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Wednesday, Nov. 9, 2022

The holidays won't save the game industry from its terrible year

Video game sales around the world have slumped in 2022, and experts predict that even the holiday shopping season won't rescue the industry from its terrible year.

The pandemic lockdowns powered growth in video games last year and in 2020, as couch-bound gamers searched for a distraction from COVID-19. From 2019 to 2021, the global video game content and services market grew 26%, jumping from $151 billion to $191 billion, according to Ampere Analysis.

That growth cooled in 2022, as the pandemic eased and the economy faltered. Microsoft (MSFT), Sony (SONY), EA (EA), and Take-Two (TTWO) each saw year-over-year sales declines. Nintendo (NTDOY) says it expects to sell 2 million fewer Switch consoles this year due to continued chip shortages, though it raised its sales forecast thanks to the weaker Japanese yen. Even mobile gaming sales are declining, with NPD Group predicting a 9% drop in the third quarter of 2023 from the same time a year earlier.

While the holiday season traditionally brings huge game sales, experts predict a muted fourth quarter thanks to a lack of new, exciting content. We'd usually see hot titles for the holidays, but pandemic-related delays have pushed many games into 2023. Yes, the pandemic has eased enough to get people off of their couches — but it's still throwing snags in the supply chain. Those disruptions could strike a blow to an industry that's already suffering from year-over-year comparisons to its pandemic-driven highs in 2021.

“This holiday season is set up to be a natural let-down just from a quantity perspective,” Jefferies analyst Andrew Uerkwitz told Yahoo Finance. “If you look at the number of games last year to this year, it's actually down. There's been over 100 games delayed over the last 24 months. And that's publicly announced delays.”