By Sagar V. Mankar The gaming industry is facing challenging times, with cost-cutting measures leading to layoffs, studio closures, and game cancellations. Major releases that could boost sales are few and far between, leaving the industry in uncertainty.
In an interview with GamesIndustry.biz, Mat Piscatella from Circana, a tracking firm, projected that the overall spending in the US gaming industry will dip by 2% to 10% in 2024.
This will lead to an approximately $6 billion loss in the $57 billion gaming market of the United States.
This projection is based on several factors, including uncertainty around hardware, content, and even the developers themselves.
Continued Decline of Physical Game Sales
The shift to digital game sales is heavily impacting traditional video game retailers in 2024. Piscatella states “on the physical side of the business it continues to decline.”
With around 50% of Nintendo’s game sales still being physical compared to other platforms like Sony and Xbox being heavily digital, retailers are much more reliant on Nintendo hardware and game sales.
The lack of a new Nintendo hardware release in 2024 is expected to “accelerate” the decline of physical sales at retail this year.
Piscatella says “Retail still relies on Nintendo much more than they do other platforms” like PlayStation and Xbox.
To participate in the success of digital game sales, retailers have gotten “really clever” by selling gift cards for popular digital games like Fortnite and Roblox.
Gift card sales for these digital titles showed “significant growth” over the 2023 holidays according to Piscatella.
Unexpected Hits and Their Impact
The two biggest games so far in 2024, Palworld and Helldivers 2, were unexpected hits.
Palworld sold approximately 25 million copies in just two months, which is similar to the success of Hogwarts Legacy last year.
However, in revenue terms picture is different as Palworld ($30) and Helldiver 2 ($40) were both sold at half the price of Hogwarts Legacy ($70).
Piscatella believes the industry would need another game at a similar level of success to match the sales and revenue numbers driven by last year’s blockbuster hit, Hogwarts Legacy.
Where Are the Big Games?
One of the main concerns Piscatella raises is the lack of highly anticipated releases in 2024.
Many of the industry’s most eagerly awaited games are not due out until 2025 at the earliest.
“The uncertainty level this year is probably the highest I can recall … with the uncertainty of what’s going to get us to the finish line, because we don’t have those big games announced that we know,” he says.
Could Grand Theft Auto 6 Be the Savior?
While 2024 may be rough for the gaming industry, Piscatella remains optimistic about the future, primarily due to the anticipated release of Grand Theft Auto 6 in 2025.
He believes that this game could be “the most important thing to ever release in the industry,” highlighting its potential to reignite interest and drive sales.
Ubisoft president also made a similar statement last month about GTA 6 during their Q4 revenue release.
Let’s wait and see how long we have to wait for the next big game release. Will it be until the release of GTA 6 in 2025? Or perhaps other games like Palworld or Helldivers 2 will come out before GTA 6 and save the day.
What is your prediction for the next big hit game following Palworld and Helldiver2? Write down in the comments.
Source: The information in this article is based on an interview with Mat Piscatella, an industry analyst at Circana, published on GamesIndustry.biz.