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How Gen Z is reshaping the gaming industry
August 12, 2022
Gen Z makes up around a third of the global population and their cross-industry influence is beginning to take center stage. Brands have been working hard behind the scenes to understand, reach and engage with this digitally-connected generation. Unlike Millennials, who experienced the introduction of cell phones, social media, and the internet, Gen Z’s formative years coincided with the rise of things like the metaverse and web3, making them total digital natives. They spend much more time on the internet than previous generations and are generally seen as the most tech-savvy audience.
Gen Z’s interest in gaming is undeniable. In fact, 87% of Gen Z said they play video games on devices such as smartphones, gaming consoles, or computers at least weekly. This presents a huge opportunity for brands in the in-game advertising space, especially for those who can authentically engage this group of gamers. Many recent studies have begun peeling back the curtain on Gen Z’s preferences and how they influence the global digital landscape. Successful marketers can leverage this data to better understand the behaviors of Gen Z gamers and the expectations they have of brands in the space.
Why gaming is such an attractive place for Gen Z
According to a recent Deloitte study, in five countries Gen Z respondents cited playing video games as their favorite entertainment activity. This is surprising when compared to older generations who still lean towards TV and music streaming. Gen Z has the potential to reshape the entertainment landscape as their preferences are strikingly different from other generations. Having grown up with online habits, they are often early adopters that have the power to influence the behaviors of older and younger generations.
Gen Z is much more accustomed to a “connected life” which can explain their attraction to gaming. They are often looking for community and a sense of belonging in their hyper-digital lives. Gaming gives them the outlet for self-expression, immersion, connection, and relaxation. In one recent study, 57% of Gen Z respondents said they felt freer to express themselves in games than in real life, and 45% stated that their in-game avatars/identities were accurate expressions of themselves as individuals. According to Razorfish and Vice Media, Gen Z consumers spend twice as much time socially interacting in the metaverse than in real life.
Reaching Gen Z gamers
With so much of their lives spent online, Gen Z gamers are much more likely to spend money in the gaming space. According to a Razorfish and Vice Media study, Gen Z gamers purchase items in the metaverse the same way they do in real life. Over the next five years, 20% of Gen Z gamers' "fun" budgets (money spent on entertainment, leisure, or recreation) will go to in-game purchases, with the average current spend being $50/year. This represents a huge opportunity for brands to not only reach Gen Z gamers where they are but also to cultivate lasting relationships with young audiences.
Creating authentic virtual identities and pinpointing their purpose and goal in the gaming space is crucial to reaching Gen Z audiences in a meaningful way. As in-game advertising and the metaverse continues to evolve, there is still a general lack of understanding among brands when it comes to constructing a presence in the gaming space. Increasingly, Gen Z is embracing gaming for more of the social and community aspects it provides and considers the metaverse an extension of their physical lives. This makes in-game advertising an ideal environment for brands to explore as a launch pad to build relationships with these consumers.
However, brands need to be deliberate in creating a clear strategy before heading into such an ever-changing environment. While this is no easy task, understanding compliance, targeting capabilities, and how to access inventory are the basics in order to successfully take advantage of in-game advertising.
Understanding Gen Z expectations
Understanding how Gen Z gamers would like to be reached is a big piece of the puzzle. One-third of Gen Z gamers would like to see brands develop virtual stores and 30% were receptive to the idea of brands selling skins and apparel for their avatars. This may only be relevant for certain industries - such as fashion and lifestyle brands - but such large numbers are promising for marketers hoping to engage with Gen Z in the gaming space. In addition, many were open to the idea of brands engaging with free products and experiences (46%), branding digital worlds (23%), and traditional advertising (18%).
In addition, understanding where gamers are discovering brands outside of the gaming space can help advertisers diversify their strategies and meet Gen Z where they are. GWI data reveals gamers often discover and interact with brands outside of the in-game space through Vlogs, branded apps, forums, message boards, pre-roll ads, and branded videos. Half of all Gen Z gamers visit online gaming community sites or social channels regularly and 43% get gaming information from their favorite streamers or content creators.
Brands and agencies who want to effectively engage with Gen Z must understand the nuances in their media and entertainment preferences, how to best leverage these channels, and ensure their strategy authentically embraces the essence of the gaming community. There is no one-size-fits-all solution to tapping into the diverse Gen Z audience.