Games industry leaders braced ‘for up to two years of pain
Games industry leaders are anticipating prolonged turbulence extending until 2025. What prompts this outlook, and how will it affect various sectors within the industry? Let’s delve into the details.
2024 – A Year of closures in game industry
A CEO of a public company expressed, “If 2023 was the year of layoffs, 2024 will be the year of closures.” This disruption doesn’t solely impact game developers; publishers, media, service companies, and more are all experiencing significant losses. According to forecasts, stability might not return until the end of 2025, marking a two-year period of uncertainty. Here are the specific impacts:
Rising interest rates and investor hesitation
Investors are currently grappling with the challenge of high-interest rates. While they anticipate rates to decrease, it might not happen until the end of 2024. Additionally, some investors are exploring safer investment alternatives outside the gaming market. Why are they reluctant?
In general, investors are cautious about pouring money into the gaming industry, which may pose difficulties for game development companies seeking financial resources to complete projects and launch gaming products.
Saturation and competition in the gaming industry in 2024
There’s concern about the plethora of games released on all platforms, leading to oversaturation. We’ve witnessed an abundance of game releases in 2020 and 2021. Consequently, not only are streaming services saturated, but seemingly, game stores are reaching a saturation point too.
When supply exceeds demand, developer profits will significantly decrease. Games will face fierce competition, resulting in severe cutbacks and terminations throughout the year. Similarly, by the end of 2023, Newzoo predicted 2024 as a “sober year” for the gaming market due to the impacts of major upcoming launches.
Layoffs and Closures in 2024
2024 – A Year of closures in game industry
Considering the issues above, there’s a high likelihood of witnessing a wave of layoffs in the gaming industry in 2024. The primary cause stems from developers running out of funds and being unable to secure investment.
Advice
Developers are advised to focus on core areas that drive profitability, protect their funding, and minimize unnecessary expenditures during this challenging period. A differentiation strategy that emphasizes sustainability and long-term success is crucial in navigating the competitive landscape.
Note: Challenges extend beyond the gaming industry
Although the gaming industry faces numerous challenges in 2024-2025, it’s part of a global struggle. Factors such as war, pandemics, and more are beyond our control. Therefore, game developers should have a clear strategy and not be overly stressed about the situation.
Despite the somewhat bleak report, a director of a major studio emphasizes that the gaming industry is still in a positive position. Investment in the electronic gaming market has not completely halted, and there are still many opportunities. Many game developers continue to be successful during challenging periods. Stay resilient and take your game into a brighter future!
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