As 2023 begins so does an exciting year for the gaming industry. A packed schedule of game launches, physical expos, and a hefty esports calendar all await gaming consumers this year. However, everything isn’t as rosy as in previous years in the gaming sector, as the global economic climate begins to bite.
It is easy to imagine that gaming lives in a bubble, protected from these market forces. And you’d be right to think that, judging from the industry’s performance during previous economic downturns. Take 2008, for example, an explosive year for gaming whilst the world suffered from a financial crash. The US market alone grew by 19% that year.
So surely the gaming industry is recession-proof? Well, maybe not.
The gaming industry is a much more mature and complex beast now than it ever was. Games are bigger and development cycles are longer requiring sizeable investment and lead times, gaming media is more proliferated than ever, and gaming hardware is more advanced and costly.
Experts are predicting that as consumers start to watch their spending so will large game studios and other industry players, tightening their pursestrings by slowing recruitment and reducing development portfolios. According to Gameindustry.biz, the global gaming market contracted by 4.3% in 2022 with browser PC games and mobile gaming feeling the pinch the most. As one Ampere Analysis puts it:
“The industry enjoyed a rapid influx of new users in 2020, which resulted in revenue growth. While the trend continued to 2021, it is not surprising that the momentum is slowing in 2022 as the impact of the pandemic subsides.”
However, somewhat paradoxically, there is a growing argument that gaming consumption will increase during these tough times. Gaming saw a massive 39% increase in time spent during the COVID pandemic, since then gaming has become more accessible and consumers will begin to turn away from holidays and expensive nights out in favour of at-home entertainment. One prediction is that the number of gamers worldwide is expected to break the 3 billion mark in 2023.
As inflation bites, consumers will be looking to reign in their spending over the next year. This evaluation of costs means assessing the value of an expensive meal out or weekend away versus the escapism that can be realised by gaming at home for a much lower cost. Yes, they may not be forking out for the latest hardware or day 1 AAA title release, but their consumption will likely still increase.
This means gaming consumers will be likely to be more selective in their gaming purchase decisions or turn to their back catalogue of games and familiar favourites.
Time is a factor too. A long, immersive game has a much greater utility and return than say a single night down the pub. Take, for example, a personal favourite of mine, Stardew Valley, an open-ended farming game that I currently (unashamedly) have roughly 120 hours of game time clocked. At the cost of £30 (Some food and a few pints in a local pub), I’ve saved 5 to 10 times that amount by staying in and enjoying my virtual farm.
So we have a gaming industry that, overall, is predicted to slow over the next few months, but gaming consumption is likely to increase. What does that mean to the average gaming brand?
Well, here are some tips:
- Reaffirm your value proposition: As consumers begin to scrutinise their outgoings more closely, brands will need to ensure that their value proposition and benefits are clearly communicated and understood by the consumer.
- Building your community: As a gaming brand, your community, however large or small, is invaluable. The next year is a perfect time to build that close relationship with your community, turn fans into advocates, and build positive brand sentiment that will carry over into more prosperous economic environments
- Purchase visibility: The consumer research and comparison phase of purchase intent will be longer, and more intense. This means your brand needs to be present in whatever channel they are performing their research. A unified content and comms strategy with strong brand consistency is key.
Only time will tell how the gaming industry fairs in this turbulent economic climate, but we know one thing for sure: Gaming offers a uniquely engaging experience that billions worldwide enjoy, and that’s not going to stop.