M2 Research recently updated its bellwether forecast for Gamification Industry revenues, projecting aggregate spending of $2.6Bn by 2016 in the US, climbing from $242m in 2012. Revenues among the leading gamification platform providers are set to approximately double per year from 2011 to 2016. Wanda Meloni, lead analyst and CEO at M2 will further analyze this data and present entirely new findings at GSummit in June.
One of the more intriguing elements of M2’s report is on enterprise gamification – or the use of game mechanics that face internal processes and employees. Though common estimates put enterprise gamification at approximately 50% of all activity in the market, vendors today only account for roughly 25% of spending according to M2. This is in sharp contrast to the marketing vertical where platforms like Badgeville, BunchBall and BigDoor are perceived to have upwards of 85% participation. The unaccounted for segments are mostly comprised of DIY solutions, built internally to solve specific business needs – often without the benefit of formal gamification training.
Although the core design techniques in enterprise and consumer gamification are mostly identical, they are perceived very differently inside most organizations. Vendors typically sell consumer gamification to marketing, product and community-management executives. Enterprise projects tend to channel through Human Resources, Training, IT or Finance groups looking to improve existing processes. This bifurcation is allowing some vendors to “double-dip”, entering companies via one track and then selling their platform a second time when the other group becomes gamification-aware.
Today, gamification is mostly a bottom-up industry driven by product and functional groups inside most organizations. A major trend we’re predicting for 2013 is the growth of strategic gamification. In this shift, we will start to see an increased number of major organizations with explicit gamification strategies emanating from the c-suite, gamification on the core strategic roadmap, and mid-to-top level executives with gamification in their functional responsibilities. While this is a hugely positive trend for the industry (and people) as a whole, there are some roadblocks ahead that I’ll discuss in a future post.
The vendors have played a huge role in driving the growth of gamification, making it easy for companies to implement the technical elements of the approach – whether consumer or employee focused. But what’s driven this extraordinary adoption curve, and what will fuel its continued growth in the next phase? I believe that gamification’s growth is a leading indicator of structural changes in the market that are not yet entirely obvious. Those changes are:
- Loss of faith in brands and traditional marketing
- Decreased attention span in the population
- Increased capital inflows to entertainment games
In a nutshell, consumers no longer believe corporate messaging, relying increasingly on their social networks and the crowd for information related to product and service decision making. With economic crises and malaise this effect has intensified, and social media platforms have done little to shift the market away from display ads (It’s an ad for Wal-Mart! On Facebook!). Gamification makes the social media marketing process into a discussion – actively driving users to advocate and engage with their peers, discovering products and services while achieving mastery. It’s a much deeper, richer and more authentically satisfying experience.
At the same time, people are evolving to be smarter, faster and less able to unitask than ever before. This means users have put every experience on a short leash: you must deliver a rewarding experience in 60 seconds or less. And in that context, they are frequently multi-tasking (checking twitter and SMS, watching a TV show in the background), giving you even less attention than you think. Whether this is caused by games or not is a hotly debated subject (and one I cover in my TEDxKIDS talk), but it’s certainly true that game-type experiences are best able to deliver focused user attention in this noisy market. The notion that we can design specifically for engagement, attention and flow is a core concept in gamification that’s driving the market to adoption.
Lastly, as the market for games continues to produce outsized consumer behavior changes, we’re seeing a flow of capital towards game-like experiences. This is being reinforced by a wide range of examples, from the perceived-as shallow distraction of Zynga’s games to the overall dominance of games in the iTunes store and the runaway success of game-like consumer experiences (e.g. Instagram, Foursquare). Investors conclude that consumers are voting with their wallets, and so do they. As capital continues to chase consumer engagement, this feedback loop will only intensify, further reinforcing the widely-held belief that gamification is a key strategy for success in the future.
Each one of these changes alone are tectonic, together they are revolutionary. Direct effects have only recently become obvious, such as GM’s withdrawal from the Super Bowl and Facebook advertising in one week. At the same time, there are a growing number of direct assaults on the university system for being overly elitist, expensive, stodgy and ineffective. These include open-source gamification projects like OpenBadges and populist platforms like Codecademy and Khan Academy.
While those may seem like unrelated trends, they are driven by the same core issue: in this epoch, old models have become ineffective, expensive places for driving engagement and outcomes. As new alternatives come to the forefront – invariably driven by gamified design principles – this snowball will continue to gather heft. Eventually, every human-facing system – whether captive or market, enterprise or consumer – will need to be redesigned to maximize reward, stimulation, engagement and challenge.
As the vanguards of this belief system, Certified Gamification Designers, platform vendors and advocates are presented with almost limitless opportunity (and serious responsibility). We can – and will – change the world in unprecedented ways, bringing human-centric design to every corner of the economy. In that context, $2.6Bn starts to look like what it truly is: the humble beginning of a very exciting industry indeed.
Looking forward to seeing you all in June at GSummit.
Image (CC) – oddsock