TechMay 9, 2024
The Gaming Industry’s Pandemic Revenues Are Gone — With Bookings, Growth, and Headcounts Shrinking
Interactive Entertainment
Noah Weidner
Discover
Sometimes a feller’s gotta eat a fella — The quote from the TV adaptation of the game Fallout perfectly encapsulates the dire state of the gaming industry. Gone are the boom days of the pandemic. And what’s left is a wasteland that has the industry fighting for survival.
The virtual world is (no longer) your oyster: In the latest pain data point, gaming platform Roblox reported first-quarter earnings yesterday that sent its stock down 21%. While its revenue surged by 22% yearly and it reached a record of 77M daily active users, slowing growth, sky-high spending, and a weak outlook overshadowed its success.
Microsoft’s major gaming acquisitions, including Activision for $69B and ZeniMax for $7.5B, aimed to boost its gaming subscription service, Game Pass. Despite these efforts, Microsoft’s gaming revenue would have fallen by 5% in the recent quarter without Activision, per Niko Partners analyst Daniel Ahmad. Rising AAA game costs and consumers returning to reality have led to layoffs and strategic shifts across the industry. Just in the last week:
Gaming latency: On top of a weak consumer environment and industry troubles, consoles are also due for a refresh. In the most recent quarter, Xbox’s hardware sales fell 31%, Nintendo saw a 12.6% decline, and Sony lowered its fiscal year 2023 console sales forecasts from 25M to 21M — saying the PS5 is reaching the “latter stages of its life cycle.” Nintendo plans to reveal a new Switch before Mar. 2025, while rumours circulate about new Xbox and PS6 consoles by 2027. Until then, game studios will have to find other ways to get gamers and investors excited. Perhaps they should take a page from LinkedIn — which has apparently built “very fun” games.
