May 29, 2024

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Video game industry not 'recession proof', sales set to drop in 2022

Video game industry not ‘recession proof’, sales set to drop in 2022

The PlayStation 5 logo is pictured at a store in Krakow, Poland.

Norfoto | Getty Images

Video game sales are set to decline annually for the first time in years, as another industry that has thrived in the age of the coronavirus faces the bleak prospect of a recession.

The global gaming and services market is expected to shrink 1.2% year-on-year to $188 billion in 2022, according to research from market data firm Ampere Analysis.

The sector expanded 26% from 2019 to 2021, reaching a record size of $191 billion. Ampere data shows that video game sales have grown consistently since at least 2015.

Games got a big boost from Covid-19 lockdowns in 2020 as people spent more of their time indoors. Launching the next generation of consoles from Microsoft And the Sony In the same year, he also boosted the fortunes of the industry.

However, the arrival of Microsoft’s Xbox Series X and S and Sony’s PlayStation 5 proved to be a double-edged sword — logistical disruptions and shortages of vital components have made shoppers struggle to find any of the new consoles on store shelves or across the board. Internet.

The Russian invasion of Ukraine — along with supply chain bottlenecks and rising inflation — has exacerbated gaming expectations. Many game software and hardware makers They decided to suspend their operations In Russia, including Microsoft and Sony.

Russia was the 10th largest gaming market in the world in 2021, according to Ampere. The company said it is expected to drop to 14th place in the rankings this year and lose $1.2 billion in value.

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Piers Harding Rolls, Ampere’s director of research, said the numbers show the gaming industry is not “recession proof,” as cost-of-living challenges caused by rising prices are likely to affect consumption.

“After two years of massive expansion, the gaming market is poised to bring back some of that growth in 2022 as multiple factors combine to undermine performance,” Harding Rolls said.

“Despite this, the year will end well before the pre-pandemic performance, and the outlook for the sector as a whole remains positive, with growth expected to return in 2023,” he added.

The market is expected to return to growth in 2023, with sales expected to reach $195 billion, according to Ampere.

Other challenges facing the industry include privacy changes from apple That makes it difficult for mobile game developers to track iPhone users, as well as delays in massive releases like Microsoft’s Starfield and Redfall.