Dueling video game events – E3 and Summer Games Fest — streaming over next few days.Nintendo, Sony, Microsoft and Bethesda to preview new releases, trailers.2020 video game revenue surged, but industry watchers divided on post-COVID-19 trend.
Video games provided a diversion during the coronavirus pandemic. With life opening up, do games retain the same commitment of time and money or could their importance wane?
Some answers could come over the next few days during the Electronic Entertainment Expo (E3). The annual video game industry event, which was cancelled last year, will be a four-day online event beginning Saturday. Fans can sign up and see the schedule at E3Expo.com.
Also due to provide new game releases and other news is the competing Summer Game Fest, set to begin streaming Thursday at 2 p.m. ET/11 a.m. PT on YouTube, Twitch and other sites (see SummerGameFest.com for more).?
Major game makers such as Microsoft (Xbox), Nintendo, Sony (PlayStation), Activision, Electronic Arts, Take-Two Interactive and Ubisoft are involved across the two online events.
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What’s revealed over the next few days could?stoke enthusiasm for the rest of 2021 and into next year, says?David Cole, founder and CEO of research firm DFC Intelligence. “COVID put a huge monkey wrench in development schedules,” he said. “Companies have been very silent with the uncertainty.”
That uncertainty – and a global shortage of semiconductor chips used in game consoles and other electronics?– has led games and esports analytics company Newzoo?to forecast a 1% dip in the 2021 global games market (mobile games included) to $175.8 billion. This decline comes a year after?a 23% spike to $177.8 billion?in?2020. But?growth returns and spending surpasses $200 billion by 2023, forecasts Tom Wijman, the firm’s market lead for gaming.
A repeat of 2020’s video game revenue surge may be unlikely, but game companies still see potential. In May, total investment in games and interactive tech hit $3.35 billion, more than triple the amount in May 2020, according to M2 Insights. And seven new studios launched the first week of June, said Wanda Meloni, an analyst and futurist with the research and consulting firm.
”What we are seeing is a definite increase in funding and M&A activity, as companies now flush with cash from last year’s growth are looking to make investments and expand their business,”?she said.
Not all industry watchers say slowed spending is a given. DFC Intelligence expects global console and PC software sales to grow 10% in 2021 to a record $71 billion in revenue worldwide. “An example might be Animal Crossing which blew numbers out of the water last year,” Cole said. “As a hypothetical if another Animal Crossing came out this year, we expect most users would buy it but probably not play it as much.”
Even though there’s some concern about whether the pandemic’s stay-at-home life inflated?video game growth, Digital World Research analyst and founder P.J. McNealy expects consumers to keep playing, too.?
”(They) have learned how to stream entertainment, communicate on Zoom, and play video games online,” he said. “That learned behavior is here to stay because it’s gotten to the point where the barriers to entry to game have been erased. It’s now easy to find games, play games, and connect with others.”
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Another reason for the?continued reach and dominance of video games is the expansion of mobile games. “The total number of gamers exposed to gaming keeps growing, driven by every new phone buyer in most major global markets,” McNealy said. “That market is not shrinking one iota, and then add in every new laptop or tablet or console sale.”
Mobile gamers may not play less as COVID-19 abates, suggests a recent YouGov survey of 1,200 adults each in the U.S. and Great Britain, as 77% of U.S. gamers and 68% of those in Great Britain said they will likely keep playing more games.
Spending on mobile games worldwide is expected to more than double over the decade, from $98 billion in 2020 to $272 billion by 2030, estimates London-headquartered research firm GlobalData.
”Mobile gaming is already bigger than the console and PC gaming markets combined, contributing nearly 57% of global video games revenue in 2020,” said?Rupantar Guha, GlobalData’s associate project manager for thematic research at GlobalData. “It will continue to account for the lion’s share of the global video games revenue over the next 10ten years.”
Traditional game makers have noticed the growing importance of mobile gaming.?Activision acquired “Candy Crush Saga” publisher King Games in 2015. More recently, Electronic Arts in February paid $2.1 billion for Glu Mobile (“Design Home” and “MLB Tap Sports Baseball”).
Last week, Take-Two Interactive spent $225 million to acquire Nordeus, a Serbian mobile game company best known for its?Top Eleven soccer management game, which has more than 240 million registered users.
Riot Games in March released a beta version of “League of Legends: Wild Rift” for iPhone and Android.?A free mobile Rocket League game for Android and iOS devices?is expected later this year, developer Psyonix says.
Meanwhile, cloud game services such as Microsoft’s Xbox Game Pass Ultimate and Google Stadia let you play on games on Android devices, as well as TVs and PCs.?Apple is embracing the latest PlayStation?and Xbox controllers for use with Apple Arcade games and Apple TV?on iPhones, iPads, and Macs.
”Cloud gaming will continue to be more of a thing moving forward,” said said Kahlief Adams, owner and host of the podcast Spawn On Me with Kahlief Adams. “Folks are looking to expand experiences to multiple devices that they always have on them.”
Some consumer spending is going unspent because Sony and Microsoft cannot make and ship enough of their latest consoles to stores. Video game lovers continue to wait for alerts from retailers such as Amazon, Best Buy, GameStop and Target for restocked supply of the game systems, initially brought to market seven months ago.
The PlayStation 5 and Xbox Series X both have suggested prices of $499.99. But on?eBay, most PS5 consoles are seeking bids of $700 to $1,000 or more, while Xbox Series X consoles run $700 or more with shipping.
Sony and Microsoft will likely address the supply issue at the upcoming events.?”PS5 allocation is still a major issue that I do think gets better until much later in 2022,” Adams said.
Matti Littunen, equity analyst at AllianceBernstein, said for the latest consoles, there’s “no end in sight for demand outrunning supply for the rest of the year at least.”
For some, it’s hard to get excited about a new wave of video games when they cannot get a new console to play them. “Half of us still can’t even buy one,” tweeted pro gamer Kevin Perez.
Could Nintendo announce a new Switch console? There has been plenty of speculation about an updated Switch system with a larger touchscreen with improved resolution and the ability to?display games in 4K video on TVs.?
Maybe Nintendo reveals some plans or teases us with a glimpse of what could be the Switch 2 or Switch Pro. But?Littunen is unconvinced a new Switch won’t arrive until at least 2022. “Sales are still strong and the transition to the new gen has been slowed down,” he said.
Follow Mike Snider on Twitter: @MikeSnider.