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Recession Expected in 2021 - New Newzoo Report
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Newzoo claims that the gaming market is expected to see a decline in revenue compared to last year. Reasons for this speculation include: Apple policy or chip shortage.
The vast majority of foreign reports show that the value of the gaming industry will increase over time. Despite the predicted trend, according to Newzoo, this year should go beyond - the market value of our site will fall from almost 178 billion US dollars in 2020 to almost 176 billion US dollars in 2021. Where do these predictions come from? Newzoo claims that the decline will be caused, among other things, by the difficult situation in the chip market or Apple's new policy related to user activity tracking, not to mention the postponement of premieres of new games. We should not forget about the landmark - 2020, the result of which was a record due to the pandemic.
Chips, chips... where are the chips?
The first of the main factors that will undermine the gaming market in 2021 is still insufficient chip production - the entire technology industry is losing, from the automotive industry to the industry of phones, computers and consoles. The shortage of chips means less progress not only in developing modern hardware, but also in creating better and more immersive games. Unfortunately, this problem is expected will be felt all over the world even until 2023.
Apple and above all privacy
Another issue is Apple's new IDFA (Identifier for Advertisers) policy, a feature of the iOS system that is designed to identify individual mobile devices and their users and assign them specific advertising categories. The 14,5 update, released on May 3 this year, has allowed owners of a large portion of iPhone and iPad models to effectively control the information they share — advertisers must now ask for permission to 'track activities' through third-party apps and websites. » The message will be structured in such a way that it is easier for the user to opt-out than to agree to such a decision, which is still rare in the world of mobile marketing. Okay, but how will this affect the gaming industry? Naturally, individual game publishers will also have a big problem finding customers for their products - players who don't follow industry news and want to turn on a good shooter, MMO or RPG from time to time. After the changes made by Apple, such consumers may become smaller and, of course, it will be more difficult to attract them.
COVID "broke" all plans for the production of games
The pandemic has hit major development studios that are working on AAA games for consoles and PC, so such products like Hogwarts Legacy, Gran Turismo 7 or Skull & Bones , will not be released until 2022. What's more, we're in the middle of the second quarter, so we can expect more news on unfinished games in time. All of these landslides will have a big impact this year, but should further improve the results for 2022.
Industry by the Numbers - PC, Mobile & Consoles
Despite the aforementioned challenges, Newzoo predicts that the mobile gaming sector will grow by around 2021% in 4,4, accounting for more than half of the global gaming market (52%) . However, this is a slight increase from the past 12 months. Sunday players got stronger then, and for many of them the fastest way to get started was to download the app. In addition, many people have integrated with their friends in various MMO games to catch up with the lockdown. Therefore, interrupting growth from 2020 to 2021 by a higher percentage would be a miracle. In turn, due to the fact that the pandemic mainly affected large-scale production for PCs and consoles, both of these market segments are predicted to decline - by 8,9% for consoles and 1,7% for personal computers.
Record investments
In the first quarter of 2021, more than $39 billion was spent on 280 business transactions in the gaming industry, including investments, public offerings and acquisitions of other companies, according to InvestGame, an analysis firm that is $6 billion more than during 2020 with 664 transactions. The report shows how much companies received in previous billing periods: they earned more than expected and, therefore, were able to invest in new projects. Such huge development spending by publishers and development studios could lead to very good results by 2021, exceeding Newzoo's estimates. However, an amendment needs to be made as the pandemic is still taking its toll and larger game releases are pushed back to the next years. However, the Newzoo report takes into account the fact that it was the pandemic that caused such a large increase in the gaming industry's revenue in the second and third quarters of 2020. Added to this was the release of the PlayStation 5 or Xbox Series X/S and the resulting huge increase in interest in the tech and gaming sector. Events of this magnitude are unlikely to occur in 2021, so the vision of lower revenues seems realistic.
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