Newzoo Report: Why the Gaming Market Still Holds Growth Potential

The recent PC and Console Gaming Report 2024 from Newzoo offers valuable insights into the gaming industry's current landscape. While layoffs and studio closures dominate the news, there are reasons to remain optimistic. Newzoo's lead analyst Tom Wijman points to the trend of declining playtime, but notes that a larger share of this smaller market is going towards older games, which has implications for monetization models. Wijman explains that it is challenging to succeed as a live service game, as it competes with established titles that have been capturing players' attention for years. However, within the smaller segment of playtime, many games are still considered successful. The report highlights that even with a smaller overall playtime, there is room for new games to succeed. Wijman cites examples such as Helldivers 2, which achieved success despite low expectations, and Manor Lords, which is part of a long list of games that have created an 'overnight success' impression through word of mouth. Newzoo's research shows that there is a group of players who jump from one new title to the next, creating a hype effect that can quickly gain traction. These players are active in engaging with games media and recommending games to their friends. The report also notes that breakout titles often share common characteristics, such as being well-made, focused, and filling gaps left by AAA studios. Wijman adds that these titles often effectively build on established gameplay, have strong community support, and blur or build on existing genres. Looking at the declining playtime trend, Wijman notes that it appears to be bottoming out, but the decline in playtime has not led to a similar drop in revenue. The number of players is still growing, particularly in emerging markets, due to increased access to gaming-capable devices and more payment methods. Wijman believes that there are opportunities to grasp in these emerging territories by serving them with games that match their preferences and moving away from familiar stories. While the market may still grow, the recent layoffs and talent leaving the industry could have a negative impact on gaming content in the coming years.