Game Industry 2021 Vision

See the history of gaming revenue here.

A new year lies ahead of us, and everyone is looking for the year to be a better one than 2020 has been. The pandemic still rages (over 1.8 million deaths worldwide and nearly 350,000 in the US as of this writing) but vaccinations are beginning, and we can see a time when life begins to return to normal later this year. I hope everyone stays safe and has a better year in 2021 than they did in 2020!

First, I’ll look at some stats for the games industry in 2020; then I’ll make some predictions for the games industry in 2021, and finally, I’ll look over my predictions for 2020 and see how well I fared in prognostication. 

Overall, 2020 was a banner year for games due to the pandemic lockdowns, which kept people inside looking for something to do. For many of them, that was gaming. Early forecasts for the games industry were $159.3 billion, but in November Newzoo raised their estimate to $174.9 billion for the entire year, up nearly 20% over 2019. Mobile gaming leads the way with $86.3 billion, followed by console with $51.2 billion and PC games at $36.9 billion (the rest being from miscellaneous categories like XR/AR/VR and cloud gaming).

Where will the industry go from here in 2021? Higher still, but don’t expect the same level of growth. New consoles are off to a strong start, as are the latest PC graphics cards – all are in short supply due to both demand and supply chain issues from the pandemic. Those issues will take months to iron out completely, so it may be a while before you can just buy a new console or one of the latest graphics cards and expect to have it right away.

On to some predictions for the 2021 games industry:

1)      Games industry growth continues, but at a slower pace. I expect we’ll see somewhere around 10-15% growth in revenue, depending on how the pandemic continues. Of course, this won’t be evenly distributed among companies or sectors, but in general it will b a good year for games.

2)      Digital stores will be taking a lower percentage of revenue in general. This has already started with Apple lowering its fee to 15% for publishers whose revenue is less than $1 million annually… which is about 98% of all the app publishers. So far, other digital stores have not followed suit, but I expect Google might. Steam will probably hold out the longest, and I don’t expect them to make a change in 2021 or any time soon after that, unless and until they really start seeing their revenues fall or publishers stop distributing games through them.

3)      Indies will have a good year. Certainly those indies who publish iOS games will be getting twice as much money, which can’t hurt. Also, more attention will be paid to indies through things like Apple Arcade and other game subscription services, which should mean more revenue.

4)      Games subscriptions will continue to grow strongly. Microsoft’s Game Pass is doing well, and represents a strong selling point for the new Xbox Series X and Xbox Series S. Google’s Stadia seems to be getting a bit of traction finally. There are plenty of companies offering a variety of subscriptions: EA, Sony, Utomik, Ubisoft… there’s plenty to choose from, and there will be more.

5)      Game streaming will grow, and evolve. More and more people will watch games being played, and the entire process will continue to change. Already some games are including a “streaming” mode to get around copyright problems with music. More games will be built to take streaming into account, and how streamers interact with their audience will change as well.

6)      AAA games will continue to generate huge revenue, but also big problems for publishers. Look no further than Cyberpunk 2077 to see the future, a massive game with massive problems that was rushed out too soon. They’ll get the problems fixed and the game will end up being one of the biggest sellers in 2021, but it’s emblematic of the problems publishers face. Just trying to implement 4K textures will make development cost more and take longer… and open-world designs cause huge amounts of content generation, and are difficult to debug. These big games will get bigger and more expensive to make, but they will also generate even more revenue… if successful.

7)      User-Generated Content (UGC) will be ever more important in games. Look at how Roblox and Minecraft continue to absorb huge amounts of time, and generate massive revenue. Sure, those are aimed at kids, but now look at Manticore Games’ Core engine, which is providing a wide audience with the tools to make all sorts of gaming experiences. I expect giving users the power to create or modify their games will be even more popular, and lead the way to more industry expansion.

 

So, how’d I do with predicting 2020?

 

1)     The games market will continue to grow. Yeah, that was a gimme, but I really nailed it! 100%.

2)     Both the PS5 and the Xbox Series X will sell, but not in significant enough numbers to be a good market – but that’s not important. They have sold well, but constrained by supply and late in the year – so not very many units are out there. But they’ve helped console game sales grow, and drawn great attention to the segment. 100%.

3)     Esports will continue to provide enjoyment for fans and disappointment for investors. The pandemic helped esports by cancelling much of traditional sports, but it’s still not clear that investors benefitted yet. More ad dollars are flowing into esports, viewership is up, but the ROI is still not quite there yet. 80%.

4)     Streaming games and the streaming game market will continue to underperform. Still not there yet, but getting better – that’s the story of 2020. 100%

5)     Game subscriptions will do well – with the right content and features. Apple hasn’t released figures on Apple Arcade, and none of the other subscription services have either. So it’s really hard to tell how well they are doing. 75%.

6)     4K gaming will be used to sell hardware, but it really won’t be significant – no billion-dollar games will be 4K only. So far there are no 4K exclusives – versions of games optimized for 4K, yes, but they are also on non-4K systems. 100%.

7)     Watching people play games will continue to grow in popularity. Another easy one. 100%.

8)     E3 will continue to shrink, while true consumer-oriented conventions will grow. Missed this one depending on how you count it. E3 2020 was cancelled, and though they claim it will be back, it’s hard to see why. Other game conventions/conferences were cancelled or moved to online-only shows. So E3 shrank to nothingness, while consumer shows shrank. 50%.

Overall Score for 2020 Predictions: 88%.

 

Happy New Year!