Six Key Factors That Could Make 2023 a Landmark Year for the Gaming Industry

The gaming industry is currently experiencing a mix of uncertainty and optimism. Last year's performance was inconsistent, with console sales declining in certain markets due to supply chain issues, particularly affecting the PlayStation 5. Software sales for consoles and PCs also decreased, mainly attributed to the decline in sales of legacy titles. Games like GTA 5 and Mario Kart 8: Deluxe saw a drop in sales as they came down from their pandemic-driven highs. The 2021 Call of Duty game's underwhelming performance further contributed to the decline in sales figures. However, new game releases in Europe saw a significant increase of 16%, driven by successful launches of titles such as Call of Duty: Modern Warfare 2, Elden Ring, LEGO Star Wars: The Skywalker Saga, Pokémon, and God of War Ragnarok. Beneath the surface, several big-budget titles failed to meet expectations and struggled to gain traction. Recent reports from Ubisoft suggest a softening in the market for games outside of major franchises. The question remains whether subscription services are affecting game sales, if consumers are becoming more selective due to economic pressures, or if rising game prices are deterring customers. These factors will likely influence the market in 2023. The mobile gaming sector is also facing challenges in user acquisition and targeted advertising. With marketing budgets expected to decrease in 2023, there is uncertainty surrounding the smartphone gaming market. Despite these concerns, there are several reasons why 2023 could be a remarkable year for the gaming industry. Based on historical data and trends, we have identified six factors that could make 2023 incredible, as well as six reasons to be cautious. Using an F1 analogy, the new Xbox and PlayStation consoles have been hindered by manufacturing limitations since their launch in November 2020. Component shortages have significantly restricted the success of both platforms. For most of 2022, Xbox and PlayStation were unable to meet demand. A decline in European stock led to a 35% decrease in PS5 hardware sales compared to the previous year. However, this situation has improved. PlayStation CEO Jim Ryan recently announced that the PS5 is now widely available. A significant increase in stock in December resulted in a surge in sales in major markets. While there is still work to be done, particularly in Europe, the days of purchasing PS5 consoles from eBay are over. PlayStation has released several notable games since the launch of the PS5, including God of War Ragnarok, which ended the year as one of the best-selling console games. In 2023, the highly anticipated Spider-Man 2 is expected to be a major title. The first game was one of the fastest-selling PlayStation titles in history, and the mini-sequel, Spider-Man Miles Morales, was a headline act at the PS5's launch. With over 33 million players and a recent expansion to the PC market, the game's developer, Insomniac, is consistently producing high-quality games. The potential release of Spider-Man 2 in September or during the holiday season could make it a guaranteed success, filling the gap left by Call of Duty. Bethesda Games Studios has a track record of producing hit games. The studio's new title, Starfield, is a different IP and will not be available on the PS5. However, it will be part of the Game Pass on both PC and console, making it an attractive option compared to other major releases. Starfield is expected to have more players at launch than any previous Bethesda game, and the studio has other notable titles in the works, including the return of Forza Motorsport and a new IP called Redfall. After a quiet 2022, Xbox is poised for a stronger 2023. The Zelda franchise is an icon in the gaming world. Before the release of Breath of the Wild, no Zelda game had ever sold over 10 million copies. However, Breath of the Wild has changed the landscape, with sales exceeding three times those of Twilight Princess. Although some of the audience may have moved on, historical data suggests that even if Tears of the Kingdom sells less than half of Breath of the Wild, it will still be the second-best-selling Zelda game of all time. With 120 million Switch owners, Tears of the Kingdom is likely to be the biggest Zelda game launch ever. Last year, the Nintendo Switch was the leading console globally, and despite sales declines in some markets, it remains a powerful platform. The Switch will continue to be a key player in the year ahead, although hardware sales may decrease, and software performance will depend on Nintendo's releases outside of Zelda. The year is filled with notable titles, including Resident Evil 4 Remake, Suicide Squad, Diablo IV, Street Fighter 6, Dead Island 2, and Minecraft Legends. Third-party blockbusters, such as Ubisoft's Assassin's Creed: Mirage, EA's Star Wars: Jedi Survivor, and the next Final Fantasy game, are also expected. Hogwarts Legacy is another game to watch, with a potential for huge success despite challenges related to the Harry Potter franchise and its creator's views on trans rights. There is a notion that the gaming industry benefits during economic downturns, as people seek more cost-effective entertainment options. However, the current market is different, with more free games and streaming services like Netflix offering better value. Historical data from the last recession shows that while big-selling games still performed well, smaller titles struggled. Consumers may turn to gaming for entertainment in 2023, but they will be selective about where they spend their money. The COVID-19 pandemic had a significant impact on game development, particularly for titles in the early stages. While some studios have adapted to the new work environment, others are still experiencing delays. Expect some delays to continue in 2023, although hopefully fewer than before. The Switch remains a powerful platform, but it is entering the later stages of its life cycle. Hardware sales will decline, and software performance will depend on Nintendo's other releases. Call of Duty is a major seller, and its performance can significantly impact the market. This year, Activision's plans for Call of Duty include digital content for Modern Warfare 2 and Warzone, but there won't be a major single-title launch to drive the market. The loss of the FIFA brand identity may require significant messaging from EA, and the rising costs of game development have already led to price increases, with Microsoft indicating that it will follow suit.