Newzoo has once again cut its forecast on the global games industry. Analysts are now expecting the first decline in 15 years, with the PC market being the only main segment to experience modest growth.
Image credit: Newzoo
- According to a Newzoo report, the games market will generate $184.4 billion this year, down 4.3% year-over-year.
- Initially, the company expected global revenues to reach $203.1 billion. It later cut its forecast to $196.8 billion, which was still up 2.1% compared to 2021. But the latest outlook seems much more grim.
- It is worth noting that Newzoo has been covering the video game market since 2007 and for the first time ever forecasts a year-over-year decline. Analysts call 2022 a “corrective year” after two consecutive years of growth.
- When looking at the global games market by platform, mobile will see the largest decline, falling 6.4% year-over-year to $92.2 billion.
- The console games market is expected to generate $51.8 billion in 2022, down 4.2% year-over-year.
- The PC games market will reach $40.5 billion in revenue, up 0.5% year-over-year. But the segment of browser games will fall 16.7% to $2.3 billion due to the ongoing migration of players to mobile.
- When looking at gaming revenue by country, China will remain the largest market, despite regulatory pressure. The local games industry is expected to generate $45.8 billion in 2022.
- It is followed by the US with $45 billion. Together, these two countries account for 49% of global spending on video games.
- Asia-Pacific will remain the biggest region by revenue, accounting for 48% of the global market. However, its revenue will decline 5.6% year-over-year to $87.9 billion.
- Other large regions will also experience the slowdown, with North America and Europe falling 5.1% and 3.5% year-over-year, respectively.
Main reasons for the decline
- As reported by Newzoo, the global games market has been slowing down after the pandemic, which fueled exceptional growth.
- The decline in mobile is largely due to the end of global lockdowns and the current economic climate, including inflation. The IDFA changes have also had a negative impact on revenues.
- The console segment has faced many delays and, as a result, the market lacks AAA releases, which remained the main revenue drivers.
- This is in line with other analysts’ forecasts. Earlier this year, the NPD Group said it expected US game spending to fall to $55.5 billion in 2022 (down 8.7% year-over). The company cited higher prices in everyday spending categories and supply issues among the reasons for the decline.
The future outlook
Despite the current forecast, Newzoo expects the global games market to reach $211.2 billion by 2025, growing at a 3.4% CAGR.
Analysts say console gaming will grow rapidly in the coming years, which should offset the current decline. “Gaming is now embedded in consumers’ lives, and that will not change,” the report concludes.
It is also worth noting that Newzoo’s forecasts are usually higher than the actual figures we see every year. For example, the company projected the global games market to generate $180.3 billion in 2021, but it ended up reaching $192.7 billion. So the situation might also be less grim at the end of this year.
More information and details can be found in the full report.