Global games market to reach $200bn in next half decade: Video Games Industry Memo, 10/08/2023
Global games market hits $187.7bn, Baldur's Gate is played by lots of people and Videoverse makes the early running for next year's awards season
VGIM in bullet points
Newzoo Global Games Market Report shows industry back on growth track
Baldur’s Gate 3 gets played by nearly a million people concurrently
Videoverse piques interest in this week’s new releases
Source: Newzoo, Global Games Market Report 2023
The big read - Global video games revenues back on track towards $200bn
It’s the most wonderful time of the year for video game market watchers. Yes, Newzoo has launched the 2023 edition of its Global Games Market Report - considered to be the bellwether for the global games industry - and it shows that the games industry is continuing to thrive in tough economic circumstances.
This year’s report, which tots up the total consumers spend on video game software around the world, values the global games market at $187.7bn. While that doesn’t quite reach the heady heights of the $192.7bn recorded during 2021 in the midst of the pandemic, it is up 2.8% on 2022’s $182bn total as the market corrected due to people, erm, going outside again.
Console yourselves
So what’s been driving the upwards trajectory? Newzoo, as always, has a lot of lovely insight within its report that’s well worth looking through. But their decision to release this report around the time that a number of major companies have been pumping out financials allows us to identify a few lovely trends that explain the uptick more than the usual ‘video games are recession proof’ maxim.
The top of mind factor is the continued easing of hardware shortages for consoles and PCs. Xbox’s upward trajectory and Jim Ryan’s announcement that PS5 sales have motored past 40m demonstrates that constriction within the supply of consoles - which dates way back to the depths of fully Covidy 2020 - has eased to allow companies to catch up with demand. This has led to the expansion of the player base through both natural demand from players and through tactical promotional opportunities - such as hardware discounts and sales - that weren’t available to console platforms until this year.
Next, 2023 has, and is continuing to benefit from, a stronger release slate than both 2022 and arguably the bumper year recorded in 2021. This is, in part, another Covid impact with the likes of The Legend of Zelda: Tears of the Kingdom delayed from 2022 to 2023 to account for development challenges in the pandemic. A similar result will be expected with Starfield when it releases this year.
Source: Nintendo
However, the year has also benefited from a wider stack of major games releases - including Baldur’s Gate III and Diablo IV - which were due on the market anyhow. Instead of becoming a killing ground for releases, as some feared a busy 2023 could be, it’s instead turning into bumper sales all year round.
Third, and finally, games companies continue to find ways to sustainably generate revenues from services, IP extension and success across market verticals. EA and Konami, for example, both reported strong performance from the service elements of their respective football games; Nintendo celebrated a bumper billion dollar haul from the Super Mario Bros movie; Activision Blizzard of ‘being acquired for a bloody huge fee and a very long time’ fame noted King’s influence on raising its bottom line in its Q2 2023 report amidst a surge in profit caused by Diablo IV.
Onwards and upwards?
This shouldn’t be taken as a sign that everything is absolutely fine and dandy in the world of games. Devolver Digital’s share price has plunged by the best part of 60% since listing on the London Stock Exchange. Ubisoft has performed comparatively poorly against its rivals due to a sparse release slate caused in part by a litany of delays. And even amidst the good news, Nintendo is finally seeing sales momentum for the Switch slowing down - forcing it to pave the way for a new device in 2024 by, likely, ensuring that Tears of the Kingdom is almost certainly the last true flagship release for this console.
However, what’s reassuring for the industry is that the companies reporting struggles or sounding cautionary notes are those whose businesses have found themselves sailing against the prevailing industry wind.
Where companies have been able to benefit from unclogging device sales, major releases finally emerging from the pipeline and successful diversification of existing portfolios, the results have been pretty punchy. And if we think that the Covid impact is, finally, coming to an end, it’s reasonable to suggest there’s plenty of room for this generation to ‘catch up’ to where it should have been - bringing moolah with it.
So with Newzoo forecasting that the global market for games is getting bigger both in terms of revenue size and the number of people playing around the world, the seemingly upward trajectory of the sector looks likely to continue in the years ahead.
News in brief
Baldur’s Played: Baldur’s Gate 3 topped 800,000 concurrent players on Steam, according to SteamDB. That puts it in the top ten most concurrently played video games on PC, with Hogwarts Legacy in its sights.
New Zealand approves MS/ABK deal: New Zealand has become the 41st nation to approve the Microsoft and Activision Blizzard deal after finding it is ‘unlikely to substantially lessen competition in any New Zealand market.’ Sources are not describing this as ‘the big one’.
Fortnite gets a Holocaust museum: The Voices of the Forgotten Museum dedicated to victims of the Holocaust has opened in Fortnite. Stephen Totilo at Axios has the details of how it’ll work (and what, interestingly for me at least, has to be omitted due to age ratings).
Ins and outs
Emma McDonald continues a barnstorming stint at Newzoo by becoming its COO after eleven years in the business…Damian Burns has left his post at Twitch as SVP/GM of twitch to take up a role at growth capital firm Bregal Milestone…Alexandre Amancio is FunPlus’s new SVP of world building and IP strategy (which is, we can all agree, an absolutely outstanding job title).
Events and conferences
Gamescom, Cologne - August 23rd - August 27th
PAX West, Seattle - September 1st - September 4th
WASD, London - September 14th - September 16th
Tokyo Game Show, Tokyo - September 21st - September 24th
Games for your perusal
Source: Kinmoku
Videoverse - Exceptionally well reviewed love letter to video game forums that’ll likely be popping up at the BAFTAs next year.
Stray Gods: The Roleplaying Musical - Greek Gods! Musicals! RPG! Murder Mystery! Fun! (probably)
Atlas Fallen - If you can find me a more generic looking action game this year, I’ll buy you a pint.
Before you go…
It’s summer and it’s all quiet out there, so why not settle in with this long read from IGN about the creation of PlayStation? Read it for the history, stay for the bit where they admit that the initial brand personality for the console was inadvertently ‘man on the internet circa 2023’.