Games Market Trends to Watch in 2023 and Beyond | Part III
The first month of 2023 is almost behind us and we’re counting down the final three major trends to watch out for this year in the games market.
If you haven’t followed our article series on what’s to come in 2023, here’s a quick summary: this year will likely have as many twists and turns as 2022. The cost of living is rising, meaning there’s less cash flowing toward games (and games are getting more expensive). The service-based model is reigning supreme among AA and AAA titles. Cloud gaming providers are investing more in PaaS solutions.
What’s more, The Last of Us has proven the power and potential of an effective transmedia (multiplatform storytelling) strategy with riotous aplomb. According to Deadline, the lauded show bridging the gap between games and legacy TV hit 4.7 million viewers on its debut, becoming HBO’s second biggest debut since 2010 after House of the Dragon.
Enjoy these final top trends we think will shape the games market this year, or explore part I and part II of this article series.
Generative AI Will Make It Easier to Develop Games (but We’re Years Away from Full Automation for AAA Design)
AI systems have been top-of-mind since ChatGPT rocked the world in November 2022. The technology is developing at lightning speed and the games industry is by no means immune to its effects.
Generative AI can already create images, 3D designs, and even videos, to say nothing of its capacity to pump out reasonably convincing texts. While the visual fidelity isn’t quite there yet, generative AI can significantly cut down development time for studios.
Games require a staggering amount of artwork and visual assets, and each piece of design needs a substantial number of variants. Game engines have somewhat alleviated the need for enormous quantities of design assets by providing libraries of reusable ones, but generative AI can fuel this process even further. Considering how reliant game developers are on interactive virtual assets, AI and machine learning technology can disrupt game development in a way that’s unique to the art form.
With progressively more powerful tools coming from the AI space, game developers can create assets in a style that matches their exact specifications. Generative tools can create endless variations of visuals in a highly iterative way at a speed that outpaces any single developer or designer.
On top of the art and design potential, AI technology may help developers populate vast online worlds. The pandemic accelerated players’ desire for social interaction in games, further driving the metaverse hype. As a result, many studios are developing virtual worlds, but a significant portion of them are empty, which makes them less enticing for new players.
AI technology might just be the solution virtual world builders need. In fact, Inworld AI raised $50 million in 2022 to, as the company says, “populate games with smarter computer-controlled characters.”
We expect AI-driven developments to accelerate change in game development in 2023 and over the next several years. In many ways, we’re only at the beginning, but what we’re seeing is as impressive as it is a shakeup for our industry.
VR Gaming Will Continue to Grow, But Will Remain Relatively Niche
VR gaming has grown in accessibility and popularity over the past several years, especially now that the segment has moved beyond small studios developing for a limited user base of headset owners. This growth is likely to continue with gusto this year.
In 2023, we’ll see the launch of the Quest 3 and PSVR 2, with both headsets set to come with substantial first- and third-party content. At CES in January, Jim Ryan claimed that more than 30 games are in development for PSVR 2’s launch window, including Gran Turismo 7 and Horizon Call of the Mountain.
Boosting investment into VR content will attract more players, leading to more entries from an expansive range of companies, paving the way for further adoption of VR gaming in the not-so-distant future.
This trend does come with a caveat or two. VR gaming will remain a niche segment, especially against the backdrop of the current macroeconomic climate. Consumers will prioritize traditional gaming platforms instead of paying an additional premium to start using VR technology, given its still somewhat limited content catalog.
Outside the gaming world, Apple is also entering the VR fray with cutting-edge technologies packaged as a reportedly high-end headset. This product, which targets the enterprise sector and hardware enthusiasts, will help galvanize consumer interest in VR and mixed-reality products. VR platforms focusing on gaming may look to Apple’s innovations as a possible way forward.
To capture more players, VR developers will also speed up experimentation on new and more diverse game mechanics. Single monetization strategies like one-off title purchases may fall by the wayside in favor of hybrid strategies already seen across the gaming market. We will see this trend continue into 2023, as added complexity in VR games enables more comprehensive monetization strategies to take effect.
Read our Free VR Market Report to learn more.
Gaming in Cars May Be Closer Than We Think
In the past few months, we’ve seen some surprising news about gaming as part of the automotive experience that leads us to believe that this segment is not as farfetched as previously thought.
BMW announced an exciting partnership with AirConsole to offer casual gaming in cars via the cloud back in October. In December, Tesla integrated Steam into its vehicles. Lastly, this January, NVIDIA announced that it was bringing its GeForce NOW cloud gaming service to select Hyundai, BYD, and Polestar electric vehicles.
Altogether, these developments represent an interesting shift toward automotive gaming.
Think about how much idle time comes with cars; especially with electric vehicles that need to charge. This chunk of time is largely unclaimed, and small bursts of gaming could occupy those periods. Allowing people to form a habit of playing high-end games while parked (or as backseat passengers, to be safe) could play an important role in our current engagement-first economy. Social media, short-form video, and other formats are already vying for idle attention, so why shouldn’t games have a metaphorical seat at the wheel?
Now seems like the perfect moment for this development for two reasons. Firstly, automotive entertainment systems are improving fast, and even if onboard computational abilities are limited, modern cars have data connectivity. Cloud gaming can take care of the heavy computational lifting in this cast. Secondly, electric vehicles need to be charged, particularly before embarking on long drives. That’s enough idle time for a round of Fortnite (or several).
Now that we’ve covered our top 10 trends to watch out for in the games market this year, let’s look back at how our predictions for 2022 panned out.
- Play-to-Earn Will Become a More Viable Business Model. False. The fate of play-to-earn depends on the crypto market, and as we all know, 2022 was not a stellar year for crypto. Play-to-earn developers also struggle to balance game economy and fun gameplay, which is not helping convert new players.
- Metaverse Anticipation Will Drive Both Investment and VR Sales. Mostly true. We did see significant investment, although the appetite cooled down in the latter half of 2022 due to the economic environment. Adoption for VR headsets grew significantly, and metaverse-lite experiences such as Rec Room and VRChat were among the most popular applications for VR headsets.
- Apple and Google Will Open Their Closed App Store Ecosystems (to Some Extent). True. As predicted, the first signs of opening app store ecosystems showed in 2022 in several markets due to regulatory pressure.
- Game IP Value Spikes as Transmedia Becomes More Relevant. True. Embracing transmedia (storytelling across multiple platforms and formats) to promote gaming content was a major strategic pillar for many game companies throughout the year. The Last of Us and its phenomenal reception indicates the transmedia strategy is here to stay (and scale).
- Gamers Will Be Spoiled for Choice! False. Unfortunately, expectant gamers experienced one game delay after another in 2022. Players had fewer options, leading to a decline in spending. In fact, last year marked a historic moment, as the first market downturn Newzoo witnessed in over a decade.
That’s it for our top 10 games market trends to watch out for in 2023. Next up, explore our market estimates and forecasts for this year and, if you want to see the latest stats from the games market, check out the free version of our Global Games Market Report.