Reflecting on the Past to Forecast the Future: 2023 is Shaping Up to be Familiar

As the year draws to a close, it's an opportune moment to take a step back and assess our current position, adopting a broader perspective than the usual daily or weekly rush allows. Typically, when writing my final column of the year, I revisit my last article from the previous year. Sometimes, this exercise reveals how rapidly things have changed, while other times, it's striking to see how little progress has been made on key issues. Given the tradition of making predictions for the upcoming year, this process often comes with a side of humility. Last year's final piece predicted that unionization would be a major story in 2022, and although that claim may not have entirely held up, the issue remains relevant in the industry. Progress has been slow, but the momentum behind the movement is building, and it's not unique to the games business, as workers in the broader tech industry are also starting to recognize the benefits of organized labor. Looking back at the stories that were dominating our attention in December 2021, there's a sense of familiarity. Frustration over console hardware shortages persists, as does speculation about Sony's commitment to its VR platform, and various companies are still exploring the concept of the Metaverse without providing clear definitions. Despite these ongoing stories, 2022 had its share of surprises, including the proposed acquisition of Activision Blizzard by Microsoft, a massive $70 billion deal that could reshape the industry's commercial landscape. However, the deal has yet to be finalized, with the past 11 months marked by back-and-forth discussions with competition authorities in various countries. One prediction that seems safe to make is that this acquisition will continue to be a major story in 2023 and likely 2024. Microsoft had hoped to complete the deal by June, but it now faces a significant legal challenge in the USA and potentially similar challenges in the UK and Europe. The most likely outcome is that the deal will proceed, but with concessions, and Microsoft's recent promise to keep Call of Duty available on Nintendo and Steam platforms for a decade may be just the starting point for negotiations. The US FTC's concerns about Microsoft's promises regarding the acquisition of Zenimax suggest that they will take a tough stance, and while the courts may not agree, this could be a preview of how the UK and EU will approach the deal. This process will likely extend into 2024, which is bad news for Microsoft and those tired of hearing about the deal's twists and turns. Legal restrictions limit the companies' ability to coordinate their efforts before the deal is approved, meaning that the actual integration of the businesses won't start until 2024, and successfully incorporating a $70 billion publisher into the existing Xbox structure will take significant time. The current console generation will likely be nearing its end before the merger process has a meaningful impact on the Xbox business. In the coming year, Sony and Nintendo are expected to have more hardware-focused years. Sony's PSVR2 is its most high-profile launch in the early part of the year, and it will be closely watched to see how committed the company is to the VR platform. The launch lineup looks solid, and the promise of improved visual fidelity and easier setup could make this a more attractive mass-market prospect. Sony is also likely to see supply chain issues for the PS5 gradually resolve in 2023. It's possible that next year will be the year when stock of PS5 and XSX consoles stays on shelves for more than a few minutes, although this may not happen until the back half of the year. This return to supply chain normality may also allow Nintendo to finally release a full-blooded update to the Switch hardware. The company has seemingly been waiting for the right moment to launch an updated model, which has been in the works for a couple of years. Analysts who have been predicting new Nintendo hardware for a couple of years will be relieved, as the company has been choosing to push back its update schedule until the supply chain situation improves. Another topic that will continue to be discussed in 2023 is the loot box discourse and the ongoing regulatory and legislative investigations into this business model around the world. Legislative progress is slow, and with many countries involved, there will be no quick resolution. However, it's possible that the story will become less relevant over time as more companies choose to avoid this monetization path due to the steady flow of news about regulation in various markets. My wildcard prediction for 2023 is that another major company will launch a serious rival to Game Pass. The most likely candidates are Amazon and Valve, with Epic as a third possibility, but a major firm could equally come out of left field. This prediction is based on the idea that it's unlikely every major tech and entertainment company would allow Microsoft to dominate the game subscription market. As always, the start of the year may bring a bombshell that renders all predictions outdated and irrelevant. Until then, I wish you a peaceful and happy holiday season.