Do you ever wonder how many games there are out there? Well, as of 2021, the answer was over five million—taking into account regional versions, remasters, and ported games. That’s an astonishing figure and it is rising all of the time, but it does lead to another question.
Are there too many games? It may feel as though the world’s appetite for video game content is insatiable, but there are some signs that the industry may be plateauing.
Slowing Down
The number of games may be increasing every year, but the $200 billion video game sector is not booming. In fact, the industry is facing arguably the biggest slowdown in the last 30 years as the dramatic growth in revenue, fueled by the latest batch of consoles and the rapid rise of gaming on smartphones, begins to slow down.
It’s fair to say that the industry did not see this coming. Video gaming had been riding a tide of booming sales and new technology ever since the launch of the first Playstation in the 1990s. And the Internet revolution, followed by the arrival of the smartphone, had kept that momentum rolling throughout the 2010s and into the global pandemic.
The small decline in the immediate post-pandemic period was expected as the end of lockdowns around the world meant gamers had less time on their hands, but that was expected to be short-lived. It hasn’t quite worked out like that, however, and halfway through 2024, the industry is still sluggish.
Sales of hardware are continuing to stagnate. Sony has slashed its prediction for sales of the PlayStation 5, and after a 2% drop in mobile gaming last year, overall growth in this sector is estimated to be in the low single digits through 2024.
Unimpressive first-quarter figures from some of the gaming sector’s big guns, like Electronic Arts, were followed by a wave of job losses, on top of the 10,000 or so jobs that were lost in 2023. There continues to be widespread concern across the industry about a number of headwinds, including the level of competition in established gaming markets, making it hard for brands that are not already proven money-winners to make any headway.
That pessimistic view of the marketplace even extends to the big-name companies, such as Sony. Although the PlayStation 5 passed the 50-million-unit sales level in December, that has been accompanied by heavy discounting, and the company has already warned that they expect a steady decline in sales over the next fiscal year, which will have a knock-on effect on the level of funds they are prepared to devote to new games. The launch of a new Nintendo gaming system later in 2024 is only likely to increase the effect of declining sales of Xbox and PlayStation systems as gamers save for the Switch 2.0, and that will have a significant impact on overall industry performance.
One market report concluded that in 2023, the games industry globally expanded by just one percent, which is a rate slower than most nations’ GDP growth, and inflation. But how much of this sluggish performance is really down to the number of games on the market?
Escalating Cost
The cost of high-end games has been a constant source of controversy throughout the video game sector’s history. As the industry chases hyperrealism and the “Hollywood” feel, budgets for games have inflated dramatically. The costs of bringing named Hollywood talent like Danny Trejo (Farcry 6 and Call of Duty) isn’t cheap, and players feel that cost is being passed on to them, which is becoming an increasing point of tension between players and studios, particularly in a post-pandemic world, where living costs have increased, leaving game companies looking increasingly out of touch.
In the years of rapid expansion, companies could argue that there were always people willing to pay escalating premium prices for premium games, but against the current overall economic backdrop, a $500 console or a $70 game often don’t look that appealing.
The Challenges of Free Gaming
Offering people something for free is a common tactic across many economic sectors, and it can often prove effective. The online casino sector, for example, has grown at a similar rate to the video gaming sector in the last twenty years, and many of the top casino sites on CasinoTopsOnline promote free slots and free games, although usually with terms and conditions attached.
Free games have also become a huge factor in the video game sector. Two of the biggest names in the free gaming space are Fortnite and Roblox, and these have become major global brands. The game time spent on those games, however, is not being spent on the higher-priced games. At the same time, multiplayer games with long-established networks of players, such as Call of Duty, are so dominant that others struggle to compete.
The overall effect is that gaming companies are taking a big risk when they devote $100 million to a new title, and the stakes are particularly high if they’ve had a failure or two previously. All of these factors undoubtedly contribute to a slowing of the games industry growth.
Indie Saturation
One area of the video game industry that we can definitely say is saturated is the indie sector. Indie game developers have been responsible for some hugely popular and innovative games, but with the barrier to entry dropping all the time—thanks to new technology and accessible game development tools—it is becoming increasingly difficult for any indie developers to achieve success.
There will always be opportunities for the most talented, innovative indie designers, but the road to recognition is longer and more winding than ever. For those who can rise above the crowd, there are significant rewards, but outside the top 10–15%, there is a dramatic drop off in financial return, and as much as half of all indie games make no or little money.
New Entrants
Another factor to be considered is the increasing interest that entertainment companies usually associated with movies and TV shows are showing in the gaming world.
It is a strange irony that at the point where big game developers are increasingly aping the Hollywood entertainment industry by focusing on rebooting established franchises, major movie companies are getting into video gaming in a big way.
Netflix has been consistently expanding the range and depth of games that it offers, while one of the most eye-catching examples recently was Disney’s investment of $1.5 billion in Epic Games, the company that created Fortnite. The plan behind that money is to create a “Disney universe” that will be focused on gaming, and the justification is that demographic trends clearly show that younger people are spending as much on gaming as they do on TV shows and movies.
A Period of Transition
While there is some evidence to suggest market saturation is a factor in the video games sector, particularly for indie designers and game developers, the slowing of growth and the financial turbulence experienced even by big game companies is perhaps indicative of something bigger than simply too many games chasing too little consumer money.
Going back to the loot chest controversies of three to four years ago, the gaming industry has been wrestling—and sometimes losing—with multiple challenges. These include how to control the costs of producing ever more sophisticated games, how to compete with a growing list of challengers, how to effectively monetize their products in ways other than raising the retail price, and how to deal with the rising threat of free games and the free game model.
At the same time, technological advance never sleeps, and in the background, AI, VR, the metaverse concept, cloud gaming, and other developments are quietly encroaching on the industry—each with the potential to completely transform it. That level of disruption can be exciting, particularly for the consumer, but for games companies with shareholders and other commitments, it is the cause of trepidation and caution.
Conclusion
Modern gamers are certainly spoiled for choice. The range of video gaming experiences available today is phenomenal. Back in the 1990s, gamers would have access to a handful of platforms and a relatively limited range of games.
In 2024, you can play millions of games in hundreds of genres across scores of different platforms, including emulations of those old gaming systems. While game saturation is undoubtedly an issue for indie developers, for most gaming companies, it is not the main problem. There are bigger issues and wider uncertainties in the gaming sector at the moment, and it remains to be seen how they will play out, and whether they will lead to a better or poorer gaming experience for players.
