Video Games: Global Market Resumes Activity After Sharp Declines

The video game industry is on the verge of recovery after a turbulent few years that saw sales decline from the record levels reached during the early months of the pandemic.

“I would say the gaming industry as a whole is primed for a rally,” Reggie Fils-Aime, former Nintendo of America president and COO, told Yahoo Finance. “Just in the last month, towards the end of last month, there have been a number of gaming announcements across the industry that consumers have responded to very well,” Fils-Aime noted.

“These are new games coming this year. These are the games coming in 2025. New platforms are coming, specifically from Nintendo, in addition to rumors of adaptation for them.” [PlayStation 5]So, there are a lot of positive things that indicate that we have crossed the threshold of the video game industry, and we are now ready for an upward trajectory.”

Blossoming in the years of the epidemic

The video game market boomed at the start of the pandemic as consumers around the world retreated to their homes with lots of free time and few things to occupy them: so there was plenty of time for video games, shows and movies, i.e. streaming services.

According to market metrics firm IDC, global mobile video game revenue grew 32.8% to $99.9 billion in 2020, while spending on digital games for PCs and Macs rose 7.4% to $35.6 billion. Meanwhile, spending on console games rose 33.9% to $42.9 billion.

But that growth has slowed rapidly in the years since. Mobile gaming revenue grew by just 15% in 2021, while it declined by 3.3% in 2022 and 3.7% in 2023. PC and Mac gaming sales grew again in 2021 by 8.7% but declined by 1.4% in 2022, though the segment saw a slight increase of 0.21% in 2023.

After taking off in 2020, console gaming spending stalled in 2021, with growth remaining at 0.7%, before revenues declined by 3.4% in 2022. However, the market returned to growth in 2023.

Sales of Xbox Series X, PlayStation 5, Microsoft, Sony and their games have all fallen victim to the pandemic.

Console sales in 2020 were also boosted by the launch of Microsoft and Sony’s Xbox Series X and PlayStation 5 consoles, respectively. But system sales struggled due to a supply chain crisis at the time, which hampered growth.

“There were huge investments that led to new hardware launches from Microsoft and Sony. There was basically free money,” explained Viss-Aime. “So developers were creating video games that had a lot of content, and frankly, some content that probably shouldn’t have been created and put on the market. And frankly, it didn’t do very well in 2023. So the market contracted.”

These cuts also led to mass layoffs across the industry, with thousands of workers losing their jobs as companies ranging from Microsoft and Sony to Riot and Unity (U) cut jobs. The layoffs didn’t stop in 2024, with EA laying off about 5% of its workforce and Sega cutting 240 jobs.

The recession must end.

“I think we’re in the worst of it,” said Matt Piscatella, CEO and video game industry consultant at Circana.

“Mobile really picked up the slack in the first half of the year and is the main reason why overall content spending numbers remain so strong. Through the end of May 2024, content spending on mobile games in the US was up 12% year-over-year. The non-console PC, cloud and VR segment in the US was also performing well, with spending also up 12% through the end of May compared to last year,” Piscatella added.

However, the home console market has continued to struggle, although it is expected to get a boost with fall game releases and Nintendo’s next-gen console next year, while there is also a growing mobile market led by Valve’s portable Steam Deck system.

While growth is unlikely to be as “wild” as it was at the start of the pandemic, it should provide some comfort to the industry as a whole. Of course, there are also games that have pushed the entire industry forward with their sales.

source: Out.gr