Esports drives user engagement — and revenue — for free-to-play games

Amid the coronavirus outbreak, the video game industry experienced a critical inflection point, although it went largely overlooked. Most of the media coverage focused on the massive increase in gameplay while children and adults alike were stuck at home. However, industry watchers ignored a major data point with enormous ramifications: For the first time in history, the video games business model flipped, and revenue from free-to-play games have overtaken traditional game sales.

Previously, game publishers operated like the Hollywood movie business: a long production cycle with one big release date supported by a heavy marketing spend, excess channel promotion and shortly thereafter, a move on to the next title. Game publisher stocks moved, and executive futures were determined by opening week sales reports, not unlike their counterparts in the movie business. The industry has now reached a watershed moment. The majority of revenues are driven by engagement in games that are now mostly free to play.