Shutterstock

All the ways coronavirus is upending the gaming industry

The video game industry, like pretty much every other industry, is facing massive disruption due to coronavirus. Last month, the Game Developers Conference was postponed with the hope to reconvene "later in the summer," and yesterday the organizers of the largest, most important annual gaming conference, E3, officially canceled their event due to safety concerns over coronavirus. In doing so, the Entertainment Software Association (ESA), a U.S.-based trade group for the video game industry, joined the growing list of tech organizations that have canceled their yearly events due to the virus, including Google's annual developer event, I/O 2020, and Facebook's developer conference, F8.

E3, formally known as the Electronic Entertainment Expo, has been a staple in the video game industry for years. Video game developers, publishers, and marketers from over 100 countries flock to the conference to show off their latest and most ambitious projects. Publishers like Square Enix and Ubisoft drum up hype for their upcoming games, while hardware manufacturers — like console makers Sony, Microsoft, and Nintendo — use E3 as an opportunity to tout their latest systems. This year, fans expected Microsoft to drop more information about their next console, the XBox Series X. The event typically attracts over 50,000 attendees to the Los Angeles Convention Center.

Some participating companies have expressed their support for the ESA's decision. Instead of coming together to present at a single event, many are now considering broadcasting their announcements by live stream or video. Nintendo is ahead of the pack in this regard, as it already streams its presentations each year during E3 on its own. Sony intended to do the same this year. But for other companies who wanted to attend the event, coronavirus is forcing them to consider how they can switch gears and make their announcements remotely.

While larger companies can more easily adjust their plans to make their product announcements via livestream, the cancellations of events like E3 or the Game Developers Conference can hit smaller companies hard.

"For a lot of [independent developers], this is the one event they go to," Rami Ismail, co-founder of indie game developer Vlambeer, told Time. "This is quite a blow … this might be career ending."

Small developers can't just eat travel costs — they have to scramble harder than larger companies to get refunds for their hotels and plane tickets. They also lose precious opportunities to network with larger publishers and market their games. It could mean some projects won't see the light of day or might be delayed, which also affects the bottom line.

The cancellation of events isn't the only impact COVID-19 is having on the gaming industry. Many manufacturers have factories in China, where quarantines imposed on workers put products at a real risk of running out of stock. Nintendo admitted in February that its production facilities would be affected by the mass shutdown of industries in the country. The company expects delays in shipping and shortages of its Nintendo Switch console in the US and Europe as soon as April. Facebook expressed a similar concern over shortages of its Oculus Quest VR headset, and Sony informed its investors that it was bracing for a hit to Playstation 4 production as well.

Thibault Camus/AP/Shutterstock

Just as the NBA canceled the rest of the basketball season Wednesday night after a Utah Jazz player tested positive for coronavirus, the esports world has also called off competitions, indefinitely postponed or had teams pulled out of tournaments, or switched to online-only competitions. For some esport games, shifting to an online competition isn't a big deal, but for genres like fighting games — arguably one of the most competitive segments in esports — the change could be more complicated. Many popular fighting games, like Street Fighter, have struggled with creating smooth online play that isn't frequently disrupted by lag. In professional level play, games with lag can abruptly turn the tide of a fight when one player's actions become delayed while the opponents are unaffected. Games without good online code, known as 'netcode,' make the game more frustrating to play and less fair in a competition.

While most tournament organizers (TOs) seem to be aware of the health risks involved in letting their events continue as normal, they might be hesitant to cancel for a very real reason: They can't afford to. CEO Dreamland, a competitive tournament focused on the Super Smash Bros. series, is one such event that is stuck between a rock and a hard place. Scheduled to take place this weekend in Orlando, Florida, CEO Dreamland has been battered by refund requests, tournament hosts pulling out of the event, and Trump's very recent ban on travelers from Europe, which has halted the plans of some international players.

The organizer for CEO Dreamland, Alex Jebailey, took to Twitter to express his frustration with the situation. He was understanding of players' concerns for their health, but explained to the public that he could not shut down the event unless the city or state banned events the way Washington governor Jay Inslee did. Otherwise, the organizers could lose all the money it took to set up the event.

Other TOs expressed similar frustration. "As a TO of an event next weekend, we're in the same situation," wrote Twitter user @ClokkeJames, one of the organizers of the Columbian event Smashdown 2020. "Unless decreed, cancelling the event means refunds which means all the money put towards the events comes out of our pockets. Please understand."

The Twitter account of an annual fighting game tournament held in Michigan, Michigan Masters, also admitted difficulties in managing the loss in revenue.

"Our team has lost thousands of dollars in the past few days due to cancellations. We believe it is morally correct to refund those who will no longer attend the event, but we are doing our best to limit our losses." The account continued, "Stress is an understatement for the feelings felt by the event directors. [Fighting game community] events have never been a way to profit, they most likely never will be. Michigan Masters is our most loved hobby, but we cannot burden the financial stress COVID has put onto us. We are sorry."

The impact of COVID-19 on the video game industry could be more damaging than initially expected. Indie game developers could lose the chance to find a publisher for their games. Both the organizers of CEO Dreamland and Michigan Masters mentioned the possibility that the loss in revenue this year could prevent their events from returning next year — or ever. The pandemic could become the death of some locally run events or small game companies. It's a sobering thought, and underscores the unexpected effects of coronavirus that have yet to come.