The video game industry fears a disappointing 2023 after Ubisoft’s warning

Ubisoft has set off alarm bells in the video game sector this week. The French firm presented disappointing results in recent weeks, which has led it to rethink its strategy for the coming months. The industry is now wondering if Ubisoft can be the ‘canary in the mine’ in an industry that has grown almost uninterrupted for decades.

Market analysts continued to be optimistic of late. In a report published in mid-November, Morgan Stanley called 2023 “a turning point year” in which the recovery from a sluggish 2022 would begin. “Game development teams are seeing better productivity and efficiency that has improved At the same time, titles that were strategically delayed are now more likely to launch in 2023,” said analyst Seyon Park.

Estimates from the analysis firm NewZoo indicated revenue in the sector of 184,000 million dollars in 2022, which represented a drop of 4.3% compared to the previous year, breaking the upward streak of the years following the pandemic. The delay of the titles that Park mentions and the recovery of the normal life of the citizens are the two main reasons why the level of sales fell last year.

In addition, Ubisoft cites a “backdrop of worsening macroeconomic conditions” for an industry that “continues to pivot towards mega-brands and long-running titles that can reach players across the globe, across various platforms and business models.” . The CEO, Yves Guillemot, pointed out that the economic situation “affects consumer spending” downwards.

Industry experts trust a product that is increasingly worked on, with better visual quality and better stories. But Ubisoft focuses on the danger of this move: its large investments from previous years to develop high-level games (the Assassin’s Creed or Far Cry sagas, among others) have already been released, “while our recent releases have not worked as well well as expected.” Guillemot was directly alluding to the titles ‘Mario + Rabbids: Sparks of Hope’ and the dance game ‘Just Dance 2023’.

Studying the risks that Ubisoft is highlighting (and that cost it a fall of up to 19% last Thursday on the stock market), one wonders if there will be a place in the market for all those games that have been postponed in recent months. The high quality of the products may not be enough if the consumer’s pocket is increasingly empty and the percentage of his income devoted to leisure is forced to decrease.

In fact, the competition for the new titles will not only be from their contemporaries but, above all, from their predecessors. In this sense, from NewZoo they remembered that only one (Call of Duty) of the ten most played video games in 2022 was launched on the market last year. In fact, the three that occupy the podium were at least five years old: Fortnite (2017), Minecraft (2011) and Grand Theft Auto V (2013).

Apart from the business in console or computer games, other branches of the industry cannot breathe easy either. A part of the viewers of eSports (video game competitions) are leaving them aside to focus on those who broadcast their games on live or delayed video platforms (Twitch or YouTube). Short video platforms, such as TikTok, are also taking up more and more leisure time for young people. At the same time, games that were tied to cryptocurrency (usually in the form of rewards) have fallen as a result of the collapse in digital currency prices.

So what reasons do analysts have to be optimistic? Seyon believes that the recovery of the chip supply chain will make it easier to buy consoles, that China will likely lift its restrictions put in place in 2021 to limit gaming hours for the country’s teens, and that recessions have historically not hurt the industry. because “staying at home killing zombies is generally cheaper than a night out with friends, even with the initial investment in games and consoles,” he says.