Fantasy castle

Amazon’s Quest for Gaming Success

For Amazon, it is rarely enough simply to expand into new markets; the aim is always to become a key player in everything they do.  

Of course, Amazon has served as an important channel to market in gaming for some time now.  However, more recently, Amazon has been turning its attention to other opportunities in the gaming market.  With its launch of Luna in the autumn of 2020, it set out its stall to become a key player in Cloud Gaming.  And soon, it is set to launch New World – its major new Massively Multiplayer Online Role-Playing Game (MMORPG).

A New World in a Mature Market

We often think of online gaming as a new and rapidly growing market and, in many ways, it is.  However, the MMORPG space now has a long, and well-established history. 

World of Warcraft (WOW) has, since its launch way back in 2004, been the dominant player in the market.  WOW has been with us for 17 years now. Its key rival, Final Fantasy XIV (FFXIX), has now been around for 11 years. 

An MMORPG with an even longer history is RuneScape.  It doesn’t attract the number of players you’d see with the big two, but it remains a popular and enduring game.  It has been around for 20 years now – testimony to the potential longevity of a successful MMORPG.  I remember playing it years ago (yes, I used to be an adventurer like you, until I caught an arrow in the knee…).

So, MMORPG is a market with several well known (and well loved) established players.  It is also a market that has found a comfortable niche for itself.  Only around 1 in 20 gamers would say they were MMORPG fans, so it is very much a minority interest even within the gaming world.  However, as we all know, many of those fans are very devoted, spending many hours playing these games, month in, month out.

Breaking into a mature market like this, populated by several well established and popular brands, won’t be easy.  But that’s never stopped Amazon before.

MMORPG in 2021

Exact figures on player numbers are hard to come by. The major MMORPG brands keep their numbers close to their chests these days). 

WOW has been the most popular MMORPG for years now. It reached a peak of 12 million subscribers in its 2010 heyday.  Its popularity has waned somewhat since then (the last official published figure was 5.5 million subscribers in 2015) but it is still the key player.  Figures from mmo-population (which can’t be taken as gospel) currently place it as attracting around 3-4 million active players every month.  That still places it ahead of its nearest rival FFXIV, which the same source estimates to have around 2-3 million active players per month.

FFXIV took a while to get established but in more recent years it seems to have been steadily building momentum.  In the overall scheme of things, it came to the market fairly late (2010). At that time WOW was most dominant.   Its success has come from a long haul rather than an overnight sensation but is now well placed to challenge WOW for the crown.  It has taken a while to get to where it is today and that is despite the advantage of being based on a popular franchise that has been around since 1987.  This just goes to show that establishing a successful game in the world of MMORPG can be a tough grind.

But that is often what it takes to make it in a mature market – sheer persistence, coupled with getting things right over the long-term, counts for much.  After all, the nature of the genre is as much about building an engaged community as it is about selling a game.

Mature but Attractive

Attracting 2-4 million players worldwide each month may not seem like so many.  These numbers are easily dwarfed by the tens of millions that play many free-to-play games (not least Hearthstone, WOW’s free-to-play spin-off card trader).  However, WOWs players are not free-to-play, they provide Activation Blizzard with a regular source of fee-paying subscription income. 

So, it is a potentially lucrative market to get into.  You can see the appeal for the likes of Amazon.

How then might Amazon go about establishing New World as a leading MMORPG?

Troubles at Activation Blizzard

Any discussion of WOW these days can’t ignore the elephant in the room.  WOW has clearly suffered from the sexual harassment scandal that has engulfed Activation Blizzard.  Many point to a migration of MMORPG players away from WOW to the likes of FFXIV as being a direct result of this.  Some speculate that perhaps WOW may finally be on the verge of losing its market leading position.

Could this be a weakness that might be exploited?  With Amazon about to launch New World, the scandal that broke at Activation Blizzard over the summer could hardly have come at a worse time.

However, despite these troubles, I still think it would be a brave man who’d bet against WOW in the long run.  Many have forecast its demise before, only to be proved wrong.  The game has proven surprisingly resilient over the years. 

The scandal has left WOW vulnerable but by no means fatally so.  But the onus is clearly on Activation Blizzard to get its house in order and any failure to do so could yet lead to its demise.  All that said, Amazon will need to do a lot more than simply capitalise on WOW’s woes to establish New World as a key force in the MMORPG space

Entering Mature Markets

The strategies that Amazon can use for successfully entering this market are not any much different from entering any other mature market.

First off, the mere fact that the market is mature means that it is inherently difficult to do anything radically different or ground-breaking.  However, that is not to say it’s impossible to re-imagine and re-package the MMORPG concept in fresh and appealing ways. 

Secondly, we need to remember the Jeff Bezos maxim “Your margin is my opportunity”, and the current subscription models generate a margin that Amazon can attack. 

Thirdly, one way to attack a mature market is to make creative use of channels to market – by finding new and innovative ways to reach out to your target audience.

These will be the three things to watch out for in my view.  If Amazon can get these elements right, it will, with perseverance, successfully carve out a place for its New World.

The New World

There are a number of ways in which New World may be able to offer enough points of difference to tempt players into giving it a try (and more importantly, retain them).

New World does have the advantage of being new.  While it lacks the historic pedigree of its rivals, the flip side of that is that it also lacks the baggage. There is an advantage in representing a completely fresh start.  It can leverage the latest technology without having to worry about legacy and, if it can do that well enough, it can make itself stand out.

It has so far promoted itself as offering a strong Player v Player (PvP) element.  This may prove an attractive selling point if it works reliably.  The beta test revealed some possible issues here, but Amazon should have the necessary resources to set these right.  Certainly, the lesson of Cyberpunk 2077 should be that premature launches are dangerous waters.  In the MMORPG market, this can be especially costly.  FFXIV’s faltering start in 2010, cost it a good three or four years before it was able to get to a place where it could build some momentum.  Amazon must avoid this at all costs.

Building a Strong MMORPG

New World’s early modern world setting is different enough and certainly promises the potential to offer a rich gaming environment.  The challenge now is to really bring that to life with strong narrative content.

In the long run, it is crucial for an MMORPG, perhaps now more than ever before, to have a strong set of engaging storylines and intriguing quests.  Strong PvP is great but Player v Environment (PvE) is key. PvE has, for many WOW players, been the key to WOWs enduring popularity.  Indeed, many MMORPG players never or rarely play PvP.  For these players, the richness of the environment, the quality of the quests and the strength of storytelling is why they play.  This is what ultimately wins and retains players.  This will be the key test for Amazon’s New World.

Margins of Opportunity

A real strength of Amazon is the brand’s ability to bring compelling offers to market at a great price.  It is a common Amazon play to attack a market with the aim of making lower margins to leverage a price advantage that buys market share.

With New World the approach to pricing looks like it might be designed to create just such a point of competitive difference.

Rather than charging a monthly subscription, it looks like New World will simply require a single one-off payment.  In all likelihood, it will then seek to make money from the publication of additional in-game content.  That seems like an approach deliberately designed to attack the competition – why pay monthly fees when you can get the rival product for a one-off cost that’s less than a six month subscription?

That would appear to the aim anyway.  A point of difference for sure – but it remains to be seen how appealing this will prove to be in practice.

Leveraging New Channels

In launching the beta version, Amazon set out its stall to attract key influencers in the form of streamers.  Amazon have bet that if they can get enough streamers to buy into the concept, these people can each promote New World to potentially hundreds of followers.

Ultimately, the gaming market is heavily influenced by a cohort of highly engaged gamers who stream content, write blogs and contribute to online reviews and game ratings.  They represent a highly influential minority and, if you can get them on board, they will do much of the work of promoting your game to the wider market for you.

Amazon have realised this and have clearly tried to woo these influencers during their beta testing.  The only question is, have they made a strong enough impression upon these people to have sold their New World to them?  The obvious risk stems from the fact that these streamers are not beholden to Amazon.  If they like the game, they will promote it to a wide audience quickly.  But if they don’t like it, they could just as easily put potential players off.

Launch

New World launches later this autumn.  That’s when we’ll begin to find out if Amazon have got the ingredients right. 

Launching in a mature market does require persistence and can be a tough learning experience if you haven’t got your ducks in a row.  The one thing Amazon can’t afford is to launch with anything incomplete or buggy.

However, if it can launch a game with that works well for PvP, offers good value, makes good use of new technology and which, critically, offers strong worldbuilding and storytelling, it could make a serious impact on the world of MMORPGs.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

Activision Blizzard

Denofgeek

Eurogamer

mmo-population

PC Gamer

Windows Central

Forest fire as an example of climate change effects

Climate Change in 2021

The Latest IPCC Report

On 9th August, the IPCC released its latest report on climate change.  Based on a detailed assessment of the available scientific evidence, it concluded that we are virtually certain to see global warming of around 1.5oC over the next 20 years.

In the longer-term global warming could rise even further, potentially exceeding a 2oC increase by 2050.  And, if it does exceed 2oC, that is bad news.  At that level the report warns, “heat extremes would more often reach critical tolerance thresholds for agriculture and health”.  Indeed, under one possible scenario we might be seeing a rise of as much as 4.4oC by the end of the century.

The report warns:

“…unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”

Who are the IPCC and why does this report matter?

The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change.  All 195 countries around the world support its work. Scientists from all around the world contribute to and assess its reports.

Every few years it publishes a detailed up-to-date assessment of where we stand.  The first report was published in 1992 and this latest report (August 2021) is the sixth.  As a result, its reports represent the most up-to-date, detailed and authoritative assessment of climate change available. 

The impact of global warming

Delving into the detail of the report reveals some rather frightening statistics that bring home just how significantly climate change is impacting our world:

  • In 2019, atmospheric CO2 concentrations were higher than at any time in at least the past 2 million years.
  • Global surface temperature has increased faster since 1970 than in any other 50-year period over at least the last 2000 years.
  • Global mean sea level has risen faster since 1900 than over any preceding century in at least the last 3000 years.

Over the past century, our world has experienced an average temperature rise of around 1oC.  We have only taken action to curb that increase relatively recently.

Where are we now?

Many nations have taken action to drive down CO2 emissions over the past two decades.  And, of course, the COVID pandemic temporarily forced a significant short-term reduction whilst much of the world was in lockdown.  So, we have made some progress.

Between 2000 and 2010, global CO2 emissions increased by just over 30%.  Between 2010 and 2019, emissions have continued to increase but, overall, at a much slower rate (10%).  Indeed, since around 2014/2015 the rate of increase has flattened significantly.

However, although CO2 emissions are no longer rising by much, they are not yet falling.  We are still a very long way from achieving anything approaching net zero.

What does the future hold?

Where we go from here will, of course, depend very much on what we do.  Do we take dramatic action now?  Do we aim for sharp and significant reductions in emissions and take the economic and financial pain that such action would surely demand? 

Or do we prioritise protecting the economy as far as possible and aim for much more gradual reductions? Depending on how fast (or how slowly) we act, the IPCC has calculated five possible scenarios.  Everything from a best-case scenario, based on what is likely to happen if we take drastic action fast.  Ranging through to a worst-case scenario, where CO2 levels continue to rise until late on in the century before finally seeing any reduction.

IPCC Climate Change Forecasts - 5 possible scenarios

Drastic Action

If we take drastic action now and achieve a global wide net zero for CO2 emissions by 2050 then the best-case scenario will apply.  However, so far, only 137 out of 195 countries have published a target of achieving net zero by 2050 (and even this is still under discussion in 72% of these countries).   Also, China (the world’s largest source of CO2 emissions) has set its net zero target for 2060, not 2050.

So, at present, the best-case scenario is unlikely.  Indeed, even under this scenario we are still almost certain to see a mean global temperature rise of 1.5oC relative to the average temperature of the world in the period 1850-1900.  It is now already too late to prevent that.

Given recent trends and current government targets around the world (and assuming those targets are all met), we are more likely to be looking at something similar to Scenario 2 or 3. 

In Scenario 2, we would need to see a more gradual but sustained reduction in emissions, achieving global net zero by around 2070 or 2075.  If we achieve that, we can just about avoid a temperature rise of 2oC.

Scenario 3 would assume a very limited/modest rise in CO2 emissions, gradually flattening as the century wore on, followed by a steady reduction in emissions from around 2060 onwards.  In this scenario we would not achieve net zero until the end of the century.  If this happened, we would see a rise of over 2oC by 2060, approaching a potentially catastrophic 3oC by the end of the century.

How will global warming affect us?

Depending on where you are in the world you are likely to experience different effects from global warming. 

Global warming has led to significant Artic ice melt but less significant melt in the Antarctic.  So it is not affecting us all equally.

However, places that have seen problems with extreme heatwaves leading to wildfires will see these events become increasingly common.  Places that have experienced more spells of torrential rain, leading to serious flash flooding will see such problems become a more frequent occurrence in future.

For northern Europe, global warming is likely to mean more heat waves in summer and fewer cold snaps in winter.  It will also mean more rain, especially in the winter, and more flash flooding following heavy downpours.  We can also expect to see more coastal flooding in those areas that have experienced such problems in the past twenty years or so.

For southern Europe and the Mediterranean region droughts, increased aridity and an increased incidence of wildfires in summer are very likely if global warming hits 2oC.  Agriculture in these areas is likely to become a lot tougher and the threat posed by wildfires will mean scenes like those in Greece in the summer of 2021 will become increasingly common.

Right now, we stand at a crossroads.  We can, if we so choose, act and limit the impact of global warming to something closer to that forecast in Scenario 1 or 2.  However, if we decide to act more slowly and opt to place short term economic and financial concerns before the longer-term environmental impacts, we may well be facing a serious crisis situation by the middle of the century.

In the light of this report, the decisions made at Cop26 this autumn will have a critical impact on our future. 

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

IPCC

Our world in data

Visualcapitalist

Thames Barrier

London Floods

Last Sunday London experienced serious flash floods following torrential downpours.  The London Fire Brigade received over 1000 flood related calls.  Two hospitals had to close for patient admissions.  Many roads and underground stations had to close, as did the Blackwell Tunnel.

But was this just a freak natural event or a symptom of global warming?  Is it a portent of things to come?

Global warming means heavier showers

It is difficult to specifically link these flash floods directly to global warming. 

However, a warmer climate will mean that showers, when they happen, will tend to be heavier over time.  According to the Grantham Institute, warmer air can hold more moisture.  That means that an increase in temperature of 1-1.5 degrees centigrade will lead to storms being about 10% stronger than they would otherwise have been.

Since 1880, global temperatures have warmed by a total of around 1oc but over the next century global warming looks like it will increase average temperatures by between 1.5oc and 5.5oc.  On that basis we can expect showers to become, typically, 10% – 50% heavier. 

So, London could be seeing a lot more flash floods by the end of the century.

Polar melt and rising seas

Climate change brings another threat to London beyond flash flooding from torrential rain.  A warmer climate is melting ice in the northern hemisphere, which is causing sea levels to rise.

London is built around the Thames Estuary and, for much of its history, it has served as a major port as well as the nation’s capital.  As sea levels rise, the danger of flooding from the Thames becomes more significant.

In the period 1971 to 2009, glacial melt is thought to have occurred at a rate of 226 gigatonnes per year.    Over the period 1971-2012 Arctic sea ice has been melting at a rate of 3.5 to 4.1% per decade.  Warming has also affected areas like Alaska and Siberia, melting permafrost over time.  Average temperatures in these places are thought to be on average 2-3oc higher now than they were back in 1971.

Of course, all this melting ice inevitably means more water in the oceans.  During the past centuries it is estimated that sea levels have risen by an average of 1.7mm per year.  It is also accelerating and by 2010 it was rising by over 3mm per year.

For a city that has always been vulnerable to flooding, like London, higher sea levels spell trouble ahead.

London’s Defences

The Thames Barrier represents London’s most prominent and important flood defence.  These gates can be shut to protect London from North Sea storm surges.   As sea levels rise London will need to rely on the barrier more and more and we can expect to see the gates being closed more frequently to prevent surges from flooding the capital.

Water levels in the Thames Estuary are estimated to have risen by around 15cm between 1911 and 2018.  So without the Thames Barrier, London would have experienced some significant floods over the past couple of decades.  It is estimated that around 16% of London properties lie within the flooding risk zone protected by the Barrier.

Since its construction in the early 80s the gates have been used increasingly over time.  So far, 2014 stands out as the most active year (during which it was raised/closed as many as 50 times).  During the past couple of decades the barrier has typically been needed about 7-8 times a year.

Graph of Thames Barrier gate closures

How long will the barrier hold?

The good news for Londoners is that the Thames Barrier is reasonably future proof.  It is likely to continue to protect London well until 2070, although the plan is to start looking for its replacement / upgrade in 2040.

Between 2035 and 2050 it is anticipated that London will need to improve flood defences such as raising flood walls and other smaller barriers and reshaping the riverside.

In terms of local conditions, it is estimated that London might expect 59% more rainfall by the end of the century.  By 2100, the water level in the Thames Estuary might be as much as 1 metre or more higher than it is today.  The proportion of London properties at risk will increase from 16% to 23% over that time and the Thames Barrier, as it is today, will not be able to protect Londoners any longer under those circumstances. 

In less than 20 years from now London will need to start thinking seriously about alternatives.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

Earth.org

Environment Agency

Independent

IPCC

NASA

Bumping elbows

Freedom Day – a British Experiment

19 July 2021 is “freedom day” – the day when the UK government has relaxed the last Covid restrictions in England.  But does it mark a return to normality (whatever that is), or is it, as some have suggested, a dangerous British experiment?

For many of us, the relaxing of restrictions is a welcome relief.  The cost in economic and social terms has been high.  Many businesses in the hospitality sector have really struggled to survive the restrictions.  That’s not to mention the impact on our social lives.  Covid has left some people feeling incredibly isolated and others struggling on reduced incomes. 

Most of us are keen to see life return to normality.  After all, we cannot go on like this forever.  Sooner or later, we must find a way to live with Covid.

Dangerous experiment?

However, some experts have dubbed “freedom day” as a dangerous British experiment. 

In an article in the Lancet, on 7 July 2021, the idea of relaxing restrictions on 19th was branded as dangerous and premature in a letter signed by 100 experts that has since been endorsed by many scientists around the world. 

These experts highlighted five of key risks:

  1. A significant proportion of the population are still unvaccinated (especially younger adults and children).  This will lead to high levels of infection running the risk of leaving many people with long term health problems.
  2. It risks high levels of infection amongst children that will accelerate when they return to school.  This will lead to further significant disruption of children’s education.
  3. Such high levels of infection represent fertile ground for dangerous new strains of Covid to emerge.  This includes the risk of a vaccine resistant strain emerging.
  4. It will lead to more hospitalisations which will place significant pressure on the NHS.
  5. Deprived and vulnerable communities are the most at risk and likely to be hardest hit by rising infection rates.

The experts recommended delaying easing restrictions further until the vaccination program has covered most of the population.  This would imply a delay until late August or possibly early September.

As it stands, on 19 July 2021, the government statistics show that nearly 88% of the population had had their first jab and 68% had received both jabs.  These are high numbers and positions our vaccination roll out well ahead of other countries.  However, it is nevertheless the case that one in three of us are not yet fully covered.

Infections are rising

Infections have risen significantly since the beginning of June, as restrictions have been eased and we have had to deal with the impact of the more infectious Delta variant. 

Graph of UK trends in cases: July 2020 - July 2021

The number of cases is fast climbing towards 60,000 and could easily hit 100,000 by the end of the month.  There seems little doubt now that case numbers will exceed the peak we saw back in January 2021.

The link between cases and hospitalisation: weakened but not gone

It has been claimed that new cases are not leading to new hospitalisations. 

A few weeks ago, we wrote a blog in which we created a Covid Index to allow us to view trends in cases, hospitalisations and deaths in parallel.  So now seems like a good time to revisit this to see how well the data supports this claim.

Unfortunately, if we look at the data, we can see that this claim is not entirely true.

It is now clear that we are seeing a gradual but distinct uptick in hospital admissions.  More cases does mean more hospital admissions, even if the link is now a lot weaker than before.

UK Covid trends INDEX: July 2020 - July 2021

The good news is that the level of increase is not tracking new cases anywhere near as closely as was the case back in January.  At that time rising cases led to a similar rise in both hospitalisations and deaths.  These followed on fairly quickly behind case reporting. 

Now, the immediate impact is much reduced and instead we are seeing a more gradual but nevertheless notable increase in hospitalisation.

Clearly, the fact that so many people are now vaccinated (especially amongst the most vulnerable groups) means that a much higher proportion of infections are now mild or asymptomatic.

A modest increase in deaths

A closer look at trends over the past month also show that as yet we are not seeing any major uplift in deaths.  However, the figures do show a slight overall increase.

Graph of Covid Trends INDEX: Summer 2021 Trends

Overall case numbers have grown to be around four times higher than the average for the past 12 months. 

Hospitalisations are rising at a slower rate but rising, nonetheless.  The current levels of hospital admissions sit are around 75% of the average number recorded over the past 12 months.  At the current rate of increase it is likely that hospital admissions will exceed that average before the end of the month.

Deaths, at present, show only a relatively modest increase since the start of June.  We’d have to say that at present it is too early to fully judge the likely medium-term impacts on death rates.  Death rates are still low at around 10%-15% the average of the rate we have seen in the past 12 months.  However, this is still up from a rate of under 5% recorded during late May and early June.

Likely trend

As vaccination continues to roll out, it will inevitably have an increasingly depressive impact on infections.  However, the relaxing of restrictions will serve as an accelerant – especially amongst young adults who are the least protected and the most likely to wish to congregate together in large social gatherings at pubs and nightclubs.

It is always difficult to predict numbers given the changing nature of the pandemic and the ongoing rolling impact of vaccinations.  However, it seems that by the middle of August we are likely to see:

  • Infection rates; will probably exceed 100,000 cases.
  • Hospital admissions; likely to be c.1,300 per day.
  • Deaths; likely to be c.50-70 per day.

This would mean that hospitalisations would be around the levels we were seeing in mid to late February and deaths at around the levels we were seeing in mid-to-late March. 

With infection rates about 100,000, many people would be forced to self-isolate based on current test and trace rules, which could be very disruptive.  Although the government plans to modify rules of self-isolation for fully vaccinated people, this will not happen until mid-August.

A race to roll out

We are now in a race between a virus that has been given significant freedom to spread on the one hand and a vaccination programme that is fast progressing to a point where the population will be fully vaccinated on the other.  These two factors combine to push the numbers in different directions.

Of course, we have to re-open society and adapt to live with this virus at some point.  Let’s just hope we have not made that step a month or two too soon.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

Government Coronavirus Data

Lancet, 7 July 2021

The Guardian, 16 July 2021

Retail – A Roller Coaster Ride To An Online World

Covid has affected most industries to some extent or another over the past 18 months. But, for the retail sector, it has been one hell of a roller coaster ride. 

Even before Covid struck a growing move to online shopping had seen many retail chains struggle to keep physical stores open.  Covid brought with it long periods of lockdown restrictions that forced people to turn to online shopping.  This has greatly accelerated long term trends and we have lost several well-known brand names from the high street. 

But now we are finally approaching an end to lockdown restrictions in the UK, it seems like an appropriate time to take stock of what has happened.  So, just how has Covid changed the retail world and how might we separate long-term shifts in consumer behaviour from the relatively short-term impacts of covid?

2020 saw a significant shift online

Trends in UK retails sales graph

Before 2020, average weekly retail sales had gradually risen year on year.  In recent pre-Covid times, modest, yet healthy, 3% or 4% annual increases were the norm.  But when Covid struck, spending slowed considerably and, in the final analysis, sales in 2020 were virtually flat compared to 2019.

But if overall growth stalled during Covid, growth in online sales witnessed a dramatic rise.  Even prior to Covid, online retail had been rising (10% growth in 2018/19) and was the main driver of overall sales growth.  However, 2020 saw online sales jump by 47% compared to 2019.  Despite this, overall retail sales growth was flat which, of course, means that high street sales have fallen.

Nearly one third of UK retail now happens online

Graph of long term trends in UK retail sales - % online

Whilst the change over the past 18 months has been dramatic, it is nevertheless a continuation of trends we have been experiencing for years now.

In 2011 only 8% of sales happened online.  This number has risen steadily every year since then, such that by 2019 it had reached 19%.  If Covid had not hit when it did, we might have expected to see online sales rise from 19% to perhaps around 20% or 21% during 2020 anyway.

However, Covid forced us online.  At times, many shops were forced to close and, even when they were able to open, shoppers often remained nervous about returning to the high street.  The net effect of this was a jump in online sales from 19% to 28%.

2021 has so far maintained this increase.  In the 12-month period leading up to the end of May 2021, 31% of retail sales were made online.

The question now is, how much of this business might return to the high street now that restrictions are lifting? 

Certainly, we might expect to see some pick up.  With so many people confined indoors for so long, there are many who are looking forward to getting out and about again.  But that may only lead to a short-term boost for the high street.  Longer term, a significant proportion of business may end up remaining online.

Lockdowns boost online sales

A more detailed look at the trends over past 18 months shows how lockdowns have continued to boost online retail.

Graph of trends in UK retail sales since January 2020 - % online

During periods of increased lockdown restrictions – the Spring of 2020, November 2020 and January/February 2021, online sales rose to around one-third or more of all retail sales.  In periods when restrictions relaxed this proportion fell back down to around 27%. 

27% is still higher than the figure of around 19% or 20% we were experiencing prior to Covid but lower than the lockdown peaks.

What this suggests is that, in the longer run, Covid has inspired a step change in our behaviour.  Rather than seeing online spend rise from 19% to around 21% (as we might have expected if Covid had not hit), we have seen it jump to a level of around 26% or 27% or more.  The lifting of restrictions will see some return to the high street in the second half of 2021 but not back to pre-Covid levels.

Overall, it looks like Covid has accelerated the process of migrating retail online by around three or four years.  So, when 2021 is done, we are likely to be looking at a year in which online retail has accounted for around 26% or 27% of all retail sales.  2022 will probably see this figure grow at a more sedate but steady pace to around 28% or 29%.

Non-food retail heads online

Nearly half of online sales are made by businesses with no stores (i.e. pure-play online retailers).  These businesses have benefited significantly from the pandemic and will, no doubt, continue to thrive in the post pandemic era.

But what about the more established retail businesses that possess high street stores.  Many of these now have online stores as well and several have been able to make up for at least some of the shortfall in high street sales with online orders. However, there has been a significant difference between the trends experienced by food retailers (such as supermarkets) and non-food retailers (such as clothes shops).

The effect on non-food retail

Graph of trends in UK retails sales since January 2020 - % online (food v non-food)

Covid has had an impact on all forms of retail but the effect on non-food retailing has been far more significant.

Of course, the non-food retail sector has been subject to enforced periods of closure at times when Covid cases have surged.  So, it is no surprise to see the proportion of online sales increase significantly at such times.

In the first wave lockdown, the proportion of online ordering reached a peak of 44% of all non-food retailer sales in April 2020.  It peaked again, partly boosted by Black Friday and partly by increased lockdown restrictions in November 2020, at 38%.  As December saw a slight easing in restrictions the proportion of online sales briefly dropped down again.  Online sales shot back up to 41% during the January lockdown, reducing again once restrictions eased.

However, although eased restrictions have boosted the proportion of high street sales, it seems that a proportion of business that went online after March 2020 has remained online.  Prior to the first lockdown, around 15-16% of non-food retail sales were made online.  Since Covid hit, it has never once fallen below 23% in ensuing months, even when lockdown restrictions have eased. 

Covid has prompted a lot of people to give online shopping a try and, having tried it, they have taken to it.  The net effect looks like a permanent shift in the market from around 15%-16% online sales to around 23%-25% in the medium to longer term (assuming no further lockdowns).

Trends in food retailing have been less volatile

Supermarkets and other food retailers have benefited from being able to remain open during lockdown.  This, coupled with the fact that everyone will always need their weekly groceries, has meant that a much larger proportion of sales has remained in store.

The first lockdown, in the spring of 2020, saw a shift to a higher level of online ordering; rising from 6% to around 10-11% in a single month. 

This probably reflects a combination of two things.  First, that a proportion of the public were very reluctant to venture out when the pandemic began (in some cases because they have or live with someone with a serious health condition).  Second, at various times people have been asked to self-isolate due to having a positive test or coming into contact with someone with Covid.  In these circumstances the only options are to get someone else to do your grocery shopping, or to order online.

However, following the initial increase in online ordering the proportion of food retailing occurring online has remained remarkably stable at around 11%, ever since April 2020.

Food retailing looks set to remain more high street bound for longer than other forms of retail.  Post Covid online ordering is likely to remain higher than before (at around 10%-11%).  The longer-term trend is likely to be one of a gradual annual rise in online shopping.

The long term picture

The migration to online retailing looks set to continue.  Covid has only really served to accelerate long term trends. 

Looking ahead to the coming year, even assuming no further lockdowns, we will be living in a world in which over one-quarter of UK retail sales will happen online.  Furthermore, over the next three or four years, this is likely to increase to over one-third.

Retailers will, in future, have to put as much thought and energy into the design of their digital stores as they have historically invested in their physical ones.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Source

Office of National Statistics

A green vision in a crystal ball

A Green Future?

As a society we have become more conscious of green issues and the dangers of global warming.  New technology such as solar and wind power and electric cars are becoming increasingly prevalent.

But to what extent do we associate ourselves with green causes and environmentalism these days?  And, if we do, is that really making any significant difference to our behaviour?  Or is there a lot of ‘green’ window dressing involved here?

How green are we?

Market research from Synchronix shows that, in 2021, 8% of UK adults (aged 16-64) list ‘environmentalism’ as one of their key interests. 

To put that in context this is more than the proportion who see ‘religion’ as a key interest (5%).  And this is on a par with the 8% who say ‘motorsports, cars and bikes’ are a key interest.

That does not mean to say that ONLY 8% of us care about the environment.  Take religion as an example.  Only 5% of us would identify religion as one of our main interests.  However, far more than 5% of us would identify/associate ourselves with a particular religion (as opposed to having no religion at all). 

It’s much the same with people who express an interest in environmentalism.  It may be that only 8% of us would strongly associate ourselves with the green cause but, no doubt, a great many more people beyond this number would nevertheless care about the environment, albeit to a lesser degree. 

This 8% would therefore represent those of us who are most strongly committed to a greener future.

But does it make a difference?

Saying you are a keen supporter of environmentalism and actually doing something tangible about it are two different things.  Do such sentiments translate into action?

There is evidence in our survey to suggest that it does. 

18% of people who express their support for environmentalism live in households that either own an electric or hybrid car and/or have solar panels on the roof.  This compares to 10% of those who don’t see environmentalism as one of their key interests.  So, an interest in environmentalism can translate into tangible action.

Who are the ‘greens’?

Those with a keen interest in environmentalism are as likely to be male as female and come from a mix of ages.  Perhaps environmentalism is a little more popular amongst younger adults, but not significantly more so (10% for the under 35s vs 7% for the over 55s is hardly an earth-shattering generational divide).  The same is true when looking at differences by household income – 9% for those earning above £25k a year as against 7% for lower income households reflects an extremely limited real difference. 

It seems clear that interest in the environment really does come from a broad mix of people from different backgrounds.

However, keen environmentalists are more likely than the rest of us to also be religious (17% claiming a strong interest in religion is significantly higher than the figure of 5% for everyone else).  It would seem that religious belief, for some people at least, encourages them to care more about the environment.

Green activism

Enthusiastic supporters of the green agenda are also more likely to see themselves as being involved with social activism (19% vs 5% for the rest of the population).  However, this does mean that most green enthusiasts do not actually see themselves as a social activist.

Perhaps unsurprisingly keen environmentalists also show a stronger interest in nature and the outdoors more generally.  Our survey shows that they are, for example, more likely to express a strong interest in wildlife (49% vs 14%); more likely to enjoy walking/hiking (63% vs 33%); and more likely to enjoy gardening (50% vs 24%).

In this sense a passion for environmentalism can be seen to be interwoven with a person’s wider lifestyle.  Whether their passion for the outdoors makes them more environmentally conscious or whether they are more environmentally conscious because of their higher engagement with the natural world is debatable.  However, it is probably more likely that environmentalism and a passion for the outdoors and the natural world are inter-related aspects of the same lifestyle (rather than one serving to promote the other).

Has COVID made us think differently about our environment?

COVID has brought big changes to our lives over the past year and a half.  Lockdowns have limited our ability to socialise and curtailed a lot of indoor social activities that we took for granted before.

Getting out and about in the open air, at times, has been the only alternative to being cooped up at home on our own.  Perhaps some of us have become more aware of the value of our natural world as a result and hence more concerned for the environment.

Many of us will also be aware that one of the side effects of lockdown has been the reduction in pollution.  Fewer cars and planes travelling from A to B means fewer emissions.  More limited economic activity has meant less pollution.

Even if only temporary, COVID has led to the biggest reduction in CO2 emissions ever measured globally – fully 17% in early April 2020.  In some cities the difference in air quality this has created has been very noticeable.

One cannot help but wonder, in the longer term, whether COVID will have a lasting impact in terms of causing many of us to re-assess our priorities with regards to the environment.

Future Generations

Interest in environmentalism is a little higher amongst parents with children under the age of 12 (10% vs 7% for non-parents).  This is only a small difference, but it does suggest that parents of younger children have been prompted to think more deeply about these issues and the kind of world they want their children to grow up in.  And, if so, it is likely they will pass on these concerns and values on to the next generation.

It would be a great exaggeration to claim that the UK is a ‘green’ nation today.  After all, 8% is very much a minority.  However, 8% of UK adults equates to nearly 4 million people who now see environmentalism and green issues as representing key concerns for the future.

Sources:

Synchronix Research:  Survey of 1007 UK adults aged 16-64 conducted online in May/June 2021.

AAAS

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog, you can view all our past articles on our website here.

If you have any specific questions about our services, please contact us.

Covid germ

COVID: Light at the end of the tunnel?

Over 80% of UK adults have now received their first vaccination, and over 60% are fully protected, so is there finally some light at the end of the COVID tunnel?

With the Indian variant now driving up the number of infections and the final phase of lockdown easing still to come, there is still some uncertainty. So, if we look at the numbers, what are they telling us?

Cases are starting to rise again

The easing of lockdown in the spring, coupled with the appearance of the Indian variant in the UK have combined to start pushing case numbers up again.  Yet this has thankfully not translated into substantial increases in numbers of hospitalisations or deaths.  So, what do we see if we take a closer look at the numbers?

The trends

Perhaps if we start by plotting the history of COVID infections in the UK over the past year we might be able to see some trends. 

You are probably familiar with government graphs showing trends in cases or trends in deaths etc.  They have appeared on the news often enough over the past year after all.  But often we don’t see all the information plotted together on the same chart and that can make it tricky to see how, for example, cases are translating into hospital admissions.

However, if we chart new cases, hospital admissions and deaths together on the same graph we get the following:

UK Covid Trends: June 2020 - June 2021

The variant effect

Well, we can clearly see the trends in case numbers; these are by far and away the biggest numbers on the chart after all.  We can also mark some key dates on the chart for context – like when the Kent variant was first identified, when vaccine roll out began and when we first spotted the Indian variant in the UK. 

This chart clearly shows us how cases rose in the UK after the Kent variant popped up in the Autumn of 2020.  We can also see just how bad things got in December/January, with the big spike in new cases really standing out.  And since late January we can clearly see how new case numbers tailed away to a low level during the spring.  Unfortunately, we can also see how new case numbers have started rising again in June.

But what about hospitalisations and deaths?  These numbers are also plotted on the chart.  But, oh dear!  It’s very hard to see the trend in either because the numbers are so small relative to new case numbers.  We can just about make out that the numbers for hospitalisations and deaths experienced an uptick in December/January but otherwise the trend line looks flat.

This is the main reason why we rarely see all three of these things plotted together – doing so makes it hard to see what is happening in terms of hospital admissions or deaths.

So how can we visualise the COVID trends in a more accessible way?

The raw data does not lend itself to easily comparing all three measures together in a single visual.  The case numbers dwarf the rest of the information to such a degree that it mostly obscures our ability to see any trends at all in the other measures.

One way to get around this problem is to create an Index. 

If we create an Index for each of our three key measures (cases, hospital admissions and deaths) then this makes a direct comparison much easier to represent visually.  As with any Index we need to set a base score of 100 for each measure.  In this case, let’s take 100 as equal to the average number recorded for each measure over the past year. 

The average number of cases over the past year turns out to be around 12,000 per day.  So, if we set that as equal to 100, we can create an index for cases based around it.  The same approach sets the Index for hospital admissions at 100 being equal to the average number for the period (c.950) and in the case of deaths, the average is c.240. 

Now if we use this to re-plot our graph using these Indexes, it is much easier to see how trends in these three measures might relate to one another.

UK Covid Trends INDEX: June 2020 - June 2021

Cases led to deaths last winter

Now it is much clearer to see just how the trends in hospital admissions and deaths mirror / follow the trends in reported cases.  We can also see the slight time lag involved.

In the winter spike, it is now apparent that the peak in case numbers very quickly translated to peaks in hospital admissions and deaths.

So, what can we tell about where we are today based on past trends?

Well, if we look at the recent data, from April onwards, we can see cases rising again in May/June but, currently this has not translated into any notable rise in hospitalisations or deaths.  The vaccination program is having the desired effect in terms of depressing the numbers of the most serious cases, even if it has not prevented a rise in cases overall.

But now things are different

We can learn more if we compare what happened during the last significant wave (Autumn of 2020) with what is happening now. 

Back in September/October 2020 we had some similar conditions here in the UK – lockdown had been eased after cases had fallen to a low level over the summer for one thing.  However, as restrictions eased, so we began to see an increase in cases.  We also experienced the introduction of a new, more infectious, strain of COVID in the form of the Kent variant.

It would seem that the UK is now facing a similar set of circumstances: we have eased restrictions after having brought down the case numbers to a low level but we are also having to live with emergence of a new and more infectious variant (Indian rather than Kentish this time).

So, what do we see if we directly compare what happened in the Autumn of 2020 with what’s happening now using our Indexed visualisation?

UK Covid Trends INDEX: Summer/Autumn 2020 v Spring/Summer 2021

This makes it is even easier to compare the two periods directly.  And the more focused comparison makes it possible for us to mark a few other key dates on these graphs for context – specifically, dates when lockdowns were eased.

The Autumn data shows that, as September progressed, we saw a rapid rise in all three measures: cases, hospitalisations and deaths. 

The recent data shows a less rapid but nevertheless significant rise in cases, even though the Indian variant is more infectious than the Kent variant.  On the negative side, it looks like this rise is set to continue.

The vaccination effect

On the positive side we can see that hospitalisations and deaths are not rising at anywhere near the alarming rate that we saw last Autumn.  We have seen no more than a slight increase so far. In this respect it looks like the vaccines are indeed having the desired effect.

Much of the rise in cases reflects infections amongst younger people who are least likely to be protected by vaccination at this time.  These infections are not translating into more serious cases because younger adults are less likely to become seriously ill with COVID.  Also, people who have received a vaccine who get infected are much less likely to get seriously ill.

There is cause for some caution here, however.  Rising numbers of infections increases the probability of new strains emerging; something scientists are keen to avoid. 

But, as vaccination continues to roll out over the summer, we should see an even more significant depressive effect on infection rates as well as on the numbers experiencing serious illness and death.

Whilst we may not be there yet, but the figures clearly show that there is indeed some light at the end of the tunnel!

Source:  UK Government Coronavirus data

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

In this particular blog piece we’ve aimed to show what the numbers are telling us about current COVID trends in the UK.  However, we also hope we’ve been able to show why and how using an Index can help us visualise trends in a manner that is more accessible and meaningful that simply using raw data alone.

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Airline seats

Can we ever really have truly ‘green’ aviation?

Can we even have ‘green’ aviation?  Today’s aircraft burn large quantities of fossil fuels after all – that’s not especially green, let’s face it.

The aviation industry has long had a reputation as a significant contributor to global warming.  Prior to COVID, the amount of air traffic globally had been rising steadily for the past couple of decades.  And, with more traffic, comes more emissions.   

In the future, with many Asian economies continuing to develop apace, we may well see the level of aviation traffic increase even further.  That could well lead to the industry contributing even further to future global warming.

But could it be that new technology can help to deliver a much greener future for this industry? 

The growth of air travel

Before COVID, aviation had witnessed a steady rise in global traffic over the past decade.  Between 2010 and 2019, there has been a 2.7 fold increase in domestic and international passenger flights globally.  This increase was particularly notable in developing economies in Asia.  The trend was clear – as emerging economies become more developed, so the level of air traffic will increase.

COVID, of course, brought this inexorable rise to a sudden halt.  The trend was put into a sudden reverse almost overnight; so much so that global air traffic in 2020 was 34% down on 2019.

But now, as vaccination programmes roll out, we are likely to see air travel recover.  If the longer-term trends are re-established, the next decade is likely to see an ongoing rise in air travel.

So, how much of a problem is it?

In 2019 aviation accounted for an estimated 2.8% of global CO2 emissions.  This may be less than many people might have thought, but it’s significant nonetheless.

Improvements in the efficiency of fuel consumption have minimised the impact of rising aviation traffic to an extent.  Since 2000, despite the overall rise in air traffic, thanks to technology, the level of CO2 emissions has risen by just 50%.  However, these efficiency savings have tapered off in recent years and, without a significant technology breakthrough, further emission increases will inevitably follow any increase in air traffic.

In fact, the level of impact on global warming is potentially more significant than the 2.8% contribution to CO2 emissions.  This is because of what is known as the ‘aviation multiplier’.  Put simply, this reflects the fact that aircraft produce emissions other than CO2 that also contribute to global warming.  The impact of these emissions is less well understood but the discharge of nitrous oxide, water vapour and soot also contribute to global warming.  Thus, the overall contribution to global warming for the aviation industry is likely to be higher than 2.8%.  Estimates vary but it could be as high as 5%-6%.

In a developed economy like the US or the UK, where air travel is more frequent, the true contribution aviation makes to global warming could be a lot higher.  Some have estimated, for example, that in the UK, 13%-15% of the UK’s contribution to global warming comes from air travel.  The same is likely to be true for many developed economies.

At present, the most developed economies account for 62% of aviation CO2 emissions but represent only 16% of the world’s population.

Is there an alternative future?

No doubt aviation engineering will continue to develop more fuel-efficient aircraft.  However, further fuel efficiencies can only go so far, and it is unlikely to be enough to prevent emissions from rising overall.  Some sources estimate that if we continue as we have been, then even with more fuel-efficient technologies, we could see aviation emissions double by 2050.

COVID has temporarily limited the amount of passenger air traffic and forced many would-be business travellers to rely more on remote video meetings by Zoom or Teams.  Perhaps this will mean that many businesspeople will be encouraged to travel less in future.  This might serve to slow the increase in aviation traffic, but it would seem very unlikely that we would see any significant long-term reduction in demand.

If we are to reduce aviation emissions in future, the only realistic answer is likely to come from the development of new, greener, technology.

Electric Planes

We already have electric cars – so why not electric planes?

Actually, we do already have electric planes.

In 2010, Airbus developed the world’s first all-electric, four-engine aerobatic aircraft, CriCri.  Since then, it has developed a couple more, small, electric powered planes that feature vertical take-off capabilities.  The Vahana is a small, single seat, aircraft that has made over 100 test flights.  The CityBus is another small aircraft (capable of seating four) that made its first flight in 2019.

Both these aircraft are small and have a limited range (50 km in the case of the Vahana).  They are a first step but a long way from offering the capability to transport large numbers over long distances.

Airbus have also experimented with hybrid aircraft – combining traditional fuels with electric power in the form of the E-Fan X (based on a 100-seater Bae 146 short-haul airliner).  This was tested between 2017 and 2020 and features a single electric engine used in combination with three conventional ones. 

Whilst a lot was learnt from the E-Fan X project, it is just a first step in the journey to developing a viable hybrid electric aircraft.  The E-Fan X itself is not yet a viable commercial proposition.

Boeing and NASA are also experimenting with hybrids.  The SUGAR Volt initiative represents an ongoing attempt to develop a hybrid plane.  As with the Airbus projects, it is currently at an early stage of experimentation.  One related project is the STARC-ABL (single-aisle turbo-electric aircraft with an aft boundary layer propulsor).  This concept aircraft will have two conventional engines mounted on the wings and an electric engine in the tail. It will be capable of carrying 150 passengers.

The eCaravan

However, if you want to look at a pure electric plane that is capable of flying today, then we need to look at something like the eCaravan.

At the end of May 2021, a modified Cessna, capable of carrying nine passengers took off near Moses Lake in Washington State.  It completed a 28-minute flight, reached a speed of 100 mph and achieved an altitude of 2500 feet.   The plane was the eCaravan.  It was powered entirely by lithium-ion batteries.

At the time of writing the eCaravan is the largest purely electric powered plane ever to fly.

The current limitation (the catch as it were) is, of course, the range.  With the existing configuration it would be possible for four or five passengers to complete a journey of no more than 100 miles.  That is enough for a short hop but clearly not viable for most commercial domestic flights, let alone international travel.

The challenge, at present, lies mainly in the limitations of battery technology.

The Battery Challenge

The challenge we now face is that lithium-ion battery technology is reaching its upper limits.  This has proven enough to enable electric cars to achieve significant performance improvements, but it is unlikely to be sufficient to do the same for aviation.

New, experimental, forms of battery technology may eventually provide the answer. 

The current front runners are likely to come from either silicon anode technology or lithium-metal.  A number of people are looking into developing these but the ones to watch would include Dr Richard Wang of Cuberg and, perhaps inevitably, Elon Musk. 

Musk recently tweeted that he thought he was not far away from having something viable for aviation appliations – “probably 3 to 4 years”.  Cuberg also anticipates making some significant advances over a similar time period.

Perhaps, then, the technology might be there to allow commercially viable electric powered planes to be developed during the late 2020s.  Only time will tell.

Hydrogen Fuels

However, electricity is not the only game in town.

Greener aviation might also be achieved through the development of hydrogen fuelled planes.  This is a technology that Airbus now appears to be focusing a lot of energy on.

In September 2020, Airbus unveiled three new concept planes that would use hydrogen fuel technology: all under the ZEROe brand.  This includes a turbofan design, carrying 120-200 passengers with a 2000-mile range. There is also a turboprop design that can carry 100 passengers with a 1000-mile range and a blended-wing body design that will carry 200 passengers, with a range of 2000 miles.  Airbus believes these concepts can be brought to market at scale by the mid-2030s.

Of course, hydrogen also currently has its issues as an alternative fuel source.  The main barrier is the cost of the fuel – currently high compared to conventional alternatives.  This is likely to change as more industries look to utilise this fuel as a greener alternative.  The other challenge would be to develop the infrastructure needed to produce, transport and store hydrogen fuel at airports.

Looking to the Future

We still have a long way to go before aviation technology has progressed to the stage where greener commercial aircraft with either no or ultra-low emissions are a reality.

However, the technology is now being developed that will eventually deliver that vision.  The question is one of when rather than if.

It is quite possible that within the next 10 to 15 years we will see either electric and/or hydrogen powered aircraft become a commercial reality; enabling us to finally achieve the kind of dramatic reduction in the environmental impact of air travel that we so badly need.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

Helping our clients understand the impacts of new innovations, science and technology markets is a key specialism for us.  You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

Sources

Aerotime

Airbus

Aviation Today

Boeing

Guardian

ICAO

IEA

NBC

Scientific American

Two gamers playing on a phone

The Casual Gaming Boom

Casual gaming has been around in one form or another for years.  You might even argue that some of the earliest games like Pac Man could be classed as casual games.  However, the genre has really taken off over the past decade.  The increased use of social media and the ubiquity of Smartphones has created the perfect environment in which casual gaming has been able to flourish.

App Annie predicts that mobile gaming spending in 2021 is on track to surpass $120 billion.  As a substantial chunk of that spend will be on casual and hyper casual games; the enormous size of the opportunities are self-evident. 

So, are we experiencing a casual gaming boom?

Who is the ‘casual’ gamer?

A decade or so ago, if you asked people to describe a gamer, the image of a teenage boy playing Call of Duty late at night on his games console would likely have sprung to mind.  Or, perhaps, they might be playing World of Warcraft on a desktop PC instead. But things have moved on a lot since then.

People who play casual and hyper casual games now include a great many gamers who never play either on a console or a PC.  A significant number of these gamers have come to gaming more recently and, indeed, might only ever experience gaming on a Smartphone or, perhaps, a tablet. 

This, then, represents a different audience of gamers from the traditional gaming market.  It is a much more female focused audience and has many different likes and dislikes, hobbies and consumer preferences that would distinguish the casual gamer from someone who might prefer to play CoD on an Xbox or Cyberpunk 2077 on a PC.

The gaming market is no longer a single homogenous audience, but rather a collection of different (if sometimes overlapping) audiences.  That means different channels, different media and very different commercial opportunities. Different audiences also provide very different opportunities in terms of the future potential for advertising and sponsorship deals.

But casual gaming is also a market that is still growing.  So, the composition of this audience is changing and evolving each year.

The audience is not only different in terms of its composition. It is also clearly different in terms of what people are looking for from gaming.

The Casual Gaming Experience

Games like Assassin’s Creed and Cyberpunk 2077 are enthralling role-playing experiences.  Many people play these games precisely because they like to get into the characters and absorb themselves in a fantasy world.

It is easy to sit down in front of PC or a console and lose yourself for hours in a highly engrossing escapist experience.  In addition, it’s an experience that can be very intense, requiring sometimes lengthy periods of quite focused concentration.  This can be quite a mentally challenging experience.  It may also be quite difficult to dip in and out of – you often feel obliged to hang on just to get to that next cut-scene or to find a good place to save.

But casual and hyper casual games are far less demanding in terms of concentrated time.  You can potentially play a game in 15 or 20 minutes.  This makes it easy to fit your gaming in around other things.  Play a quick game in your lunch hour, or a quick couple of games on the train on your commute to and from work.  As one casual gamer put it on an online forum:

I play half an hour to an hour on my phone everyday. I don’t really have much to do while I’m on the bus or at lunch, so I’d just use to time to play video games on my phone.

Relax with a casual game

It’s because these game can be less mentally demanding that people are more likely to see them as relaxing.  They deliver a means to wind down after a hard day’s work.  As another gamer put it:

What I loved so much about Animal Crossing was how I could wind down and relax.

As such, these games lend themselves more to humour, light-hearted entertainment, and cartoon characters.

fun and utterly hilarious.

But, whilst it is possible to quickly fit in a game in your coffee break, it is still also possible for gamers to spend hours playing such casual games.  Indeed, gamers can and do become every bit as a engrossed with games like Clash of Clans on their mobile phones as a console gamer might with Red Dead Redemption.

In a way gaming is becoming not that much different from television.  TV producers have, for many years, understood that working within different genres means appealing to different audiences.  The audience you might attract for an enthralling thriller is not the same as you’d get for a light entertainment programme. 

So, as the variety of different gaming genres evolves, so too will the variety of audiences.  And so too will the need to understand them independently from each other.

A Blank Canvas

Many of the new generation of casual gamers have come to gaming via the Smartphone and via casual games specifically.  There are many amongst them who have never played a console game or even a PC game.  Perhaps, they have only started playing games within the past few years.  All this means that they are not constrained by any of the pre-conceptions that PC and console gaming fans might have.  That means they represent much more of a ‘greenfield’ opportunity for the future.

This relative lack of ‘expectations’ is likely to mean these gamers are more open to experimenting with new things.  Perhaps they are more open to in-game advertising, perhaps they offer the best opportunities for cloud.  Indeed, any genuinely new innovation in gaming might find a more fertile ground for uptake amongst these gamers than elsewhere.

On the downside, it should be remembered that many of these newer gamers may well not be so familiar with concepts that gaming publishers and developers might ‘assume’ gamers know about.  That means gaming companies need to be careful in using gaming jargon – these guys just might not understand it (or worse, misunderstand it). 

Assume nothing.

Cloud?

Mobile gaming may well prove to be an area to watch in terms of cloud streaming services such as Google Stadia, Microsoft’s Ultimate Game Pass and Amazon Luna. 

The mobile casual gaming audience includes many gamers who are not wedded to traditional console and PC gaming.  They will also include many people who are comfortable with streaming film or music to their mobiles already, so cloud gaming won’t be an alien concept to them.  But here, the cloud services need to get their content right.  Content, after all, is king – demand will entirely depend on a wide enough choice of content.

However here again, gaming companies need to be careful.  These people are not the enthusiastic, technically literate, hardcore of the gaming world.  They may not even have heard of cloud gaming or even understand what makes it any different from other forms of gaming.  They probably haven’t read any of the articles on the subject that appear in the gaming press.  So, this raises the question – how best to market such services to such people? 

Monetisation

Gaming has historically been financed by gamers paying for their games (either outright or perhaps by subscription).  However, recent years have seen a growing proportion of revenues generated by microtransactions where gamers seek to buy in-game content such as upgrades to the game, additional equipment (some functional, some purely aesthetic) and so on.

There are many games available where you can play a basic version of the game for free and any revenues come purely from upgrades to a more complete version of the game and/or from microtransactions.

The free-to-play model has proven a successful option and in future I can see this approach extended to deliver an even higher proportion of content for free.  Monetisation here will therefore be increasingly driven by the microtransaction approach and even by advertising and sponsorship deals.

TV is significantly financed by private advertising and sponsorship and this is now an increasingly important revenue stream for esports – it is surely only a matter of time before we start to see this proliferate across the gaming industry.  The obvious route in will be through the Smartphone based games – and that means casual gaming is likely to be at the forefront.

However, to capitalise on these opportunities gaming companies will increasingly need to learn from the playbook of other entertainment industries (like TV) who have been playing the advertising and sponsorship game far longer.  That means understanding audiences and knowing what advertisers and/or sponsors would offer a great fit for any given audience.  It also means finding the best way to accommodate this without disrupting game play or without it becoming overly intrusive.

Channels

One potentially dark cloud on the casual gaming horizon relates to channels.  At the end of the day casual gaming on Smartphones depends very heavily on two key channels – App Store and Google Play.  This grants Apple and Google incredible market power.

The current legal dispute between Epic and Apple has highlighted the potential problem here – are these channels becoming so dominant that they can effectively squeeze the margins of gaming companies down to near minimal levels?  This very fear has led Epic to invest heavily in its own store front.  At the time of writing, it is yet to be seen as to whether Epic’s legal action with Apple will change anything.

Nevertheless, Epic’s move to develop its own store may yet prove to be a shrewd one for the longer term.  You only need to look at food retailing in the UK to see that a relatively small number of dominant retail chains can seriously squeeze the margins of the food producers. 

The Future

There is little doubt that we will continue to see continued growth and diversity emerge in the casual gaming market over the next couple of years.  New audiences will continue to emerge and evolve as a result.

The challenge for the gaming companies will be to find ways to best capitalise on these audiences – and that will require a detailed understanding of them, plus, of course, how they continue to evolve.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We have considerable experience in the design and execution of market research surveys in the gaming, leisure and consumer tech sector.  We can offer a range of services to help you identify new market opportunities and to understand the current and potential audience for any given game. 

You can find out more about us on our website.  

If you wish to follow our weekly blog you can view all our past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

ANIMAL CROSSING COMMUNITY

APPANNIE

BBC

COMMONSENSEMEDIA

GAMESKINNY

MARKET WATCH

QUORA

SEATTLE TIMES

Robot image

I Robot

“In the twenty first century, the robot will take the place which slave labour occupied in ancient civilisations.”

Nicola Tesla

The Robots are coming

The past few decades have seen many significant advances in robotics.  As a result, we now live in a world in which an increasing variety of tasks utilise robots.  Oxford Economics estimated that robots could displace about 20 million manufacturing jobs by 2030 (that’s 8.5% of the current global workforce).

Indeed, the number of robots in the world has doubled over the past decade.  And, whilst they are not expected to revolt against the humans any time soon, they are nevertheless changing the world in which we live.

But what are Robots?

What counts as a robot?  Before we get carried away talking about machine uprisings, let’s start by considering what a robot actually is.

As it turns out, it can be quite difficult to come up with a definition that everyone agrees on.  Most people would agree that a robot is a machine.  But a robot must be more than just a machine to make it a robot. Kate Darling, a roboticist at the MIT Media Lab, defines a robot as:

a physical machine that’s usually programmable by a computer that can execute tasks autonomously or automatically by itself’

On this definition a radio-controlled drone is not a robot.  This is because it can only act based on instructions it receives from its controller.  However, it can become a robot if it becomes capable of performing actions independently of its human controller based on some pre-programmed automated logic.  For instance, if it is programmed to detect and avoid obstacles during flight without needing to be instructed to do so.

This fine dividing line between machines that are remotely controlled and machines that have the capability for autonomous action can make it difficult to spot robots.  Just how autonomous does a machine’s actions need to be to count as a robot? 

Simple machines that are not robots can perform tasks such as switching on and off, without human input, but we don’t necessary consider these to be robots.  It needs to be automated; it needs to respond to input from its environment and it needs to act independently of direct human control.  However, it also needs to be reasonably sophisticated in its ability to respond – otherwise a thermostatically controlled switch might potentially be called a robot!

How many Robots are there today?

Most robots are, at present, used in manufacturing and, in particular, for automated assembly processes.  The (International Federation of Robotics) IFR estimated that there were around 2.7 million industrial robots in use around the world in 2019. 

Robots are big business.  2019 saw 373,000 new industrial robots installed at a cost of US$13.8b.  

However, 73% of these robots exist in just five countries – the USA, Japan, Germany, China and South Korea. 

So what are Robots being used for?

Most robots are used in manufacturing and logistics operations.  Typically, that would be for assembly operations or for moving goods/parts around the factory floor or in a warehouse.

28% of all the robots installed in 2019 were in an automotive business.  The image many of us have of robots assembling cars is still a fair representation of the reality of robotics in the workplace today.  And a further 24% are in use in the electrical/electronic manufacturing industries.  That’s just these two industry sectors purchasing over half of the world’s robots.

However, robots are now also being used in a wider variety of other manufacturing sectors such as metal machinery, plastics and food. We can expect to see them used more extensively across manufacturing over the coming decade as technology develops viable applications outside of the automotive space.

Also, whilst most robots are still being installed in factories, we are now starting to see new types of robots emerging in other industry sectors as well.

When drones become Robots

Most drones are not robots.  That is because their radio operators directly control them. And in that respect, they are no different from radio controlled model aircraft.

However, some of the more advanced drones incorporate a degree of AI in the form of Computer Vision which enables them to detect and respond to obstacles whilst flying without the need for operator intervention.  This kind of technology also allows them to record observations about their environment in a more automated way.

The more autonomous a drone becomes, the more robot-like it becomes.  In future robot drones will become a reality.

Robots in logistics

Robotic (driverless) forklift trucks have been around for a while but up until now not in huge numbers.  In 2019, firms bought around 5,000 of these robot trucks – that sounds a lot but it’s still only 0.3% of the global forklift truck market and only about 1% of the size of the global market for industrial robots.

Nevertheless, logistics is becoming more automated, and the competitive demands generated by businesses like Amazon will no doubt act as an accelerator of change.

How fast robots will catch on in logistics remains an open question, but many industry commentators expect to see significant growth in their use over the coming decade.

Robots in healthcare

Robots are now also starting to make an appearance in our hospitals and health clinics.

Here, there are number of different applications.  Covid has seen a particular growth in interest in UV disinfection robots.  These may have had most prominence in the news over the past year, but they are by no means the only application.

Toyota have developed a robot (WelWalk WW-200) to help with the rehabilitation of patients suffering from lower limb paralysis.  And some companies have even developed robot surgeons to assist in simpler or more routine surgical procedures.

It is clearly very early days with a lot of this technology, but many people feel healthcare robotics is an area to watch for some potentially significant growth opportunities in the future.

Driverless vehicles

Driverless vehicles are, of course, a form of robot.  Trials are currently underway with driverless cars and we could well see these vehicles start to make an appearance on our roads before 2021 is out.

These robot drivers can negotiate their way from A to B – responding to traffic conditions and making autonomous decisions about when to speed up and slow down, when to avoid obstacles, and when to stop for traffic lights etc.

Just about any form of vehicle could be driverless.  Indeed, we may even see the day where passenger aircraft essentially become robot-controlled drones.

Robots in agriculture

One sector that is likely to see an increased use of robots is agriculture.  Here we are likely to see more driverless tractors and combines in use in the future. 

There are also robots today that can pick fruit, capable of gauging the ripeness of fruit and deciding for themselves which fruit to pick and which not.

Robot house servants

Simple robots are in use today for such basic tasks as vacuuming and CES 2021 showcased several concept domestic robots designed to help with a variety of common household tasks such as washing the dishes and tidying up.

The day when we are all served by Robot Jeeves is still a long way away, however, although the next decade is likely to see some increasingly sophisticated automation technology move us a lot closer to it.

I Robot

To get to a stage where we come face to face with a fully functioning, intelligent, humanoid, robot is (let’s face it) a long way off.

The key developments that are yet to come, which would make that possible, relate more to AI than to creating an electro-mechanical machine capable of replicating human motion.

How close are we to creating such an robot?

Various experts have different views on this.  Some have suggested some time between 2030 and 2060 is theoretically realistic – so potentially within our lifetimes!

That said, we have an issue in creating that kind of AI.  And that is the age-old AI problem – to design Artificial Intelligence, you really need to be able to define what “human intelligence” actually is.  Philosophers have debated this question for centuries without really arriving at a clear answer!

One thing is for sure though, robotic technology is going to offer some significant growth opportunities across a range of different sectors and applications over the coming decade.  It is just a question of identifying and exploiting the new opportunities that this technology will bring.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future.  That means understanding change – whether that be changes in technology, culture, attitudes or behaviour. 

We have considerable experience in the design and execution of market research surveys in the field of both b2c and b2b science, engineering and tech markets.  We can offer a range of services to help you identify new market opportunities and to understand the position and strength of your brand in the market.  You can read more about this on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

Sources

ARIC Journal

BBC

Builtin

CNET

Heartbeat

IFR

Interesting Engineering

Intuitive

Investopedia

John Deere

MMH

Ohio University

Oxford Economics

Toyota

Wired

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