The risk in rapid growth -Making the gaming industry safer
Working Paper No. 17
The gaming industry is big. And only gets bigger.
The video game industry has been on a growth path for many years and is now the world’s leading form of entertainment. This lucrative industry currently generates more revenue than music, television, and movies. There are numerous estimations of its current and future value, all of which are enormous. From 2022-2027, it is expected to be worth more than $300 billion with an estimated Compound Annual Growth Rate (CAGR) of 9,6%. Roughly there are 3.1 billion people that make up the world-wide gaming population contributing to its huge impact.
Game developers (studios) & publishers, product distributors & marketers, infrastructure builders & suppliers, and device & hardware makers make up the distinct business and technical industry ecosystem. These components largely work independently but are extremely necessary to bring fun and engaging content to gamers around the globe.
Next level gaming brings ever more people and ever more tech together.
The market is driven by consumer demand, while constantly following the advancement of newer technology to push innovation in game products and operations. From advances in biometrics (face/voice recognition), virtual and augmented reality (VR/AR), and wearables—to the growth in mobile gaming, device controllers or add-ons, and cloud technology, gaming can more easily drive realism and accessibility to as many people as possible. Delivering fun, competitive, and immersive gaming experiences to tablets, PCs, phones, televisions, and on the best game platforms continues to be a trend the industry leads with.
In recent years, the rise of Esports has highlighted the progression of the industry, which has been facilitated by the internet's ubiquity. This newer "segment" of gaming combines all the parts of the industry and highlights the competition aspect to drive engagement from viewers of that experience. Frequently organized, multiplayer tournaments are held between individual players or teams, in which competitors "battle" each other for the chance to win large sums of prize money (even around 40 million USD). For followers of the gamers, teams, sponsors, game studios, and any other organized entertainment involved, it provides a similar but unique experience to watching professional sports events.
Not just fun for gamers, but a fascination for all
The esports segment of business is predicted to grow at a CAGR of 24.4% from 2020 to 2027, with an estimated value of $1.8 billion in 2022. Because of its size, scope, and professionalization, opportunities have arisen in its ecosystem. Esports and gaming is now seen as a professional career path and a solution for organizations to bridge technical skill gaps. Government agencies are starting to see the value in gaming for soldier’s training. Many universities are implementing esports curricula, and the IOC appointed its first head of virtual sport in January 2021 to develop virtual sports for the global Olympic body.
The boom of this segment has been spurred by means of sponsorship investments – global brands such as BMW, Adidas, Coca-Cola and Intel have sponsored esport tournaments to leverage the huge audience base. With a massive target market base, partnerships are forming between sports teams and technology providers and investors. One notable example is Paris Saint-Germain (PSG) entering a partnership in 2018 with a Chinese esports streaming platform.
While the income channels are being established, the esports merchandise has caught the eye of the retail industry. Large retailers like Walmart and GameStop have begun positioning many of their locations as event space hubs for esports related events. This trend coincides with the emergence of NFTs – or Non-Fungible Tokens, grows which let you own a “completely unique” piece of a digital asset to own, sell, etc. New marketplaces can now emerge around gaming NFTs to create a digital economy around the movement of items that could retain as much value as any physical good. Recently, triple A game developer Ubisoft’s launched their game “Ghost Recon Breakpoint” including NFTs in their platform for users to sell and trade playable character gear. The possibilities of the different ways ecommerce in gaming will be shaped due to this are endless.
The more we are connected, the bigger the risk.
The all-digital and online esports market proliferates towards the backdrop of technological advancements, developing esports infrastructure and evolving behaviors of enthusiasts.
As a result of its staggering growth, the industry has also become a target for cyber threats.
Hackers or Bad actors have realized that digital gaming platforms have become a treasure trove of personal and high value financial data. There are a multitude of financial target areas in gaming that have already seen increased criminal activity as the financial reward for hackers, state actors, and competitors has grown with the market.
Security risks are growth risks.
All components that make up the gaming industry can be fragmented and complex from a security perspective, which makes it the perfect landscape for bad actors. Each one is not always required to adhere to the same security standards which can leave the billions of users exposed where their data is commonly stored and distributed amongst them. This can and does also impact the game development and publishing cycle as deadlines for game releases are expected. Historically the gaming industry has not been at the forefront of regulation that prioritizes trust in user data, secure transactions, communication, and content. Early video games did not collect information and metrics from users in the way they do now with more data driven business models.
Supply chain incidents are increasing, changing threat landscape even further as new efforts must be developed to protect how digital software gets into our hands un-tampered and without dangerous malware. Additionally, organizations in the industry can struggle juggling distributing IT and other resources in an optimal and impactful way while dealing with complex growing technical debt.
It's on the gaming industry to change, and consumers to demand it.
The gaming industry has to develop more robust trust and security operating models to combat the growing number of cyber-attacks on gaming - data breaches, operation disruptions, game malware, inappropriate content, cheating, piracy, and fraud/account theft.
For the gaming industry to continue its growth, it must prioritize the needs to the players and anybody that engages in gaming experiences. Based on industry trends, the expectation is that organizations in gaming will make strides to protect critical data and provide more transparency on how well they are doing in security. Being a reliable, trusted source for the sensitive and valuable data of those billions of games and esports participants is not only a responsibility but a competitive advantage in this growing market.
As the definition and scope of what good protection is evolves, there will continue to be a culture shift to prioritize this. Questions should always be asked around where your personal data gets stored in the gaming ecosystem, how it is being protected, and what would happen if the protection failed. More informed decisions on where to put safer