This week’s article offers three perspectives that need to be engaged with if we are to maintain and navigate the years of slow growth that the reports would have us believe.
Published Date – 25 February 2024, 05:30 PM
Hyderabad: Tim Bradshaw’s article in the Financial Times (FT) on February 18th, titled ‘Game Over…,’ has set the warning bells ringing with regards to gaming in most global places of business as investors debate the ramifications of the first signs of slowing growth in three decades for an industry that has historically thrived in adverse economic conditions.
Despite the chaos and mayhem, the unfolding market reports are likely to reveal, it is important to accept that slow growth is still positive growth. I believe that there is more to the numbers than what early analyses suggest.
This week’s article offers three perspectives that need to be engaged with if we are to maintain and navigate the years of slow growth that the reports would have us believe.
Unprecedented growth was impossible to sustain:
The 2021 peak was as much the gaming industry’s doing as it was the pandemic’s. At a time when smartphones became essential for daily activities, digital games became the preferred choice for leisure and entertainment. Nearly two years after the Omicron variant, the world has reopened, and other leisure activities have bounced back.
While most analysts would have anticipated a correction after the pandemic, it is important to recognize that in 2021, the number of players worldwide reached nearly 3.38 billion – almost half the world’s population. Rising from this number poses a significant challenge, and any growth will need to be slow, sustained, and achieved by offering value.
It is also noteworthy that it is not just game revenues that have stalled; smartphone sales are facing a similar predicament as the expected demand from the proverbial “next billion” has failed to materialize.
The PS5 is still outselling the PS4:
While Sony’s revised targets may lead many to believe that hardware sales are below expectations, it is important to note that at this point – 39 months since going on sale – the PS5’s sales numbers are 7 percent higher than corresponding numbers of the PS4.
These numbers, while not meeting targets and estimates, are still impressive considering the overwhelming popularity of the PS4. As the PS5 enters the latter half of its console generation, it is important to remember that in South Asian countries like India,the PS4 remained extremely popular until 2018-19, and this trend is likely to continue as late buyers prepare to upgrade their devices in 2025-26. Expect the PS5 to keep selling steadily as long as Sony offers strong exclusives.
The mobile games market needs to wake up:
The data indicates that one of the primary reasons for the slowing growth in revenue is the declining figures from the mobile games market. Once the leading force in the sector, mobile gaming has failed to innovate and introduce new genres since the emergence of Battle Royale games.
While titles like Genshin Impact have demonstrated the depth and richness of the free-to-play format, it’s essential to recognize that such games are not well-suited for portability and quick gameplay sessions. Worthy competitors to games like Pokémon Unite or Marvel Snap have been scarce, and while recent releases may be technically impressive, few offer true innovation in terms of gameplay.
Lastly, video games have always been a site of aspiration for young people. Historically, the transition from handheld devices of play to consoles and gaming PCs has been a steady pattern for the industry’s growth. If the industry seeks to remain a valuable entity for Gen-Z and Gen Alpha, it needs to revamp how mobile and free-to-play games function.
As the data suggests – in a maturing market with slowing growth, gimmicks and exploits for a quick buck are unlikely to work. Game makers and studios must commit to the long haul and maximize revenue through constant innovation and the creation of loyalty through consistent delivery of good experiences.
