Fear of recession in the games market grows with bad results

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The dark clouds of recession are approaching the United States and Europe, and the games industry is showing signs that it will not be unharmed by the weather, recovering an old discussion: after all, would the games market be recession-proof?

The reputation that game companies would be virtually immune to financial crises gained strength in the second half of the 1990s and early 2000s, when the sector was going through a phase of sharp growth and seemed to suffer little in periods of economic turmoil.

In an article for Gameindustry.biz, researcher Rob Fahey points out two main factors for this phenomenon:

• The rapid growth of the consumer public in the period. Children who started playing video games in the late 1980s and early 1990s grew up and continued to play into their teens and early adulthood — helped by a maturing industry as well, which began making games for this audience, as more kids entered. in that consumer market.

• Video games are a relatively inexpensive form of entertainment. Even in a time of crisis and unemployment, people are still looking for forms of leisure. In the case of games, for the same price as going out for dinner one night with the family (or even less) it is possible to buy a game and enjoy it for dozens of hours.

However, he says recent changes have made these two protective mattresses down significantly:

• Although the game market is still growing, the rhythm is no longer the same. In addition, one of the areas where expansion is strongest, that of mobile games, is historically underestimated by traditional companies in the sector and often seen as of lesser importance, although this scenario is changing.

• In addition, companies are increasingly betting on microtransactions and expansion packs, which demands that players continue to spend even after making their first purchase. So some may no longer see video games as such cheap entertainment options.

The not encouraging numbers released by the industry in recent weeks can be understood as a sign that the protection that the sector had for times of crisis really no longer exists.

Today’s top three console makers, Nintendo, Sony and Microsoft, reported lower-than-expected results in their gaming divisions, with sales of their main products falling sharply.

Between April and June of this year, Nintendo recorded a 23% decrease in the sale of consoles and 8.6% in the sale of games in relation to the same period of the previous year. Microsoft had only slightly better numbers, with hardware sales falling by 11% and software sales by 6%.

Sony already announced a 4% increase in PlayStation 5 sales, but the good news ended there. Sales of PS4 and PS5 games are down 26% from last year, resulting in a 2% drop in the company’s gaming revenue and lower expectations for the rest of the year.

And they weren’t the only ones. Capcom (from the “Resident Evil” and “Street Fighter” series) had a 50% drop in sales; Square Enix (from “Final Fantasy”), down 15.5%, and Take-Two (from the “GTA” series), which made its first report since acquiring Zynga, reported a 28% drop in sales this first quarter of the fiscal year compared to the sum of the results of the two companies in the same period of 2021.

The negative numbers, however, are seen by companies more as the result of one-off and temporary problems than as the beginning of a long-term crisis. Many of them point, for example, to an unfair comparison of the 2022 numbers with those of 2021, when the games sector was still positively impacted by the increase in sales during the lockdown period.

“Growth in the games market as a whole has slowed as opportunities for consumers to leave the house have increased due to the reduction of infections by the new coronavirus in key markets”, said Sony in its financial report, pointing to a 15% drop in the time users spend on PlayStation consoles.

Nintendo, meanwhile, attributed its results to an aftermath of international logistics crises and shortages of semiconductor chips.

Independent analysts also highlighted the absence of major launches in the period. “The mid-year hiatus of video game release is unfortunate and much of it is a result of bad luck. The disruption to game development due to the pandemic hasn’t helped […] and many publishers are in a state of waiting until their new games are released,” said video game market analyst and consultant Sam Naji in an article for Gamesindustry.biz.

The argument makes sense. Bandai Namco, distributor of “Elden Ring”, one of the few big releases of 2022 so far, was one of the outliers in the market when it recorded a 54.5% increase in game sales in the last quarter.

In general, the situation of the games sector can be summarized by the analysis of the consultancy Newzoo. The company identified a market slowdown and lowered its expectations for 2022, but still estimates a 2% growth in the games industry as a whole.

If the predictions are correct, we shouldn’t see massive layoffs of studio employees or new games being canceled for lack of money in the coming months. However, it seems clear that the times of blue skies and calm seas are in the past.

play

game tip, new or old, for you to test

Portal

(PC and Switch)

Released in 2007, “Portal” can already be considered a classic. Valve’s game is a first-person 3D action puzzle in which the player must use a weapon that produces interdimensional portals to reach the end of a maze sequence. The premise is simple, but the physics challenges present in the title require the player to think “outside the box” to find solutions. That alone would be good, but the game still tells a fantastic science fiction story and with a lot of fun dialogues. Originally released for PCs, the game was recently released for Switch in a bundle that includes “Portal 2”, a sequel as good as the debut title.

update

news, launches, business and what else matters

• In a document sent to Cade, Microsoft’s lawyers in Brazil accused Sony of paying developers not to put their games on Xbox Game Pass, says the website Adrenaline. The demonstration took place after the owners of PlayStation took a stand against the acquisition of Activision Blizzard by Microsoft on the grounds that the “Call of Duty” series is too important a product to be under exclusivity of its competitor.

• The open world game “Hogwarts Legacy”, based on the Harry Potter universe, has had its release delayed. Initially scheduled for the end of this year, the game should only arrive on PCs and PlayStation and Xbox consoles on February 10, 2023. post on twitterthe team responsible for the game said that it “needed a little more time to deliver the best possible experience”.

• The tactical RPG “Marvel’s Midnight Suns” had its release delayed for the second time. The game developed by Firaxis Games (from the “Civilization” and “XCOM” series), which was initially expected to be released in March of this year, should only reach the public in February or March of next year.

• Square Enix has announced that its London studio is developing a new mobile game based on the Nickelodeon series “Avatar: The Legend of Aang”. The game will be called “Avatar: Generations” and, according to the company, will be a free-to-play adventure RPG with tactical battles. There is no scheduled release date.

• Still in beta, the fighting game with characters from Warner “MultiVersus” reached the mark of 10 million players last week, according to data from the website tracker.gg. Scheduled for release later this year, the game will be free and will have versions for PC and Xbox and PlayStation consoles.

download

games that will be released in the next few days and promotions that are worth it

aug 15

“MultiVersus”: free (PC, Xbox One/X/S, PS 4/5)

aug 16

“Rollerdrome”: no price available (PC, PS 4/5)

aug 17

“Kirby’s Dream Buffet”: BRL 77 (Switch)

aug 18

“Cursed to Golf”: BRL 37.99 (Switch), no price available (PC, Xbox One/X/S, PS 4/5)

“We Are OFK”: BRL 34.19 (Switch), price not available (PC, PS 4/5)

“RPG Time: The Legend of Wright”: BRL 143 (Switch)

“Thymesia”: no price available (PC, Xbox One/X/S, PS 4/5)

aug 19

“Madden NFL 23”: R$249 (PC), R$299 (Xbox One and PS 4), R$339 (Xbox X/S and PS 5)

Promotion of the week

Humble Bundle has launched a promotion of games from the “Resident Evil” series. The price of the sets varies from US$ 1 (R$ 5), for the simplest with 3 games, to US$ 30 (R$ 150), for the complete package of 10 games, including the remakes of “Resident Evil 2” and “Resident Evil 3”, and a 50% off coupon for “Resident Evil Village”, the latest title in the series. Part of the amount raised will be donated to philanthropic institutions. Offer runs until August 24th.

Readings of the week

what came out about games in Folha