Consolidation of the games market is a concern, but it is not a bogeyman

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If there’s one sector of the economy that can’t complain about the Covid-19 pandemic, it’s the games industry. With people locked at home and consuming more games, there was considerable growth in revenue.

Still, Rodrigo Terra, president of Abragames (Brazilian Association of Electronic Game Developers), was restless. “We were very concerned about the verticalization of the market”, he says.

The idea that the games industry was going through a process of “verticalization” (or “consolidation”, as it is often called) gained traction in January, after an unprecedented sequence of billion-dollar deals:

These deals raised questions about the concentration of a lot of power (and money) in the hands of a few players in the games industry and doubts about how this would change the market.

Terra’s concern was with a smaller-scale repetition of this phenomenon in Brazil, with medium and large studios buying or merging with smaller studios. “Which would end up decreasing the base of the pyramid and we wouldn’t have a cycle of new companies emerging”, she says.

This movement really happened, but with different results than he expected. “As the games market exploded, there was great interest from students and even professionals from other areas of the economy, who began to see games as a potential market”, he reports.

The effect of this was that many studios were born during the pandemic, in 2020 and 2021. “Young people with a lot of talent”, says Terra.

According to research released by Abragames, in the last four years, Brazil went from 375 game development studios to 1,009, an increase of 169%, with about 40% of these companies having up to five years of existence.

Chris Charla, General Manager of Projects and Content Curation at Xbox, also notes a clear expansion of the Brazilian industry. “The quality of games is growing very fast. Developers releasing one, two, three titles in a row, and it just keeps getting better,” he says.

As responsible for the ID@Xbox program, which helps bring indie titles to Microsoft platforms, and an employee of one of the companies responsible for the current consolidation process, Charla is in a privileged place to observe the consequences of this phenomenon in the market.

He recognizes that there is a consolidation process, but he doesn’t see it as something negative. “For a studio, joining a larger company might be the right thing. For others, starting over with a small project and surprising is the way to go.”

Charla sees that both options can achieve success at the same time. “It shows that we are in a healthy industry,” she says.

“As in the entertainment industry, you never know where the next big thing is going to come from. I don’t see anything in the sales numbers and long-term projections that might worry independent developers,” adds the executive, who quotes “Cuphead”, Canadian studio MDHR’s debut title, as an example of an indie game that became a global success – even winning a series on Netflix.

It is also true that a lot can still change. The main deals involving game companies have not yet been concluded or are pending approval from regulatory bodies – the FTC (US Federal Trade Commission) is still considering the purchase of Activision Blizzard by Microsoft.

In addition, analysts polled by GamesIndustry.biz do not see the wave of acquisitions and mergers ending anytime soon. The only certainty is that the game market will never be the same again.

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game tip, new or old, for you to test

Stray

(PC and PS 4/5)

If you’ve ever seen a slouchy cat sleeping in the sun without a care in the world and felt a tinge of envy, then “Stray” is the game for you. Popularly known as the kitty game, the debut title by French studio BlueTwelve was released last Tuesday (19) and became an instant classic. In the game, the player takes control of a lost yellow kitten who needs to explore different areas to find his way home in a world inhabited by robots. The strong point of the game, however, is that it is a “cat simulator”, in which the player can play with balls, knock over objects, scratch furniture and find cozy corners to take a nap.

update

news, launches, business and what else matters

• The studio Mojang, creator of “Minecraft”, released a note refuting any possibility of implementing NFTs in its main game, including by third parties. According to the company, this technology “creates models of scarcity and exclusion that conflict with our guidelines and the spirit of ‘Minecraft'”. The move is seen as a warning to companies using the game to implement their own NFT sales schemes.

• Meanwhile.. Square Enix announced the November 2023 release of “Final Fantasy 7” commemorative cards and figures that will include NFTs.

• Ubisoft has delayed the release of “Avatar: Frontiers of Pandora” to “2023 or 2024”. The company, which announced a 9.8% drop in sales in the first quarter of the year, also canceled four games, including “Splinter Cell VR” (as the name implies, a virtual reality game from the spy series “Splinter Cell “) and “Ghost Recon Frontline” (a “Call of Duty: Warzone”-style multiplayer battle-royale).

• For the first time, a woman will be on the cover of the global version of a “Fifa” game. Australian Sam Kerr, Chelsea player, will be the highlight of the standard physical versions of “Fifa 23” sold in Australia and New Zealand – in other countries, the standard cover will have the French Kylian Mbappé. The edition with the player, however, will also be available in other countries through Amazon.

• Discord app voice chat service has started working on Xbox consoles. Interestingly, the feature is not yet available on consoles from Sony, which made a minority investment in the communications company last year.

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

July 26

“Story of Seasons: Pioneers of Olive Town”: undisclosed price (PS 4)

July 27

“Octopath Traveler: Champions of the Continent”: free (Android, iOS)

July 28

“Bear and Breakfast”: undisclosed price (PC)

“Lost Epic”: BRL 34.99 (PC), price not disclosed (PS 4/5)

July 29

“Xenoblade Chronicles 3”: BRL 299 (Switch)

Promotion of the week

The strategy game “Railway Empire” is on sale at Humble Bundle. The title, which makes it possible to build and control trains in different scenarios, is being sold for just US$ 1 (R$ 5.50). Paying a little more, you can also buy up to nine expansion packs – the whole set costs US$ 12 (R$ 66). Part of the money raised will go to charities.

Readings of the week

what came out about games in Folha