The gaming industry experienced massive growth during the pandemic owing to the lockdown. The growth in the industry was such that it was expected that this growth is here to stay for the next few years. However, now reports have indicated that the engagement rate of the gaming companies has come down. In the post-pandemic world, the players have now returned to pursue real work; therefore, this low engagement rate is not surprising for many.
Additionally, the video gaming industry is experiencing a chip shortage. As a result, the sales of gaming consoles have also come down. Also, in the latest quarter, the demand for gaming consoles has also decreased.
The Gaming Industry Is Experiencing Lower Business
The gaming industry is finally experiencing a slowdown after witnessing a massive surge in demand during the pandemic. During Covid-19, many gaming companies and platforms like TapTap witnessed a bumper profit. However, the consumers’ appetite, which was high during the lockdown, has now gone down. People are now looking for real-life fun instead of virtual entertainment. During the lockdown, people were forced to stay inside. Hence, gaming was a good option; however, people now want real-life interactions.
Even Sony and Microsoft have reported that their gaming businesses have gone down. In July this year, Sony witnessed a drop of 15% in PlayStation engagement. The same drop in business was true for Nvidia. Also, the gaming industry is not fully recession-resistant, including apps like Auto Clicker that support other games. The impact of inflation is now showing its impact on the gaming industry. Gamers from across the globe are now spending less money on games because of inflation. Right now, during inflation time, people are spreading their discretionary spending judiciously.
This is also affecting the valuations of the gaming companies. A few companies that saw a fall in valuations are Activision Blizzard, Electronic Arts, Sony, Take-Two Interactive and Roblox.
Not Everything Is Gray For The Gaming Industry Yet
Even though the gaming industry is witnessing slow growth right now, this will not be the case in the future. All that the gaming industry needs right now is a blockbuster game with a big release. Also, it must be noted that with improvement in internet penetration and smartphone accessibility, there is a steady growth in the number of gamers globally. This is especially true for mobile gaming, including both paid and free games.
Once the gaming fatigue is over, the gaming industry will again witness growth. Currently, the slow growth in the gaming industry can be attributed to gaming fatigue, inflation and a shortage of chips. It must be noted that many professional players play video games and depend on subscription services. However, gamers are not freely spending their money on games because of inflation.
Gaming Industry To Touch A Valuation Of USD 339.7 Billion By 2027
The valuation of the gaming industry last year was USD 198.40 billion. By 2027, it is expected that the gaming industry will reach a valuation of USD 339.95 billion. This indicates a CAGR of 8.94% between 2022 and 2027. Technological advancements like virtual technology and artificial intelligence greatly contribute to this growth. Such technology will create an immersive experience for the gamers, and this will furthermore increase the popularity of the games.
Also, a gaming revolution will occur with the spread of 5G. It will promote cloud gaming, making it possible for everyone to play sophisticated games on ordinary devices. Furthermore, internet penetration and the number of internet users are also increasing. Along with the increase of internet users, even the number of gamers across the globe is growing too.
The Slow Growth Is Temporary
Even though the gaming industry is currently witnessing slow growth, at least there is growth. Also, this slow growth is temporary and is a result of just gaming fatigue and inflation. Once the phase is over, the gaming industry will be back on its way to steady growth. It would be interesting to see how long the gaming industry will take to fasten its growth. Currently, the gaming industry is waiting for a blockbuster game to hit the platforms to bring back the gamers’ interests. Also, to maintain steady growth, the gaming companies need to create more sophisticated games with solid plots, gaming designs and technology.