Roblox Game – As Music-Games Partnerships Rise, Labels Face An Opportunity To Shine
Music industry innovators are discovering the many growth opportunities that exist in the rapidly-growing games market. Artists are leveraging gaming spaces as a new way to release albums, launch ancillary products and host immersive events like the hugely-successful Fortnite/Travis Scott performance and Lil Nas X/Roblox concert.
According to a 2021 MIDiA Research report, “Music and Games Partnership Strategy: Beyond the Comfort Zone” by Karol Severin, music labels face a particularly unique opportunity to become business-critical partners to gaming companies. By looking beyond traditional licensing models that monetize consumption, music rights holders can create innovative deal structures for partnerships that help the games industry tap into its most important growth opportunity, in-game spending.
“The key here is to shift the mindset of a song being essentially a finished product,” says Severin, also a senior analyst and product manager at MIDiA Research. “And really, just start coming up with ways of how a song or fandom for an artist can be present in creating newer products where music can be present.”
Severin explains that music labels can evolve by entering the “spend-centric” headspace of gaming teams and helping them grow their businesses on a broader scale. He points to the in-game spending market and how consumers are purchasing more digital features that do not translate to progress within the game. Instead they are demonstrating a need and desire for “cosmetic” items with which to define and express their personal image within the digital environment. And, he adds, these types of purchases increase with the amount of time that a player spends playing a game.
According to the new report, music rights holders are seeking to expand the reach of music in games more than games companies think is needed. In fact, games aficionados were found to be three times more likely to spend six or more hours per week streaming music (53%). This is where in-game spending offers labels the opportunity to monetize fandom on top of consumption.
Consumption-centric licensing partnerships are also covered in the report, which found that those pushed by labels were identified as offering little incremental value to the games industry. Because music is not a direct driver of revenue growth for the games industry, Severin explains that game companies view licensing deals with music labels as a trade-off between enhancing user experience and sacrificing a share of existing games revenue. He says that music rights holders could change the dynamic by demonstrating to games companies that they are not simply asking for a share of revenue, but an opportunity to actually grow game success.
The report outlines a significant in-game spending opportunity. Global in-game spending totaled 70% of global games revenue in 2020 ($97 billion) and is expected to reach $135 billion in 2027. This accounts for 75% of games revenues.
Cosmetic in-game spending is set to reach $52 billion in 2021, according to the report. Considering the $38.8 billion of total global recorded music revenue (retail values), Severin says that this presents a significant revenue opportunity for music labels.
Warner Music Group (WMG) recently invested in Roblox and is on the path to building more innovative and symbiotic partnerships with the games industry. Alex Kamins, senior vice president of new business and ventures at WMG, says that the company is focused on leaning into the demand by “super-serving the gaming community through integrations that are native and authentic.” These unique interactions, he explains, create opportunities for artists to engage with current fans and expand their audience base into new demographics.
“Music will be an essential component of the future gaming landscape,” says Kamins. “There is an increasing appetite from gaming audiences for social, immersive experiences around music, such as Roblox’s virtual concerts and launch parties, and for the ability to use music to enhance and personalize the gameplay experience, such as Fortnite’s music emotes.”
The robust creativity of the music industry has a chance to drive in-game spending down a new path. The music rights holders who can look beyond consumption and create fresh value and incremental revenue around fandom in the game space will lead the way.