Why 2024 May Set the New Normal for the Video Game Industry
By Movieguide® Contributor
The video game industry saw an incredible bump during the pandemic, and after an unusual 2023, the upcoming year will set the new standard for the industry’s future.
A new report from DDM Games recapping 2023 found that apart from the colossal $68.8 billion Microsoft acquisition of Activision, the financial movement within the video game industry was down from 2022. Much of this change stems from the industry moving from a period of booming during the pandemic back towards a period of normalcy.
Total investment within the industry dropped from $14.08 billion across 951 deals in 2022 to $4.4 billion across 616 deals in 2023. Last year’s numbers, however, are still up over 2019, showing overall growth within the industry.
2023 was also a down year for the industry as a whole as many major studios cut their workforces, which ballooned during the pandemic. Unity and Microsoft both cut over 1,000 jobs in their games divisions last year, while Riot Games laid off 500 workers. Tangentially, Amazon’s Twitch streaming platform laid off 500 workers as it looked ahead to a more sustainable future.
The industry has been hit hard by new regulations within China, gaming’s largest market, which restrict children’s and teens’ access to video games.
Nevertheless, the games industry looks forward to a bright future as the pastime becomes more and more mainstream. The industry’s annual gross has hovered around $200 billion in recent years as gaming has quickly become the king of the entertainment industry.
With the rise in popularity and acceptance, gaming has seen impressive results in other spheres of entertainment, such as movies and TV shows. THE SUPER MARIO BROS. MOVIE was last year’s second-highest-performing movie at the box office, grossing over $1.3 billion worldwide. Meanwhile, the industry’s most popular games continue to grow. Fortnite, for example, received a record-high 1.6 billion playtime hours last November alone.
These impressive numbers have caught the eye of non-gaming companies, leading to further interest in the industry. Disney recently purchased a $1.5 billion stake in Fortnite’s developer Epic Games, with plans to further connect with its audience through the gaming platform.
While the industry restructures itself to return from the high of the pandemic, video games remain as popular as ever. 2024 looks to set a new normal as the industry moves on from its pandemic boom into a cooler market.
Movieguide® previously reported:
Gaming remains the last entertainment sector to rely primarily on sales, but the industry has been undergoing a massive shift as companies and consumers eye a subscription model for video games.
“We’ve seen this huge transition in the games industry of moving away from the traditional, what I would call ‘unit-sales-based’ business model, towards an ‘engagement-based’ model,” said Karol Severin, MIDia Research’s senior games analyst and VP of data. “I would dare to say that the number of game subscriptions is going to grow much faster than the number of games sold for the next decade.”
This trend is in line with the music and entertainment industry, which have gone from primarily sales-based to nearly entirely subscription-based in roughly a decade. The streaming wars for gaming are now heating up as even non-gaming companies look to join the fight.
