The IMI 18th Jun 2024

'Spending on cosmetic in-game purchases is projected to grow to $100 billion by 2028. Music currently accounts for close to zero of this market.'

With nearly 300 games developers working with its Beta programme, and new licensing agreements with Hopeless and Cherry Red Records, Reactional takes sync in video games to a new level. It wants to make music something players will pay for...

If there’s one part of Simon Harvey’s elevator pitch that will grab music rights-holders, the above headline is probably it.

Simon Harvey is co-founder and CMO of Reactional Music, billed as the ‘world’s first rule-based music engine’. It’s a technology that takes sync in video games to a new level by allowing music from the company’s catalogue to be added into games by developers and then react live to what’s going on in the game itself.

The cosmetic in-game purchases that Harvey refers to in the interview below, generally refers to superficial items bought by gamers once they are already playing. Maybe new character appearances or any number of visual accessories.

(Note that the $100 billion figure Harvey refers to does not take into account the hefty initial price tag often attached to video games – or any other of revenue stream for the sector.)

A big market for content creators, then, and one that music rights-holders have so far failed to claim their place in. Reactional hopes to change that: With nearly 300 games developers already working with its Beta programme, it seeks to enable music as an in-game purchase, allowing gamers to personalise their personas and gameplay with their favourite music in the same way they do with skins and other in-game purchases.

In March, Reactional agreed two new partnerships with established indies in Cherry Red Records and Hopeless Records, including master rights for tracks by All Time Low, Avenged Sevenfold (pictured), Neck Deep , Sum 41 ,Everything But The Girl, The Monochrome Set, The Residents, Felt and more. We spoke to Simon Harvey about the opportunity he sees for independents.

 

Broadly speaking, your niche is part of the video games sync market. What value do you think your various USPs add to traditional sync?

Simon Harvey: There’s a huge opportunity for music consumption to become a central part of the gaming experience. 

Traditional synch opportunities in gaming have suffered from both licensing difficulties and the technical challenges of using recordings in games. 

Reactional offers the creative, commercial and technical framework to connect gaming and music, allowing commercial or production music to be incorporated into gameplay in time and in sync — with no changes to the master. 

Our rules-based engine allows games developers to create soundtracks that aren’t just hard-coded into games, but where music, sound and visuals react to individual gameplay in real time. This is the first time ever this has been possible at scale. For gamers, Reactional’s technology offers opportunities for personalisation, allowing them to personalise their experience with their favourite tracks and artists in the same way they might do with skins.

It is also important to understand that changes are taking place with consumer habits. Technically, creatively and commercially more is now possible than ever before. 

Games and social media are interactive and are places where people are hanging out with their friends. As consumers are increasingly time poor, they want to bring in their favourite entertainment into these spaces. The opportunity is for music to become a relevant and meaningful part of these places and experiences.

This change is happening now and has been happening for some time. 

"We believe that the independent music market has an incredible opportunity to embrace games and interactive worlds."

You’ve pointed to the size of the video games market in general, but how much of a revenue opportunity is there specifically in video games sync for independent rights-holders?

The global sync business is worth around $5.5 billion a year, according to MIDiA, and games accounts for around 10-11 percent of this. That’s all revenue from game related activity, including advertising use of music. That’s a $500-$600 million a year business. 

Of the global games business (worth around $223 billion), in-game spending accounts for roughly $126 billion of revenues, with over half made up of cosmetic purchases, or content to personalise the game experience. Spending on cosmetic in-game purchases is projected to grow to $100 billion by 2028. However, music currently accounts for close to zero of this market.

The market in which music can have a place is significant. 

For independent rights holders and self-releasing artists, the gaming community represents an untapped market of fans. MIDiA Research has found that gamer aficionados spend more time listening to music each week on average, and have an over 50% adoption rate for paid music streaming subscriptions, compared to just over 30% for consumers generally.

We believe that the independent music market has an incredible opportunity to embrace games and interactive worlds, and Reactional has some great partnerships in the independent space with companies like Defected, Cherry Red and Hopeless Records. It’s an opportunity for independent artists and their teams to be at the forefront of an exciting new revenue stream and to finally have access to data on what gamers want to listen to during gameplay as soon as they get tired of the repetitive game loops in today’s video games. 


Is there anything independent music rights-holders need to be aware of/prepared for when engaging with these kinds of opportunities?

The music industry has built itself on super structures and contractual practice that were designed for the pre-digital age. The opportunities for music rights holders are the same for artists, composers and creators – revenue share. 

The games world is built on models that understand consumer behaviour and consumer spending; they allow new ideas and new products to be created, developed and be adopted by consumers.

Reactional comes from a place of music. The engine was invented by a music rights holder, Jesper Nordin, the modern classical composer. We are a business that understands the artist and the creator. Therefore our model is a transparent one where the master rights holder and publisher benefit equally with Reactional. 

Certainly, we would encourage all rights holders to think long and hard about changing demographics and consumer consumption habits. Streaming revenues have already peaked in Western markets at the same time that a new generation of music fans is looking to consume their music in new ways, with gamers of all ages wanting to make music a personalised part of their gameplay.

The IMI