If anything, 2023 promises to be an interesting year for the gaming industry. The pandemic sent shockwaves through the games market in ways we couldn’t have predicted. Global lockdowns stoked impressive growth in 2020 and 2021, though 2022 was a corrective and hectic year in terms of the most impactful market trends.
To put the relative instability of 2022 into context, we saw a year-on-year decline of over 4% for the first time since Newzoo started tracking global games market revenues in 2012. That’s not quite a seismic paradigm shift, but it’s definitely worth keeping track of.
Yet we remain as optimistic as ever about the future of gaming. In 2023, many hotly anticipated titles will be released for new consoles, and mobile gaming will undergo significant market changes in the post-ATT era. There are exciting developments brewing in the cloud gaming and VR spaces as well.
So, what are the games market trends that will shape 2023?
In our newest article series, we’ll dive into the top 10 trends we believe will have the biggest impact this year. Our analysts will offer key insights on all the most riveting developments and make predictions on what’s to come. What will happen with the Microsoft-Activision deal? How will generative AI affect the game development process? What’s the deal with gaming in cars?
Without further ado, let’s dive into our first 3 top trends in gaming to watch in 2023.
More AAA and AA Publishers Will Pivot Their Main Franchises to a Service-Based Model
Live service games are dominating the games market. Nine out of the 10 top games in 2022 ranked by peak MAU were not even launched this year. We see that players have come to expect that games are constantly supported and updated, and the bar has been raised for single player, narrative-driven games.
This expectation for high-quality, continuous content is putting a lot of pressure on games development. Over the past decade, development time has increased and the teams responsible for this development have grown. Gaming companies have very little financial wiggle room to risk a flop, and often focus then on titles seen as sure bets.
Typically, these games are already well-known and beloved. That’s why the market sees so many sequels, remakes, and remasters. However, developers and publishers are taking this one step further: instead of creating sequels or remakes, they’re pivoting to a live service strategy and adding content to existing titles.
We’ve seen this pivot take two distinct forms. On the one hand, smaller independent publishers have stopped developing new games within a franchise and are continuously supporting a single title. Just look at IO Interactive’s recent rebrand of its Hitman franchise into World of Assassination. On the flipside, larger publishers with a lot of people power can task entire teams to support a live service game, while other teams work on the next title in the franchise.
Publishers that want to tap into the Chinese games market can benefit from focusing on a few live service titles. China grants licenses to operate on a per-game basis, so once a game’s approved, publishers can update titles and launch them on multiple platforms without having to obtain new licenses.
To offset some of the development pressure of maintaining a live service game, publishers can leverage user-generated content (UGC). Live service games prioritize engagement, which precedes spending, an idea that has incentivized studios to build gameplay systems that encourage players to login weekly or daily. However, this may create time sinks that push players away from certain titles.
The Microsoft-Activision Deal Is Getting More Likely, but Regulators Will Continue to Impact How Gaming Companies Operate
Regulators have flocked to involve themselves in the games industry, thanks in part to the pandemic boom. If this past year is any indication, we expect to see regulators scrutinize common practices within the industry in 2023, especially on the topics of loot boxes, app store practices, and content exclusivity.
The relationship between regulators and the video game industry doesn’t have to be contentious. For instance, added scrutiny could lead to more protections for younger gamers. The EU also has plans to provide grants for local gaming companies, which will make it easier for smaller studios to compete with the global game development giants.
One of the key stories from 2022 will also continue into 2023. FTC may not actually block the Microsoft-Activision deal, but Microsoft will have to make additional concessions before the deal can go through. The mammoth deal may not even conclude this year — every day sees new updates and roadblocks coming to the fore in this story. One prediction we can make is that Call of Duty will come to Switch via a mobile port.
Another story that will stay in focus in 2023 concerns Apple, which must now allow third-party app stores on its ecosystem in select markets. The company may have to allow third-party payment processors, as well. This will allow Epic Games to relaunch Fortnite on iOS. While this is dynamite news for Epic, we don’t expect this to cause a seismic shift in the mobile market.
In international market news, China will start easing regulatory pressure in 2023, giving domestic and international game companies more opportunities to break into this market. After a game license freeze of nearly two years, China approved a new batch of 44 imports in December, and approvals on domestic games resumed earlier in the year. Reportedly, the NPPA will gradually streamline the licensing process.
However, this doesn’t mean that the floodgates are (re)opening. The limit is likely only a few hundred game licenses, which pales in comparison to the number of approvals pre-2020 freeze. In the foreseeable future, China may start to grant more game license to small and medium companies first. Game giants such as Tencent and NetEase may not acquire game licenses matching their development productivity.
The PC and Console Markets Will Embrace Hybrid Monetization Strategies (Including Advertising)
This year, we expect the PC and console gaming markets to ramp up their hybrid monetization strategies, including advertising in games. This offers additional marketing platforms to third-party companies and lower-priced subscriptions to players who don’t mind seeing ads.
Implementing multiple monetization methods has become the standard model for success in mobile games, particularly after the removal of IDFA made it much harder to rely on advertising as a sole revenue stream. PC and console developers have witnessed the potential of hybrid monetization methodology and are embracing it. Many games already offer in-game subscriptions and micro-transactions. In some cases, the initial purchase now comes at a premium.
However, players are only able and willing to spend so much on games, especially as the economic climate worsens around the world. Games companies can no longer rely on their dedicated players to foot the bill completely.
Embracing advertising may be just the growth opportunity PC and console developers and publishers need to offset this sticky situation. Blended advertising solutions like anzu.io help companies serve up immersive ads within games that don’t disrupt play, while providing an alternative growth path.
To drive this point home, game library subscriptions such as Xbox Game Pass have dwindled a bit in the last few months. We’ve heard rumblings of an ad-based tier offered at a lower price point, which would retain subscribers who have a reduced budget and entice new players to join the platform. Subscription tiers free of advertising may see a price bump, though, as they become a more premium commodity. We’ll just have to wait and see.
That’s it for the first 3 top trends to watch out for in 2023. Stay tuned for Part II of our top 10 most exciting trends in the world of video games.
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