Why 2023 Could Be a Pivotal Year for the Gaming Industry

The video game market is currently experiencing a significant level of uncertainty. Last year's results were mixed, with console sales declining sharply in some markets due to stock shortages, particularly for the PlayStation 5. Software sales for consoles and PCs also fell, primarily due to a decline in sales of legacy games, such as GTA 5 and Mario Kart 8: Deluxe, which had previously seen a surge in sales during the lockdown period. The performance of 2021's Call of Duty game also had a negative impact on the overall figures. However, across Europe, new game sales saw a 16% increase, driven by successful launches of games like Call of Duty: Modern Warfare 2, Elden Ring, LEGO Star Wars: The Skywalker Saga, Pokémon, and God of War Ragnarok. Despite this, some high-budget titles failed to meet their targets and struggled to chart, and recent reports from Ubisoft suggest a softening of the market for games outside of major franchises. The question remains whether subscription services are negatively impacting game sales, if consumers are being more selective due to the cost of living crisis, and whether rising game prices are deterring customers. These factors are likely to influence the market in 2023. The mobile gaming sector is also facing challenges related to user acquisition and targeted advertising, with marketing budgets expected to decrease in 2023, leading to uncertainty in the smartphone sector. Despite these concerns, there are several reasons why 2023 could be a landmark year for the gaming industry. By analyzing historical data and trends, we have identified six reasons why 2023 could be an incredible year for gaming, as well as six reasons to be cautious. Since the launch of the new Xbox and PlayStation consoles in November 2020, their success has been limited by manufacturing issues, including component shortages that have significantly hindered both platforms. For most of 2022, Xbox and PlayStation were unable to meet demand, with a drop in stock across Europe resulting in a 35% decline in PS5 hardware sales compared to the previous year. However, this situation has changed, with PlayStation CEO Jim Ryan announcing that the PS5 is now in free supply. A substantial increase in stock in December led to a spike in sales in major markets, although there is still work to be done, particularly in Europe. The removal of these supply constraints is expected to have a positive impact on the market. PlayStation has delivered several major games since the launch of the PS5, including God of War Ragnarok, which ended the year as one of the world's biggest console games. In 2023, the highly anticipated Spider-Man 2 is expected to be a major title, with the first game being one of the fastest-selling PlayStation titles in history. The game's developer, Insomniac, is known for consistently producing high-quality games, and with over 33 million players across the series, Spider-Man 2 is likely to be a guaranteed success. Bethesda Games Studios has a track record of producing hit games, with franchises like Fallout and Elder Scrolls regularly topping the best-seller charts. Starfield, a new IP, is set to launch in 2023, although it will not be available on the PS5. Instead, it will be part of the Game Pass on PC and console, making it an attractive proposition compared to other major launches. With the inclusion of Starfield, Xbox is looking stronger in 2023, with other key games from Microsoft, including Forza Motorsport and Redfall, expected to launch. The Zelda franchise is an iconic and beloved series, with Breath of the Wild being a game-changer for the series. Prior to its release, no Zelda game had sold more than 10 million copies, but Breath of the Wild has surpassed that figure, with sales currently more than three times higher than the previous best-seller, Twilight Princess. The success of Breath of the Wild has raised expectations for the upcoming Tears of the Kingdom, which is likely to be the second biggest Zelda game of all time, even if it sells fewer copies than Breath of the Wild. With 120 million Switch owners worldwide, Tears of the Kingdom is almost guaranteed to be the biggest Zelda game launch of all time. Last year, the Nintendo Switch was the best-selling console globally, and although sales are declining in some markets, the platform remains a key player in the gaming industry. The Switch has a strong lineup of games, including Tears of the Kingdom, and with over 100 million people accessing the console in the 12 months leading up to September 2022, it is likely to remain a major force in the market. In addition to the big three console exclusives, 2023 is set to see the release of several major titles, including Resident Evil 4 Remake, Suicide Squad, Diablo IV, Street Fighter 6, and Dead Island 2. There are also several third-party blockbusters, such as Ubisoft's Assassin's Creed: Mirage, EA's Star Wars: Jedi Survivor, and the next numbered entry in the Final Fantasy series. One game to watch is Hogwarts Legacy, a Harry Potter RPG that has generated significant buzz despite the challenges it faces, including the controversy surrounding the series' creator, JK Rowling. If the game delivers on quality, it is expected to be one of the year's biggest titles. The notion that video games benefit from recessions is based on the success of the industry during the last recession, which coincided with the popularity of the Xbox 360, Wii, and DS. However, the current market is different, with more competition from free games and TV services like Netflix, which offer better value for money. While consumers may turn to games for entertainment in 2023, they are likely to be selective about where they spend their money. The COVID-19 pandemic had a significant impact on game development schedules, particularly for titles in the early stages of development. Although some studios have adapted to the new way of working, others are still finding progress slower than before, and delays are likely to continue in 2023. The Nintendo Switch is entering the latter stages of its life cycle, and while it will remain a key player in the market, hardware sales are expected to decline, and software performance will depend on the company's lineup outside of Zelda. The Call of Duty franchise is a major seller, and its performance can significantly impact the overall market. This year, Activision's plans for Call of Duty include a range of digital content for Modern Warfare 2 and Warzone, but there will not be a major single-title launch to drive the market. As a result, this might be the first year in a decade where Call of Duty and FIFA do not top the European charts. The loss of the FIFA brand identity is expected to have some impact on the market, although EA's retention of other licenses, such as teams, leagues, stadiums, and players, will help to mitigate this. The rising cost of game development, combined with inflation and the need to deliver on heavy investment, has already led to an increase in game prices. Microsoft has indicated that it will also raise the price of its titles, and it is unlikely that prices will decrease in 2023.