(Photo: Derek Story/Unsplash)The video game industry’s pandemic-induced heyday might soon be over—or at the very least, taking a break. New research reveals that the global gaming industry is set to contract this year by up to 1.2 percent.
An analysis by market data firm Ampere Analysis suggests that gaming-related software and hardware sales will dip to about $188 billion. In the US specifically, consumer spending is expected to drop to $55.5 billion, marking a nearly 9 percent decrease from last year. According to Ampere, 2022 will be the first year video game sales have dropped since 2015.
Before anyone begins to freak out—on behalf of the gaming industry or the economy overall—it’s important to note that this downturn is actually made up of slowed growth. That means there’s quite a bit of a buffer in which sales can fall while still remaining healthy. The pandemic drove up video game-related software and hardware sales by more than 29 percent between 2019 and 2020 alone, according to global market analysis firm NPD. A decline in sales from that point doesn’t necessarily mean the industry is suffering; it could very well be returning to a “normal” state, if that still exists. (General consumer spending in the US is going the same way: while the Bureau of Economic Analysis says spending has decreased month over month, they mean it only rose by 0.2 percent in May, while April brought an increase of 0.9 percent.)
That isn’t to say there’s no reason to worry at all. Major players in the gaming industry are gearing up for a recession by laying off workers and slimming down operations. Meanwhile, the industry is continuing to feel the effects of Russia’s invasion of Ukraine, which prompted many companies to halt operations in and with Russia. According to Ampere, Russia made up the world’s 10th largest video games market pre-invasion. Now it’s expected to drop to number 14 following a projected $1.2 billion loss. And here in the US, rapid economic inflation continues to upend individuals’ and families’ budgets, likely leaving little room for luxuries like gaming.
That being said, quarantine orders are largely nonexistent these days, resulting in fewer people turning desperately to video games for entertainment. There’s also the chance that the novelty of newer consoles, like the Xbox Series S and X and the PlayStation 5, has started to die off (especially as people give up on ever finding one in stores.) All things considered, it seems likely the dip in sales stems from a number of phenomena with positive and negative implications.
One bit of good news, though, is that the dip is expected to be temporary. Ampere’s analysis suggests the industry will return to growth in 2023, when sales hit an expected $195 billion.