Gametech: How Video Games are Seriously Changing the World
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How Video Games are
Seriously Changing
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KEY TAKEAWAYS
The video games industry has grown significantly since Niko Partners began
tracking the market in 2002. Today, Asia is the largest region for video games with
a total of 1.5 billion players spending over US$86 billion on video games software
and services.
The video games industry has benefited from pre-existing technologies that
have been developed for other industries first, and then directly applied to video
games. This integration of video games and pre-existing technologies has created
a symbiotic process of technological adoption and innovation.
Financial investments in R&D by the video games industry have increased rapidly
over the past decade and led to the development of a broad array of new tech-
nologies that, while initially intended for use in the video games industry itself,
are now being repurposed for beneficial uses across other industries.
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Gametech: How Video Games are Seriously Changing the World | Introduction
INTRODUCTION
Niko Partners has been tracking Asia’s video
games industry since 2002. We conduct
market research and analysis on the video
game markets of China, Japan, South Korea,
Southeast Asia, India, and the Middle East
(Saudi Arabia, UAE, and Egypt). Our focus is
local perspective with global understanding
of consumer behavior and spending on
video game software and services, the total
number of gamers, trends, challenges within
the industry, market sizing, and regulations.
As fast as video games have evolved and the
sector has grown, there has been a similar
pace of innovation in technology. We have
watched video games grow across many
generations of consoles, the arrival of mobile
gaming as an industry segment, and the
explosion of esports, livestreaming, and gaming as a cultural phenomenon. These
milestones in the video games industry
are driven by technological advancement,
from chips to network innovations, but
these technologies don’t exist in a bubble.
Just as video games are a force for cultural
exchange, job creation, and economic
growth across the Asia region, the video
games industry has also contributed in
the same way to other industries through
technological development. This report
sheds light on the growing importance of
video game technologies (a.k.a. gametech
in this paper) and the leading role Asian
companies take in bringing this technology
to the world.
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Gametech has also benefited science and social applications with AI researchers
applying techniques used in the video games industry to develop and train AI
that is faster than ever before. Innovations across autonomous decision-making
impacts numerous industries including self-driving cars, manufacturing, and the
development of smart cities.
Game based learning is another sector where gametech has benefited education
which has led to upskilling, new career paths and increased student motivation.
These same lessons have been applied to medical technologies with hands on
simulations benefiting medical technicians, nurses, and physicians in the work-
place, while game-based applications are used to support patients and increase
accessibility.
As the video games industry has adapted new technology, other industries and
society have seen immeasurable benefits through the spillover of these technol-
ogies. The video games industry also stands at the center of our digital future as
more of lives move online and ultimately into the metaverse.
Gametech is a term used to describe these technological innovations, including
those starting in the video games industry that are now being utilized across and
directly benefiting industries such as hardware development, software develop-
ment, digital media, virtual reality, scientific research, education, and medical
technology.
The video games industry is a driver of technological innovation worldwide and
gametech has produced significant economic and societal benefits including
scientific breakthroughs, the creation of entirely new industries, the development
of new products, increased job opportunities, new ways of learning and even indi-
vidual healthcare.
The video games industry has fostered innovation across specialized hardware
with the introduction of GPUs in the late 1990s, the development of haptic tech-
nology and more recently dedicated gaming smartphones. Software initially de-
signed for the video games industry, such as game engines, have also started to
play a crucial role across the film, manufacturing, and virtual humans’ industries.
As the games industry has reached a wider audience, investment in gametech has
led to the introduction of VR headsets and game peripherals like adaptive control-
lers. These technologies are now being used across healthcare, education, auto-
motive, design, and numerous other industries.
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Gametech: How Video Games are Seriously Changing the World | Introduction3
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1950s
1958
Physicist William
Higinbotham
creates the first
video game
called Tennis for
Two1962
Computer
Scientist Steve
Russell creates
Spacewar!, the
first widely
distributed video
game
1960s
1972
Atari releases
Pong which
leads to the rise
of arcade
games
1990s
1985
Nintendo releases
the Nintendo
Entertainment
System which
popularizes console
gaming1994
Sony releases its
PlayStation console which
uses CD-ROM technology
1997
Ultima Online is published
by Origin Systems in 1997
with online multiplayer
2002
Xbox launches Xbox Live
for online gaming on its
Xbox console
2003
Valve launches its PC game
distribution called Steam
for digitally downloaded
games2006
Sony launches
PlayStation 3 its CELL
processor, Blu-Ray and
PlayStation Network
2009
Rovio releases Angry Birds
which leads to the rise of
early smartphone gaming
1998
Epic Games releases the
first generation of Unreal
Engine
1999
Nvidia popularizes the
GPU with its GeForce 256
which enabled modern PC
gaming
2000s
1970s
1980s
201
0s
2011
Twitch launches its games
live streaming service,
further popularizing
esports and streaming
2011
Nintendo releases the 3DS,
the first video game
console to display
stereoscopic 3D
without the use of 3D
glasses 2013
Oculus introduces its first
VR headset, the Oculus Rift
2014
Sony launches PlayStation
Now, its cloud gaming
subscription service
2015
Tencent releases Honor of
Kings which leads to the
rise of high definition 3D
smartphone gaming2016
The Pokémon Company
and Niantic release
Pokémon Go which uses
augmentedreality and
location based services
technology
2017
Epic Games releases
Fortnite: Battle Royale
which leads to improved
cross play implementation
2017
Nintendo releases the
Switch, its hybrid console
that offers both home and
portable gaming
2018
Nvidia releases its GeForce
20 series GPUs, the first to
implement ray tracing in a
consumer product
2019
Xbox launches its own
cloud gaming services
2020
miHoYo releases
Genshin Impact, a AAA
game that fully scales
across mobile, PC and
console
2021
The League of Legends
World Championship
final sets an all time of
73 million peak viewers
2020 >
Gametech: How Video Games are Seriously Changing the World | Introduction
The History of Gaming
Source: Niko Partners 2022
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Asia’s game software and services revenue in 2022 | US$ Million | Mobile PC
692
69131
18
46
3 34
49
13
66
28
396
China
MENA-3
Indonesia
Malaysia
Philippines
Singapore
ThailandVietnam
Chinese Taipei
JapanKorea
India
346
195
204
54 492
549 810
2,9574,572 106 825
452
370
526 873
567
1,159
16,212
5,546
587 368 1,105
34,090
13,646
China MENA-3 Indonesia Malaysia Philippines Singapore Thailand Vietnam Chinese
Taipei
Japan
Korea India
There is a symbiotic relationship between
the video games industry and the
development of technology. Proprietary
technologies that are created by and for the
video games industry improve the gaming
experience while the increasing number of
users, promoting the systematic and large-
scale application of game technology.
Asia is an excellent case study for this
symbiosis. In 2022, we estimate that Asia
is the home to 1.5 billion gamers across
mobile and PC, the two largest platforms in
the region, that will generate US$86 billion*
in revenue by the end of the year. In this
regard Asia makes up more than 55% of the
PC and mobile global gaming audience and
revenue. While Niko Partners tracks console
spend for select markets, its market share
remains low across the broader Asia region
due to high barriers to entry such as the need
to pay upfront for dedicated hardware and
software.
*Includes Mainland China, Japan, South Korea, Indonesia,
Malaysia, the Philippines, Singapore, Thailand, Vietnam, Chinese
Taipei & MENA-3 (Saudi Arabia, the United Arab Emirates and
Egypt). PC & Mobile game revenue only.
Gametech: How Video Games are Seriously Changing the World | Introduction
Asia’s PC + Mobile Gamers in 2022 | Million
Source: Niko Partners 2022 Source: Niko Partners 2022
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Asia is also home to more public game
companies than any other region. Five
of the top 10 public game companies by
market value in the world were from Asia in
2021: Tencent, Sony, NetEase, Garena, and
Nintendo. Furthermore, Asia is home to 26
out of top 50 global public game companies
by market value. The combination of
these factors arguably contributes to Asia
being the center of video games industry
development.
Asia is also a hotspot for global
manufacturing, particularly for computer,
smartphone, and chip manufacturing. In
this sense, Asia is at the intersection of
video gaming and technology industries.
Gaming technology, or “gametech” refers to
both existing technology that is benefiting
the video games industry and technology
developed by the video game industry that
benefits other industries. Because it is a
symbiotic relationship, gametech represents
a two-way street.The first category in the gametech space
refers to pre-existing technologies that
are incorporated into video game software
and hardware or are integral to playing
online video games. This would include
computer processors applied to gaming,
or network technologies leveraged to
support live-service titles. The second
category of gametech includes technologies
initially designed for use in the video game
ecosystem but which have become widely
used for other commercial applications and
in a multitude of businesses. This second
category includes virtual reality (VR), game
engines, haptic input devices and adaptive
controllers, just to name a few. These were
all initially introduced in the video game
industry but later adopted and widely used
by other industries. This white paper will
cover both areas with an in depth focus on
the second category of gametech spillover
into other industries.
Pre-existing technologies
Technologies initially designed for video games
Computer
processors Network
technologies Augmented
Reality Artificial
Intelligence
Virtual
Reality Game
Engines
GPUs Adaptive
controllers
Gametech: How Video Games are Seriously Changing the World | Introduction
Source: Niko Partners 2022
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A GLOBAL OVERVIEW OF
GAMETECH
Although gametech is included in this research to the degree that it sustains and enables
the video games industry, the value and economic impact of gametech is not fully
encapsulated by gaming industry revenue. It should be noted that Niko takes a consumer
demand-based approach to its market size estimations and forecasts, accounting for total
player spend on video game software and services. To ensure that our models are strictly
within the scope of the video games industry, Niko does not include other segments that
contribute to the video game industry. So, despite the already massive Asia market size
projection of US$86 billion with more than 1.5 billion gamers in 2022, this does not fully
demonstrate the impact of the video game industry in the region. The video game-related
and game-dependent industries are larger in size, especially if we include the spillover
effects from innovation within the video games industry.
Gametech: How Video Games are Seriously Changing the World | A Global Overview of Gametech
GameTech
Hardware
development Software
development
Education
ExtendedReality
Artificial
Intelligence
Metaverse
Web3
Healthcare
Digital
Media
Accessibility
Scientific
research
Source: Niko Partners 2022
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For example, Epic Games’ Unreal Engine, which was initially developed to create video
games, has been adopted and widely used in film, TV shows, and even in the emerging
avatar (virtual humans) sector. Unreal notes that the engine has been used in 160 major
motion pictures and TV shows. Notable titles that were produced using Unreal Engine
include
Star Wars: The Rise of Skywalker, The Mandalorian, Game of Thrones , and
Westworld .
On the industrial end of the spectrum,
technologies developed in other sectors, like
education, aviation, and medicine, can end
up as major feature in video games.
Augmented reality (AR) is a clear example
of gaming adopting technology originally
developed for non-gaming purposes. Once
AR was adapted by the video games industry
and demonstrated success in video games,
companies were quick to jump on the
bandwagon and develop wearable gadgets
designed to include gaming (and other
entertainment purposes) as one of their main
functions. Technological breakthroughs in
smartphone capabilities, digital cameras,
gyroscopes and GPS systems, alongside AR,
allowed
Pokémon Go to reach 500 million
downloads and generate over US$6 billion in
revenue.
Gametech: How Video Games are Seriously Changing the World | A Global Overview of Gametech
miglagoa | stock.adobe.com nito | stock.adobe.com
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Gametech: How Video Games are Seriously Changing the World | A Global Overview of Gametech
Gametech has Societal Benefits
Since 2018, Microsoft has continuously
developed the Xbox Adaptive Controller
(XAC), which has enhanced accessibility for
PC and Xbox gamers with disabilities. The
technology includes hearing, vision, mobility,
and cognitive assistive technologies, and can
even be implemented for Linux users. The
technology has been extended to support
accessibility in other industries, such as for
election voting software. This is where we
begin to see the social benefits of gaming
technology as well. Accessibility in gaming is
broadly socially productive.
A survey of people with disabilities
in Japan in 2021 found that 50.9% of
respondents believed that gaming and
esports allow them to connect more
with the world.
50.9 %
Eric BVD | stock.adobe.com
9
One of the most apparent synergies between
tech and gaming is the adoption of new
technologies by game companies. The video
games industry has long benefited from
technological developments in adjacent
sectors, allowing for innovation in video
games and the creation of more compelling
experiences for players. Recently we have
seen gaming adopt Web 3 technologies
and incorporate cloud computing as
an emerging business model. Artificial
Intelligence (AI), cloud gaming, and 5G also
fall into this category – they have been
developed for other industries first but
are now being utilized by the video games
industry. In turn, innovation made with this
technology through video games is leading
to applications that can then be redeployed
in other industries. Artificial Intelligence
A compelling case from Asia is the
intersection of AI and gaming. AI is already
utilized in games across a number of areas,
including generating new content, creating
realistic NPCs, analyzing user behavior,
adapting difficulty levels in games, and
even combating toxicity online, all through
machine learning. Tencent’s AI Lab has used
machine learning and artificial intelligence
to create a complex and intelligent AI that is
capable of solving difficult challenges. When
applied to gaming, this AI is even able to
beat human players.
Machine learning is widely used to create
software that can identify patterns and
predict outcomes of complex systems.
Tencent’s game AI, called Wukong AI,
was created to learn rules, strategies, and decision making for Honor of Kings ,
Tencent’s 5v5 MOBA game.
Honor of Kings is
the top grossing game in China, with its own
massive esports league and a playerbase in
the hundreds of millions. In 2019, Wukong AI
defeated a human team comprised of 5 top players from China’s King Pro League in a 3-1
victory. The AI reportedly played the human
equivalent of 400 years’ worth of simulated
games each day against itself to develop
its strategy, a feat impossible for its human
counterparts.
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
R&D INVESTMENT ACROSS TECHNOLOGY
AND VIDEO GAMES
10
While it is impressive that an AI can beat
human players, the implications are much
wider. Video game AI may be used in
training top human players and esports
coaches may use this technology to
uncover or optimize strategies that would
take players years to discover. Tencent is
pursuing the development of gaming AI for
more widely applicable reasons as well.
Advancements in gaming AI can also be
used to improve normal players’ gaming
experience. AI is already being used in the
detection of cheaters and to weed out toxic
online behavior in game chats and online
communities.
5G and Cloud Gaming
The development and deployment of 5G
across Asia is another example of broader
technological advances improving the
video games market. 5G is increasing the
accessibility and complexity of mobile games
by increasing download speeds and lowering
game latency, producing smoother online
gaming experiences. 5G rollout and coverage is also a crucial threshold for cloud gaming,
a way to play high-end video games on low-
end devices, anywhere, at any time.
Cloud gaming removes barriers to entry
by allowing any device to play video games,
but it also requires a constant internet
connection. Its widespread implementation
would dramatically increase the addressable
market for high-end and next-gen video
games on low-end devices like smartphones,
tablets, and TVs. It is also a potential
marketing tool which could be used to lower
barriers to player acquisition by eliminating
downloads and local storage. While cloud
gaming is still a niche segment in the video
games industry, Niko Partners expects it to
take off in Asia as governments plan to roll-
out 5G connectivity and as 5G smartphones
are more widely used. In fact, as we describe
in our cloud gaming report, we project
the addressable market for cloud gaming
services will exceed 500 million users in Asia
by 2025.
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
Addressable market for cloud gaming in Asia* | Million
*The number of gamers who are aware of cloud gaming services, have
access to cloud gaming services, and have a home broadband or mobile
data plan that would support moderate cloud gaming usage.
Source: Niko Partners 2021 Cloud Gaming Report
2021 2025
150
500
more than
3x growth
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Ubitus, a worldwide GPU virtualization
and cloud gaming firm based in Chinese
Taipei, has introduced innovative solutions
that utilize 5G. By partnering with telecom
carriers, Ubitus provides fast-to-market
cloud gaming solutions for game publishers.
Ubitus has partnered with telecoms such as
China Mobile HK, Korea Telecom, Ericsson
Malaysia, and Singtel, among others, to
deliver cloud gaming solutions in Asia. It
is an example of a game company at the
forefront of an emerging market segment
made possible by wider improvements in
technology.
Cloud gaming depends on robust network
infrastructure to work as intended. A user
requires an always active high speed, high
bandwidth, low latency, and low jitter
connection for play. So, as telecoms invest in
their network and firms like Ubitus provide
unique cloud gaming solutions, the reliability
of the service, breadth of content, and price
to the user will improve, leading to increased
growth for the cloud gaming market.
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
CLOUD COMPUTING /
COMPONENT + SERVER
PUBLISHERS /
DEVELOPERS CLOUD GAMING SOLUTIONS
B2B CLOUD
CONSOLE
PC
MOBILE
TV
B2C CLOUD
USER
ACQUISITION
TELCO / ISP
END USERS
TELCO CLOUD
GAMING
PLATFORMS
Asia’s Cloud Gaming Ecosystem
Source: Niko Partners 2021 Cloud Gaming Report
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Research & Development
As the previous examples demonstrate,
the video games industry benefits from
the development of technology broadly.
However, game companies have not been
content to simply adopt these solutions.
Niko Partners research shows that the
R&D investment of game companies has
continued to increase, suggesting that
game companies see themselves as active
participants in this process. Revenue
generated by video game-related companies
is directed back into R&D to develop new
technologies and iterate on existing ones to
build new experiences, which spill over to
other industries.With a greater focus on AAA production
values and high-quality content, game
developers are increasing their R&D spend
while the number of titles they publish
annually decreases. This is due in part to
growing development time for AAA games.
Genshin Impact for example had a 4-year
development window and budget over
US$100 million prior to launch, something
that is becoming more common across the
industry. AAA teams now scale to over 1,000
employees per game. Live service models
also mean video games must continually
provide innovation through technical and
content updates. Increased R&D in the video games industry
reflects the importance of hit titles with
long life spans. Developers are striving to
build video games that will attract massive
audiences and keep them engaged for
years—and cutting-edge technology is a
great way to set a game apart. Increased
R&D has led to higher video games market
revenues and allowed other industries to
utilize gametech for their own markets –
which we explore in the next section of this
report.
NetEase is one company that has seen its
percentage of R&D spend relative to revenue
almost double from 11.3% in 2017 to 22.3%
in 2021. Its absolute spend on R&D has also more than tripled over the past 5 years.
The company has established leading R&D
centres, including its Fuxi AI Lab and AAA
game studios, dedicated to the development
of cutting-edge game related technologies.
Its AI Lab recently created a deep learning
technique called MeInGame that can
automatically generate 3D character faces
using a real-life picture of a person. This
technology has applications beyond gaming
across other digital industries. Nexon has
seen its game R&D spend as a percentage of
total revenue more than double from 3.4%
in 2017 to 2021. The company has focused
on investing in the building blocks for video
game virtual worlds that will contribute to
the development of the metaverse.
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
13
NetEase R&D spend | Billion RMB | R&D Spend % of total revenue
2017 2018 2019 2020 2021
4.1
11. 3 %
18.5 % 18.1 % 19 %
22.3 %
7.48.4 10.4
14
2017 2018 2019 2020 2021
3. 4 %
4.1 %
6.0 % 5.6 %
7.6 %
8.07
10.46 14.9
16.54
21
Nexon R&D spend | Billion JPY | R&D Spend % of total revenue
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
Source: NetEase IR
Source: Nexon IR
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The video games industry is currently going through a phase of consolidation, with video
game and tech companies acquiring and/or investing in game studios with strong R&D
capabilities, a large talent pool, and popular IP or content. We have seen geographic
expansion with firms such as Tencent, miHoYo, NetEase and others either investing in
overseas game studios or opening their own studios to establish leading R&D centres
with global talent. All of these cases represent gaming companies recognizing the value of
emerging technology as well as their place within the cycle of tech adoption and innovation.
It is not just game publishers and developers taking part in this cycle. The establishment and
growth of dedicated game technology firms with businesses in development, operations,
and analytics, such as game engine companies, hardware manufacturers, middleware
companies, and even UA and monetization platforms, have all helped to support growth
across the video games industry and in turn led to technological innovations that can be used
by both game and non-gaming companies. The case studies above demonstrate gaming’s
ongoing involvement in a symbiotic process of tech adoption and tech innovation.
The rest of this white paper report sets out to communicate the impacts of gametech, with
a focus on Asia, by indicating where gaming advancements have been imported to other
industries, where gaming culture and consumption drives other markets, and finally where
gametech has created a spillover effect that results in job creation, the development of new
businesses, products and business models, or even provided social benefits that are difficult
to quantify in economic terms.
Gametech: How Video Games are Seriously Changing the World | R&D Investment across Technology and Video Games
Sony Game & Network Services |
Tencent | Billion RMBNetmarble
| Billion KRW
NCSoft
| Billion KRW
R&D spend
|
R&D Spend % of total revenue
Source: Sony Game & Network Service IR
Source: Tencent IR Source: Netmarble IR
Source: NCSoft IR
Billion JPY
2017 2018 2019 2020 2021
106.2
116.3
126.7
144.5
175.7
5.5 % 5.0 %
6.4 %
5.4 %
6.4 %
2017 2018 2019 2020 2021
311.8
412.9
458.9
519.2
561.8 12.9 %
20.4 % 21.1 % 20.9 % 22.4 %
2017 2018 2019 2020 2021
17.5
22.9
30.4
39
51.9
7.4 % 7.3 %
8.1 % 8.1 %
9.3 %
2017 2018 2019 2020 2021
189.4
274.7
309.6
381.5
428.8
10.8 %
16 %
18.2 %
15.8 %
18.6 %
15
While the video games industry has clearly been the beneficiary of wider
advancements in technology, and video game companies have taken it upon
themselves to build out more comprehensive R&D arms to make better video
games, much of the impact and spillover of gametech can be seen outside of the
video games industry. In many cases, technology designed for video games has
developed an unexpected life outside of gaming. Technology benefits from the
push to create higher quality, AAA video games.
This push has led to the development of specialized hardware to support the
growth of the video game industry, including processors, GPUs, memory, storage,
VR headsets, haptic feedback technology, sensors, displays, gaming accessories,
and other peripherals. The first set of cases in this section explore instances where
gametech hardware has created an impact that reaches beyond video games.
GPUs
One of the earliest examples of video game
hardware developing a broader industrial
impact, is the growth of the GPU (Graphics
Processing Unit) industry. In the 1990s the
GPU industry saw rapid development in
tandem with video game development, and
growing graphics demands. Sony was the
first game company to coin the term, using
the phrase GPU for the Toshiba designed
graphics card incorporated in the first Play-
Station console. Nvidia popularized the
term GPU in 1999 with the development of
its GeForce 256 PC GPU. Today GPUs are a
standard part of any gaming PC build, and a
closely scrutinized component of each new
generation of video game consoles.
However, in the past decade, chips that
were designed first for video games are now
being deployed to run everything from self-
driving cars to cryptocurrency mining rigs.
GPUs have become optimized pieces of tech- nology, ideal for processing-intense applica-
tions and usable beyond gaming. Even the
most powerful supercomputers have bene-
fited from the development of GPUs. GPUs
with parallel processing can perform more
calculations simultaneously than a CPU,
allowing calculations to be divided up into
many identical tasks. Because of their pro
–
cessing capabilities, GPUs became so pop-
ular in crypto mining that they became diffi-
cult to acquire for PC builders and gamers.
One particularly notable chip was Sony’s
CELL processor, which developed a sig-
nificant legacy beyond gaming. The CELL
processor was initially developed by Sony,
IBM, and Toshiba for use in the PlayStation
3 (2006) console. It was so powerful and
cost-efficient that the CELL chip ended up
powering the IBM Roadrunner, the most
powerful supercomputer at the time. In fact,
the United States Air Force Research Labo-
ratory deployed a PlayStation 3 cluster of
over 1700 units, nicknamed the “Condor
Cluster,” for analyzing high-resolution satel-
lite imagery in 2010.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
HOW INVESTMENT IN GAMETECH BENEFITS
OTHER INDUSTRIES Gametech and Hardware
Photo by Greenpro / CC BY-SA 3.0
16
Haptics
Another case of hardware designed for video games bleeding into other industries is
haptics – the simulation of touch and motion senses. This is the basis for peripherals
ranging from mouse and keyboards to touch screens. Video game consoles integrate
haptic feedback in user input devices, like controllers and game pads, where the
intent is to stimulate a sense of touch with more specific and stylized vibration. Sony
has actively developed its haptic feedback technology for gaming and today this
technology adds a variety of powerful sensations to gameplay on PS5, such as the
slow grittiness of driving a car through mud, the small impact of an object hitting the
surface, or the recoil of shooting a gun.
This technology is also being used to develop new input devices for video games
such as haptic gloves for VR games to provide realistic touch sensations. It is also
used beyond the video games industry from training in medical industries to more
engaging mobile phone displays.
Smartphones
The rise in gaming on mobile has led to the
creation of dedicated mobile GPUs, multi-
touch input via software and hardware, high
refresh rate displays, larger batteries and
cooling systems, all of which work in tandem
to provide superior gaming performance.
Dedicated gaming smartphones are being
released by manufacturers such as Lenovo,
Asus, Xiaomi, ZTE, Razer and others. Lenovo
developed its Legion Phone Duel 2 with
the above in mind. The phone also imports
haptics from game controllers. The device
has an octa trigger virtual key design with 4
ultrasonic shoulder buttons, 2 rear buttons,
and 2 additional buttons on the display. It
allows players to customize their control
layout, which is cutting edge for a cell phone.
These kinds of hardware adaptations of
gametech can be quite significant for the
hardware industry. In 2021, Nvidia reported
that 46.3% of its total revenue is from
its gaming hardware segment, including
GeForce GPUs and Nintendo Switch’s Tegra Chip. Likewise, AMD reports that 56.8%
of its revenue in the same period comes
from its computing and graphics segment
which includes GPUs. This doesn’t include
the contribution from its semi-custom
segment which includes SoC sales to Sony
and Microsoft for PlayStation and Xbox
consoles. Advancements in this space
have increased the demand for dedicated
gaming hardware, reduced the overall cost
of hardware development and introduced
new innovations that can benefit both the
video game industry and other tech related
industries.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Black Shark 5 Pro | Source: Black Shark Alena | stock.adobe.com
17
Video Game Engines
Game engines have significant spillover,
Epic’s Unreal Engine is a classic example.
It has had a massive and undeniable effect
on game development, with high adoption
among developers in Asia. The most recent
iteration, Unreal Engine 5, allows developers
to build open worlds and next generation
experiences. These workflows are already
being tested in non-gaming industries and
are generating benefits for them.
The manufacturing industry is using the
Unreal Engine and similar gametech in
the creation of “digital twins.” Digital
twin technology allows manufacturers to
create a real-time virtual representation
of a real-world system for the purposes of simulation, testing, monitoring and long-
term planning. Digital twins help inform
companies how products will function best
with the additional benefit of being usable as
a marketing tool.
In one notable case, Beijing based 51World
created a digital twin of Shanghai, all 3,750
square km for its 26 million residents, in
Unreal Engine. The aim was to build a
true digital twin that will be updated in
real time that planners and engineers can
use to improve public services, plan new
developments, optimize city systems and
monitor traffic flow. New ideas can be
simulated before they are constructed in
the real world to study the impact of such a
decision. In a similar project, Tencent Games has built
a digital replication of the Great Wall of
China. For this project it has relied on game
technologies including Programmed Content
Generation technology (PCG), Physics-
based Rendering Technology (PBR), and
Similar to what is happening with hardware, advances in game software are contributing to industries beyond gaming. The growth of the
video game industry has led to the development of specialized software and services across areas such as game engines, middleware tools,
management platforms and more. This has also led to new software and services for localization, accessibility, and industrial operations.
Gametech and Software
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Cloud Gaming. The goal is to create a digital
version of this cultural site for the purposes
of conservation and heritage education. The
project uses gametech to preserve cultural
heritage while making fragile sites and
landmarks accessible.
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Virtual Influencers
Gametech software is also being utilized
for the creation of virtual influencers,
virtual humans, Vtubers, and virtual idols.
These are digital avatars that resemble
game characters, but are used in videos,
livestreams, and virtual worlds as virtual
personalities that can market to and
influence consumers. Similarly, Epic Games
has built its MetaHuman technology,
allowing developers to build their own
virtual human. Korea’s most popular virtual
human, APOKI, is rendered in real-time using
the Unreal Engine. Chinese game developer
miHoYo, known for Genshin Impact, has also
created its own fully motion-capped and AI
voice generated virtual idol in Unreal Engine.
The idol has 1.5m subscribers across social
media and its debut stream had 500k views. As video game engines and development
technology improves, it is being quickly
adopted by other industries such as
film, TV, virtual humans, digital twins,
manufacturing, design, and many more.
This also is not limited to software adoption.
Innovation in software and services designed
for video games first has a large spillover
effect, creating new demands and new
opportunities. Beyond borrowing software
from gaming, like the Unreal Engine,
industries are now hiring developers with
game engine development experience
to support these new endeavours. In this
respect, this spillover of gametech is creating
new jobs and new business opportunities
that are difficult to fully quantify. According
to a report from the Asian Development
Bank, the share of software development /
technology jobs rose to nearly 50% of global
online work in Asia during 2020 and appears
resilient compared to other sectors.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
MetaHuman | Source: Epic Games
19
Gametech and Digital Media, Virtual Reality, and Serving Everyone
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Gametech has been a well for wider innovations in digital media, networked
communications, and virtual reality.
This is not a new phenomenon, Sony’s PlayStation console famously played a pivotal role
in popularizing physical media in the real world such as the CD-ROM with the PS1, DVD for
the PS2, and most famously Blu-Ray with PS3 which beat out HD-DVD technology. Today,
the latest generation of consoles are pushing forward innovations within our digital reality
that will shape how people communicate or even occupy emerging virtual worlds and the
metaverse.
Modern consoles today have adopted networked technologies that allow for smooth
online gaming sessions, wireless connectivity for peripherals, communication tools and
even the ability to access on demand content such as movies, tv shows and live streamed
video games. The integration of these technologies has led to the rise of dedicated
applications for gamers such as Discord for online communication. Discord itself is also revolutionary, it upgraded the way online communication was
conducted with high quality voice, better user security, multiple channel messaging,
and other helpful tools. The technologies used for online communication including text,
voice and video technology, are developed first to meet gamers’ needs, starting with PC
and mobile gamers. Today, Xbox and PlayStation have allowed their players to integrate
Discord on their consoles.
It is the culmination of this technological integration that is allowing for new types of
gaming hardware and software to develop. With the advent of VR technology and growing
integration among platforms, technology, and content providers, it is foreseeable that VR
devices in the near future will essentially be wearable consoles with the ability to conduct
digital online communication, run applications, and play games from an all-integrated
device.
20
Virtual Reality
Video game and tech companies such as
Sony, Meta, Pico and others are investing
in cutting edge virtual reality headset
technology that will allow gamers to
interact in a 3D virtual environment. Sony’s
PlayStation VR has sold 6 million units while
the Meta Quest 2 has already sold more than
10 million units.
Niko’s survey of Asian gamers at the end
of 2021 found that gamers in Japan and
Korea are more likely than other markets
to purchase a VR headset for gaming in the
next six months. Our data showed that 16.5%
of gamers in Korea and 14.5% of gamers in
Japan have a high interest in purchasing
a VR headset. While gaming is one of the
main avenues driving the implementation
of VR technology, the technology is also
increasingly used in other fields including
healthcare, education, business, military,
automotive, occupational safety, and
architecture.Sony’s PlayStation VR “experiences” allows
PSVR gaming customers to use VR as a
way of consuming streaming content,
experiencing VR documentaries, engaging
in virtual travel, virtual music concerts, and
more. Each of these cases is a roadmap
for how VR can and will be deployed and
adopted by other industries. Furthermore,
VR devices are also increasingly being used
for accessibility purposes both in the case of
training individuals and assisting those with
impairments, with one use case being motor
rehabilitation.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
More than 50%
likely to purchase
a VR headset for
gaming in the
next six month
16.5 %
Korea
Source: Niko Partners Asia-10 survey 2021
14.5 %
Japan
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Accessibility
Accessibility has been a key priority of the
video games industry for the past decade
with dedicated hardware and software
being released for developers and players.
Accessibility expands player bases, makes
video games accessible to wider audiences,
and improves the experiences of players
with disabilities. The Asia-Pacific region is
an excellent use case for these technologies.
Asia is home to a massive population with
significant linguistic, cultural, geographic,
and economic diversity. Asia is also home
to over 65% of the world’s population with
disabilities.
Accessibility solutions in gaming broaden
the overall addressable gaming audience
while also making video games more
inclusive. In addition to Xbox’s Adaptive
controller, mentioned earlier in the report,
the company also introduced its Xbox
Accessibility guidelines to standardize
solutions to common accessibility problems
in video games. Microsoft used findings from its Xbox segment to build a whole new
series of modular, adaptable, and inclusive
peripherals such as an adaptive mouse and
adaptive hub. While they can be used for
gaming, they have also been created for
general tech use.
On a platform level, console manufacturers
are starting to build more accessibility
features at a system level and plug-ins
allow for game engines to have standard
accessibility features too. Game developers
are solving for issues such as colour-
blindness, eye tracking, object clarity,
linguistic communication, and more. These
solutions are being utilized across other
industries.
Chinese entertainment and gaming
company Bilibili introduced accessibility
features within its live streaming channels
for the 2021 League of Legends World
Championships broadcasts. This included
AI speech recognition for live captioning,
a color optimisation mode for those with color blindness, and narration of website
elements for the visually impaired. Following
the success of these adaptations among
its esports audience, Bilibili extended
these accessibility features across its entire
platform and is also working together with
the China Foundation for Disabled Persons
(CFDP) to recruit people to test out these
new “barrier-free” functions.
Innovations across digital media, networked
communications and virtual reality are
helping to remove barriers to video
games while creating more immersive
and interactive environments. This
technology provides a footprint for other
industries across modern online media and
communications to follow and benefit from.
We explore the various applications of VR
technology to support training, simulation
and more later in this white paper.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries 22
Games + Artificial Intelligence
While game avatars, game streamers, and
game NPC AIs are important parts of the
video games industry, the technologies
that are used to develop and manage
them can also be implemented for uses
outside of video games. Virtual humans can
be utilized in other industries, especially
when combined with artificial intelligence
capabilities. These are already are beginning
to be used in architecture, engineering,
construction, finance, livestreaming,
tourism, advertising, and other sectors.Companies across Asia have been noted
to employ virtual humans technology to
support other social and economic entities.
For example, Tencent partnered with the
National Museum of China to create a virtual
human tour guide for the museum. Likewise,
Netmarble has collaborated with Hyundai
to place virtual humans into metaverse
projects. AI driven virtual humans are also
being used as customer service for Japan’s
Ameri Vintage.
Investment in gametech has yielded benefits in the fields of science and social applications.
As we previously noted, game engines are being used to create virtual humans who can
serve as influencers, brand ambassadors, and educators. However, it is not just game engine
technology being applied to the virtual human sector. With AI, and through partnerships
with cultural organizations and industry, virtual humans may be a game changer for many
industries.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Gametech in Science and Society
23
In a more terrestrial application of AI
technology, Sony created “Sony AI” in
April 2020 to enhance the company’s AI
development. In 2022, Sony AI, Polyphony
Digital, and Sony Interactive Entertainment
announced their newest creation, Gran
Turismo Sophy, an autonomous artificial
intelligence agent designed to race against
top Gran Turismo players. GT Sophy was
trained on a specific learning platform, and
the techniques used to develop the AI may
be used in the development of autonomous
cars.
However, these applications of AI are not
just limited to social applications. Tencent
Games has announced joining the Chasing
All Transients Constellation Hunters
(CATCH) program initiated by the Institute
of High Energy Physics, Chinese Academy
of Sciences, Key Laboratory of Particle
Astrophysics. CATCH will use Tencent
Games’ AI technology to problem solve for satellite coordination. Using a multi-agent
reinforcement learning algorithm, the AI will
manage more than 100 satellites to observe
the extreme reaches of the universe.
Researchers benefit from the development of
AI in video games and are working to utilize
data from video game AI to further improve
the technology. The unification of AI and
video games has allowed researchers to
develop and train AI faster than ever before.
This has real-world benefits for industrial
applications such as the development of
smart cities. Innovations in video game
simulation technology can also improve
autonomous decision making across
numerous industries paving the way for
additional real-world applications of
gametech.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
VTT Studio | stock.adobe.com
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Asia is a leading market for gametech’s integration in education. Niko Partners 2022’s survey
in Indonesia found high levels of support, acceptance, and understanding of video games as
a tool for learning. Games are being integrated into public sector soft skills education and
student education across the region.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Gametech in Education Technology (Ed-Tech)
Game based learning
In March of 2022, the Department of
Education of the Republic of the Philippines
launched Minecraft: Education Edition (M:EE)
Mobile Pilot for public and private school
teachers and students. This is a version of
Minecraft adapted for mobile and designed
specifically for use by education institutions.
The department aims to encourage all the
learners and teachers of DepEd to use M:EE
for game-based learning and create better
classroom experiences, with the benefit of
being able to use these spaces virtually as
well.Tokyo-based startup Gecipe Inc. has stated
that online esports lessons combined with
English conversation practice have proven to
be a hit with young gamers. It was reported
that dozens of people including elementary
school children, have signed up for the
English lessons integrated with esports, with
several hundred more on a waiting list.
25
A case study in the leading edge of
gametech in education is Japan’s REDEE
Program which uses video games to teach
programming, typing, illustration skills, and
video editing. The program also features
classes in esports and professional gaming.
Located in Senribanpaku Park in Suita City,
Osaka Prefecture, REDEE is the largest video
games education institution in Japan. It
is popular with students who visit REDEE
as part of off-campus and extracurricular
learning. REDEE opened on March 1, 2020,
specializing in programming education but
with a wide offering of games, language, and
STEM related courses.
This case demonstrates gametech’s
connection to education is multi-layered.
The REDEE program leverages gaming
technology to teach students new skills, at
the same time preparing them for emerging
opportunities in the technology and games
space. In essence, this fosters interest in
areas of study that students may not have
considered learning before. Gametech is also creating new careers for people who can
teach games, opportunities to teach beyond
schooling, and new career paths for students
through gaming and programming, all as a
secondary effect of game industry R&D.
In 2020, the COVID-19 pandemic displaced
over 1.2 billion students. This has placed
a greater need for technologies to support
e-learning. Games and gametech are playing
a growing role in creating ways for students
to engage with education and participate
in the wake of the pandemic. This includes
gaming to increase student motivation as
well as the creation of video games that can
be used as teaching spaces. Ultimately, this is
a trend we may even see spillover into future
gaming metaverses.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries 26
Although gametech finds its way into many other industries than we will cover here, the final
case we discuss in this paper is the intersection between gametech and the fields of health
and medicine. As the global COVID-19 pandemic proved, public health can have a major
impact on world economies. In the field of medicine, technologies borrowed from video
games are being used in everything from medical training to VR in the OR, to metaverse
spaces for telehealth. Although VR has long been considered for use in the medical field, it is
only recently, and through its refinement in the field of video games that it is finding new uses
in medicine.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries
Gametech in Medical Technology (Med-Tech)
27
Simulation
Games used in training and education are
not new, but VR is pushing the possibili-
ties further and is becoming an important
part of the medical field as a training device
that reduces costs while improving access
to more students and professionals. For
example, a study by the Journal of Bone and
Joint Surgery found that medical trainees
who learned using VR were not only superior
to non-VR trainees in technical skill, but also
that they also learned significantly faster. In
Singapore, VR technology is used in training
to develop simulations for interacting with
patients. VR is also found in nursing schools
in Chinese Taipei and Hong Kong where it is
used to provide a more immersive, but also
risk-free learning process.
Like VR, live-streaming, which rose to popu-
larity around videogaming, is also being used
as a way to expand access to medical proce-
dures and surgical operations for students in both Japan and South Korea. In these cases,
livestreamed operations and medical proce-
dures can dramatically expand traditional
observation rooms used in medicine.
Training is not the only use for gaming in
medicine. As the pandemic created greater
needs for telehealth and virtual access to
care, gametech has been utilized to increase
access for patients. For example, in Malaysia
and Indonesia, there are private hospi-
tals using AR, VR, and metaverse-based
approaches for telemedicine. These tech-
nologies allow patients to access care and
medical expertise without having to leave
their homes.
Similarly, Chinese game developer 37 Inter-
active, has created a game called Star Life
Park, which is designed to help socialize chil-
dren with autism. 37 Interactive consulted
with psychology experts to develop a title
that will be used to strengthen social skills,
reduce anxiety, and create better social expe-
riences for children with autism. Both exam-
ples above are particularly helpful during
the pandemic where limitations on physical
practices and face-to-face interactions have
impacted medical access.
From an economic perspective, gametech’s
impact on medicine may be significant.
McKinsey reports that Asia is primed for
a healthcare industry boom, as policies
shift and as consumer demographics and
demands change. In Asia, governments are
the leading payers for healthcare and allo-
cate on average only about 4.5% of their GDP
for health, compared to 12% for the OECD
average. As this changes, the value of the
healthcare market in Asia could rise from
US$37 billion in 2020 to over US$100 billion
by 2025. As this industry grows the role and
value of gaming and game tech for every-
thing from training to improving access will
also grow significantly.
Gametech: How Video Games are Seriously Changing the World | How Investment in Gametech Benefits Other Industries 28
Gametech: How Video Games are Seriously Changing the World | Gametech is at the Center of the Metaverse
GAMETECH IS AT THE CENTER
OF THE METAVERSE
One area of gametech we have mentioned at several points in this paper but have not
discussed at length is the Metaverse. The metaverse refers to the evolution from Games-
as-a-Service to Games-as-a-Platform, with the convergence of physical, augmented,
and virtual worlds within a shared online space. The metaverse in gaming is made up of
multiple building blocks including: a persistent virtual world, an ever-growing gameplay
experience, in-game representation (avatars), professional and user-generated content,
a fully functioning in-game economy, interoperability across platforms, virtual and real-
world engagement, and multiple hardware entry points. In short, it is a living, growing
world that exists in virtual space.
The video games industry is already playing a central role in the development of the
metaverse, with many Asian companies leading the way. Video games have excelled at
building virtual worlds for decades and many building blocks of the metaverse are taken
directly form video games today. With case studies like Roblox and Fortnite providing early
blueprints for the concept.
As we think about the impact of gametech, this is one area where we can begin to
grasp the full scope of gaming’s wider impact. As companies scale to build metaverse
experiences, it will be those with already existing experience building video games
that will benefit the most. We are already starting to see, an acceleration in video game
industry consolidation as metaverse oriented companies tap into talent and technology
from the gaming space. Key building blocks of the metaverse, from the creation of 3D
virtual worlds, to integrating user generated content, to developing the devices and
haptics that will open the portal to these worlds, are all things the video games industry
has excelled at for decades. To this end, the impacts of gametech are only poised to
become more integral to global economies and our own daily lives.
Niko Partners August 2022 report titled “The Metaverse and Beyond: Future Trends of
Gaming in Asia” is about the next wave of innovation we expect from emerging gametech
across technical, industrial and cultural segments, focusing on the development of the
metaverse.
29
Asian gaming companies are at the forefront of R&D investment activity in gaming
technology, generating value that is not represented in the market value of the video
games industry alone. As a result of the video game industry’s continued innovation
in the field of technology, gametech is filtering back into industry and society through
the fields of software, hardware, education, science, and medicine.
The video games industry has undoubtedly grown through technological advances in
other industries. It is the beneficiary of rising consumer access to computers, smart-
phones, and improvements to networks. It has also been strengthened by more
powerful computer hardware and broader improvements to software and tech educa-
tion. However, Companies are not simply profiting from these developments. As video
games have adopted new technologies, the industry has contributed significantly to
the adaptation and improvement of these technologies, creating a field of spillover
technologies and social benefits that reach far and wide. It is clear that investment
in video game R&D pays dividends for businesses, society, and of course, the video
games industry.
Gametech: How Video Games are Seriously Changing the World | Conclusion
www.nikopartners.com
CONCLUSION
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