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Insert a coin. There is growing pessimism about the health of the video game industry.
Tuesday, GameStop
,
The largest video game retailer reported a 31% decline in software sales for its fiscal fourth quarter. In January, Microsoft announced 1,900 job cuts across its Activision Blizzard and Xbox gaming divisions. A month later, Sony and Electronic Arts, as well as several other studios around the world, announced similar layoffs. Some experts and executives are beginning to worry that industry sales will be permanently depressed.
But I'm not going to extrapolate from this latest round of bad news. Many publishers overhired during the pandemic and mistakenly went after saturated categories, such as ongoing multiplayer games, which the industry refers to as “live services.” (think fortnite.) I don't see anything wrong with the structural growth of the game.
It's true that console game sales are likely to be significantly lower this year, but that's largely due to timing factors regarding game releases. The industry is about to have a great year. For example, the best-selling titles of 2023 are; hogwarts legacy, sold over 24 million units.Nintendo
's
The Legend of Zelda: Kingdom of Tears 20 million units sold.activision blizzard diablo 4 was another major seller. All three of his games took years to create. There will be no equivalent release in 2024.
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After a lull in this year's blockbuster titles, the industry should return to growth in 2025. Remember, great content also drives hardware sales.The biggest blockbuster of them all is Take-Two
Grand Theft Auto VIscheduled for release next year. GTAfranchise is unparalleled in terms of sales. His final work in the series sold over 195 million copies. Even if the title is delayed by a few months (as some are currently fearing), it will eventually be released, thereby increasing console sales.
There are other big games coming up. In its last earnings call, Sony said there would be no major franchise first-party game releases during the fiscal year ending March 2025. This means there's a lot more to come over the next 12 months.
When Nintendo releases a sequel for its current Switch console, it could bring new games such as: Mario. The exact timing is not very important. Whether it's this year or early next year, it will come out and drive new sales.
Beyond mega-franchises, there is some evidence that the games sector is holding up well. Already this year he has scored unexpected big hits for two small studios. Arrowhead Game Studios releases in February helldiver 2Cowen estimates that the company has sold 8 million units and generated nearly $300 million in revenue. pal world, Pokemon– Something like a game with guns made by a small Japanese studio, sold On PC, it sold 12 million copies, which equates to hundreds of millions of copies sold.Finally, earlier this month, Hasbro
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announced that monopoly go Mobile games generated $1 billion in revenue in three months, totaling more than $2 billion in the past 10 months.
The bottom line is that interest in video games is as strong as ever. Publishers that create high-quality games rather than following trends are fine.
I'm looking forward to buying the next games from Nintendo, Sony, and Take-Two. In 2025, it will continue to accumulate. For now, gamers can get back to last year's backlog.
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Short note: I will be on vacation for the next three months. A colleague will take good care of his Barron's Tech newsletter until I get back to him in July.
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Email Tae Kim at tae.kim@barrons.com or follow him at X. @firstadopter.
