The video games industry is set to grapple with persistent challenges throughout 2024 and potentially into 2025, as leaders in the field anticipate closures, layoffs and restructures.
"If 2023 was the year of layoffs, 2024 will be the year of closures. Not just developers, but publishers, media, service companies... There are just too many unprofitable businesses in video games. We're looking at up to two years of pain," the CEO of a public company told GamesIndustry.biz.
Moreover, investors expressed a reluctance to invest in video games until interest rates decrease later in the year, with one angel investor saying, in dialogue with the video game website, "Why take a gamble with a games company when you can just stick the money in the bank and earn 5%?"
Rising interest rates are identified as pressuring various business costs, including wages, insurance, travel and rent, with limited room for adjusting video game prices.
Furthermore, publishers voiced concern about the overwhelming number of games saturating all platforms, attributing it to the greenlighting of numerous titles in 2020 and 2021.
Industry leaders stressed the need to return to pre-COVID-19 pandemic release schedules, projecting a two-year timeline for this normalization, urging companies to divest or cut unprofitable areas, and emphasizing a focus on core offerings.
Despite these challenges, industry insiders highlighted the satisfaction and engagement of gamers, who continue to play and buy more than in previous years.
"The games business is built on very solid foundations. And when things do start to grow again, we would hope to see a more sustainable and wiser games industry emerge on the other side," GamesIndustry.biz co-founder and CEO Paul Gouge concluded.
Photo: Santijago on Shutterstock.
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