The gaming industry experienced a boom during the Corona pandemic. Now times could become more difficult. But it’s not just layoffs that are currently affecting the industry and gamers.
After the boom in the corona pandemic, a current analysis sees the global gaming industry facing a difficult year. There have been news of waves of layoffs in the industry for months – these could be the first signs of a shake-up in the market and the industry, as the EY-Parthenon study shows. For this purpose, the strategy consultancy of the auditing firm Ernst & Young (EY) examined the financial indicators of the world’s 32 largest gaming companies.
At these companies, EY counted at least 2,500 layoffs in 2023 – after years of constant growth. However, the number of jobs actually eliminated is likely to be higher. Not all exemptions were published. Companies from the USA in particular have taken the red pencil. Almost every second dismissal is due to them. The study leaves it open how many people in total work at the companies examined.
Margin falls
In terms of sales, the gaming industry continued to grow – but not as strongly as in previous years. In 2023, the gaming companies analyzed generated revenue of 138 billion euros, 6.2 percent more than in the previous year. Growth was therefore slightly higher than in 2022, but below the best values during the pandemic.
In 2021, the industry’s sales grew by 12.9 percent and in 2020 by 27.1 percent. The industry had to accept further reductions in profitability. The margin, for which the operating result is compared to sales, fell from 17.1 to 11.6 percent last year. This corresponds to the trend of the past three years, it was said.
EY industry expert Jens Weber said: “The business figures of the gaming giants look good at first glance, but the simultaneous waves of layoffs are evidence of the pressure that large game companies and small studios are equally exposed to.” The latter would have to assert itself against many competitors. “With the right concept, some small studios have recently been able to achieve considerable success and clearly stand up to the big publishers.”
Innovative games drive up development costs
The big games companies, in turn, are faced with the challenge of supplying a target group that is now used to graphics and technology with new and innovative titles: “These games, whose development costs have exploded in recent years, are increasingly being viewed critically.” The studios therefore prefer to rely on proven concepts as well as sequels or new editions of successful games.
According to Weber, this is why the community is simmering. So-called microtransactions are also currently causing dissatisfaction. Gamers can use real money to buy virtual goods in games – for example, for faster progress. Although this generates a lot of additional income for companies, it is met with opposition, said Weber.
Customers didn’t want to pay 60 to 70 euros for a game, but then pay even more to compete against other players on the network. Some would still bite the bullet: “The game manufacturers are walking a very thin line when it comes to customer favor,” said Weber.
Source: Stern
