41 million Americans who identify as active and avid gamers are serious investors in technologies that up the challenge and complexity of content. Gamers are emptying retailer inventories of immersive-enabling hardware such as 8K televisions and soundbars. More than half of U.S. gamers already use a TV with 4K or higher quality, with 36% planning to upgrade to an 8K TV in the next 12 months. Some 40% will purchase gaming-caliber headsets with microphones, soundbars or surround-sound speakers, and more to boost their experiences.¹¹

As the metaverse evolves in the coming years from visual perception to a more tactile experience, haptic technologies -- like the vests and gloves on display at CES 2022 from exhibitors Owo and Skinetic -- will also become a key piece of gaming equipment to achieve full immersion. A Ready Player One-like gaming of a sci-fi future may truly be coming closer to our present.

Tracking the Gaming Sector Through the Nasdaq CTA Global Video Games Software Index™ (PLAYR2™)

The Nasdaq CTA Global Video Games Software Index™ (PLAYR2™) is a modified theme-adjusted free-float market capitalization-weighted index designed to track the performance of a selection of Developer/Publisher companies engaged in the global Video Games industry. The companies are selected based on classification by Consumer Technology Association (CTA) and include issuers determined by CTA to be domiciled outside of Russia or China. It is reconstituted semi-annually in March and September and is rebalanced quarterly in March, June, September, and December. The index was launched on August 10, 2022.

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^{1 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}

^{2 https://www.cta.tech/Resources/Forecasts/Industry-Forecasts}

^{3 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}

^{4 https://indexes.nasdaq.com/Index/Overview/PLAYR2}

^{5 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}

^{6 https://www.theverge.com/2021/10/21/22738550/arkham-knight-google-stadia-att}

^{7 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}

^{8 https://techcrunch.com/2021/08/09/fortnite-ariana-grande-concert-metaverse/}

^{9 https://www.cnbc.com/2022/10/17/roblox-stock-pops-18percent-on-september-user-growth.html}

^{10 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}

^{11 https://shop.cta.tech/collections/research/products/the-future-of-gaming-2022}