The video game industry appears to be on the verge of a resurgence after a period of decline following the pandemic-era boom. The sector, which saw unprecedented growth during the early stages of the COVID-19 pandemic, is now showing signs of stabilization and potential growth, especially with significant upcoming releases from major players like Nintendo and Take-Two.
Reggie Fils-Aimé, former President and COO of Nintendo of America, shared optimistic insights with Yahoo Finance, stating, “The games industry is positioned for an upswing.” He highlighted recent industry announcements and consumer enthusiasm for upcoming titles and new gaming platforms as indicators of this positive shift.
The pandemic initially spurred a surge in gaming activity as global lockdowns led people to spend more time at home. In 2020, mobile gaming revenue soared by 32.8% to $99.9 billion, while digital PC and Mac game spending increased by 7.4% to $35.6 billion. Home console game expenditure also surged by 33.9%, reaching $42.9 billion.
However, the rapid growth of 2020 was followed by a downturn. Mobile game revenue grew by just 15% in 2021 and then declined by 3.3% in 2022 and 3.7% in 2023. PC and Mac game sales saw a modest increase of 8.7% in 2021 but fell by 1.4% in 2022, with a slight recovery of 2.1% in 2023. Console game spending, which had initially surged, experienced stagnation in 2021 and a decline of 3.4% in 2022 before rebounding in 2023.
The initial console boom was partly driven by the launches of Sony’s PlayStation 5 and Microsoft’s Xbox Series X and Series S. However, supply chain issues hampered system sales and, consequently, industry growth.
Fils-Aimé noted that the market contraction was influenced by an overproduction of content, as game developers faced ample investment but produced a glut of titles, many of which did not perform well in 2023. This oversaturation contributed to industry-wide layoffs, with major companies including Microsoft, Sony, Riot, and Unity reducing their workforce. The trend continued into 2024, with EA and Sega also announcing significant job cuts.
Despite these challenges, signs of recovery are emerging. Mat Piscatella, Executive Director and Video Game Industry Adviser at Circana, indicated that mobile gaming has been a major contributor to the industry’s resilience. “Mobile gaming has been a key factor in maintaining overall content spending,” Piscatella noted, reporting a 12% increase in mobile gaming content spending in the U.S. through May 2024. The PC, Cloud, and Non-Console VR segments have also shown promising growth.
The home console market, while still struggling, is expected to benefit from new game releases and the anticipated launch of Nintendo’s next-generation console in 2025. Additionally, the handheld gaming sector, led by Valve’s Steam Deck, is gaining traction.
Overall, while the industry’s growth may not match the explosive rates of the pandemic’s early days, the forthcoming releases and technological advancements offer a hopeful outlook for the future of gaming.
