Founder @ NowSourcing. Contributor @ Hackernoon, Advisor @GoogleSmallBiz, Podcaster, infographics
Vlad Panchenko at the DMarket office ideating on in-game skin concepts. (Courtesy: DMarket)
With brick and mortar gaming stores, like GameStop closing at a rapid pace, the world of gaming is moving, rather quickly, to an online-first arena for developers and gamers alike. This includes the rise of the in-game skins market.
Skins are visual wearables either earned within a video game through feats of accomplishment, or can be purchased by users via tokens or money. Skins don’t typically impact a player’s ability to do anything or impact gameplace, but they do cosmetically communicate or create visual awareness for players. Some skins can be exclusive or rare, thus giving players certain recognition or status.
Over the past five years the in-game skins market has skyrocketed. A vanity component to gaming has, much like the luxury goods market, increased during current economic times. Skins turnover reached around $25 billion over the last 5 years. Top tier games such as Fortnite and APEX Legends are building their in-game economy around virtual assets, season passes, etc. Multiple celebrities and famous brands such as Louis Vuitton, Moschino and Nike are launching their own skins collection within video games.
The market took off in late 2012 as Valve introduced the Steam Community Market and players began to trade in-game items. Expanded since by user-generated content and third-party trading platforms, this has now evolved into a multi-billion dollar economy with a record price tag of more than $61,000 for a single item.
A SuperData report estimates total digital games revenue across mobile, PC and console hit $109 billion in 2019, with free-to-play games like Apex Legends and Fortnite making up 80% of the share. EA has made nearly $1 billion from microtransactions in just the last three months.
Of the $2.4 billion made by Fortnite in 2018, around a billion came from in-game asset sales. In 2019 the game earned $1.8 billion, its success the result of consistent content updates and monetization through Battle Pass subscriptions, as well as crossover promotions with pop-culture blockbusters like “Marvel’s Avengers,” Netflix’s “Stranger Things” and Star Wars, according to SuperData.
Now, with the launch of Google Stadia, cloud gaming is about to take off. It is a natural ally of the ‘Games as a Service’ trend, with its subscriptions and skins-based monetization. Cloud gaming is expected to double the time players spend on games (up from current 7.1 hours a week on average) which developers hope will further boost the demand for in-game cosmetics and boosters.
What has caused such tremendous growth? For one, the rise of free-to-play model gaming. It’s one of the biggest online incentives for games, like Fortnight, to attract millions of users. If it’s free to play, then revenue must be made somewhere -- enter in-game skins. This is one of the key ways gaming companies are making billions, says DMarket founder and in-game skins developer Vlad Panchenko.
"Many of the top-tier games from Fortnite to Apex Legends have built skins-based game economies to reclaim billions in revenues,” says Penachenko.
Developers, like Panchenko, are about to descend upon Las Vegas this week for the 2020 D.I.C.E. Summit. It will be a conversion of brands, gamers, developers and anyone tangentially connected to the industry for an opportunity to look at trends and opportunities.
With continued growth and market innovation expected, D.I.C.E. attracts key players, like keynote speaker, Tim Sweeney, Founder and CEO of Epic Games. Sweeney will present the Conference Opening Keynote titled, "The Times They Are A-Changin'" where he will share his belief on how the industry needs to rethink the relationships between platforms, paywalls, publishers, players, policies, and politics on the basis of principles for long-term game industry health.
It’s no surprise, then, that attendees will see a strong overlap of gaming moguls and major brands, like Louis Vuitton, Moschino, Prada and Nike who have already jumped on board to create branded in-game items.
What can we expect to come from conferences and convergences of minds, like D.I.C.E., as it relates to the in-game skins industry?
According to Panchenko,
“Tomorrow we will witness the rise of open-world-economies with real multiverses such as Roblox. Not only skins but the global real-world-businesses between players and content creators that will continue to create better experiences.”