Games Industry to Become Even More Concentrated; Pure-Play Companies Will Be Challenged, But Hits Like Palworld Will Still Occur
It's not even the end of January yet and the games industry has already announced layoffs for several thousand employees, showing that 2024 could be even more problematic than the already troublesome 2023 in this regard. We reached out to MIDiA Research Senior Analyst and Strategy Director Karol Severin to discuss the state of the games industry in this post-pandemic, high-inflation environment.
Sales were up 1% in the US and 1.7% in Europe for 2023, and Newzoo is forecasting growth for 2024 (although they believe it will be a lean year). At the same time, the games industry has been rocked by constant layoff news: less than a month into the year, there have been around 60% of the layoffs seen last year. Some games industry leaders are reportedly bracing for 'up to two years of pain'. What do you think about this seemingly conflicting state of the industry?
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It's important to note that even though these statements may intuitively sound as conflicting at first glance, they are not necessarily mutually exclusive. It is possible that the industry will grow revenue (depends how you count/define ‘the industry’) in absolute terms. MIDiA’s forecast states the growth will be only very modest (approximately 3% globally in 2024) and below the rate of inflation, which means that even though the revenue number may end up higher, the industry will probably be worse off in reality. The growth in absolute numbers is more driven by ongoing price hikes and growing gamer population. The layoffs are an ongoing part of the industry consolidation and optimizing for profitability (though some are calling it ‘sustainability’). If we assume that the market is over-saturated with too many games at the moment, then it is possible for layoffs to happen without affecting the global games revenue. It will likely just become more concentrated among fewer games companies as
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