Newzoo estimates that the global game industry will grow negatively this year. What is the problem?

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GameLook report/Recently, Newzoo, a market research organization, has made an adjustment to the 2021 global game market revenue forecast. Newzoo predicts that the global game market will generate revenue of US$175.8 billion in 2021, which is a 1.1% year-on-year decrease from the previous estimate of US$177.8 billion , This is also the first time it has reduced its gaming market revenue since it started tracking data in 2012.

In the past 2020, due to the outbreak of the housing economy, the development of the game industry has advanced by leaps and bounds. However, in Newzoo’s view, due to the continued shortage of semiconductor chips this year, coupled with the official implementation of Apple’s IDFA policy, this year’s total revenue has been caused. The value will hardly exceed last year.

However, this does not mean that the game industry is going backwards. According to Newzoo’s data, as of the end of this year, the scale of global gamers will reach 2.9 billion, and the game industry is expected to exceed $200 billion in 2023.

Newzoo executive Tom Wijman said in an interview: “This is indeed the first time in our history that we have lowered our estimated game revenue this year, but we have no reason to worry about the long-term prospects of the game industry. From a long-term perspective, the market will remain in the next few years. With a very healthy growth trend, this year is our slight correction to the crazy 2020 game market.”

For the gaming industry, last year was undoubtedly a very special year of growth. Because of the impact of the epidemic, games in all regions and platforms have increased tremendously. Those who are not allowed to watch sports programs at home or on TV start to try games, and they will continue to play games.

More importantly, in the fourth quarter of last year, the two console giants successively launched the next-generation consoles PS5 and XSX, which stimulated the demand for games from core players, and the sales of the two consoles repeatedly set new records.

Newzoo pointed out that in 2020, the global game market created $177.8 billion in revenue, an increase of 23.1% year-on-year in 2019. This is the highest year since Newzoo began tracking and forecasting game market revenue in 2012.

In 2020, the performance of many game companies is very outstanding. For example, Zynga and Activision Blizzard both announced excellent quarterly results. Although they said that there are still some uncertainties in the industry, the performance of the next few quarters will still be Maintain a good growth momentum.

Wijman said: “We expect that this year’s Q2 and Q3 quarter revenue will see a certain decline. At this time last year, due to the outbreak of the housing economy, many game companies have seen a surge in revenue. Therefore, these companies are still growing this year. Something expected.”

The 3A host market has a greater impact, and the effects of the epidemic will eventually pass

In the first half of 2020, an epidemic changed people’s work and lifestyle. Many large-scale events were forced to be cancelled or postponed, and even the Olympic Games were postponed to this year or 2022.

Among these, game studios are naturally no exception. Changes in the working environment may affect the quality of the game and even the enthusiasm of the players for this game. At the same time, the epidemic has also caused difficulties in the global supply chain, and there is a shortage of supplies for next-generation mainframes and high-end personal graphics cards.

Therefore,Newzoo predicts that in 2021, the global PC game market revenue will fall by 2.8% year-on-year to $35.9 billion.Among them, 33.3 billion US dollars will come from digital version/boxed games, and 2.6 billion US dollars will come from web PC games. Moreover, the post-epidemic effect will continue to affect the host market this year.Revenue from console games will fall 8.9% year-on-year to US$49.2 billion.

The delay of game release will affect the development and distribution of the entire market, especially for those games with high production value and large-scale team cooperation game projects, the impact will be even greater. Generally speaking, these games are mostly 3A console games, so the impact on the console market will be greater, while the impact on the PC market is relatively small. At present, the game lineup of many next-generation consoles is more or less affected. The impact will continue throughout 2021. Many products have postponed their launch time to the second half of this year or even 2022.

At the same time, this negative impact will also spread to the hardware market. The global chip shortage will mean that some electronic products will be in short supply, such as next-generation consoles and components required for high-end PC games, such as graphics cards. Similar to the impact of the delayed launch of the game, Newzoo predicts that the shortage of hardware and components will also cause consumers to have a negative impact on PC and console spending.

Finally, Newzoo has a clearer understanding of the situation of the game industry after the epidemic is controlled, and then adjusted its revenue forecast for the game market.

Newzoo believes that although the stickiness of game users will continue to grow, the stickiness and consumption levels of users will return to the levels before 2020 in the short term, because as the epidemic gradually stabilizes, people can control their lifestyles more freely. Disposable income of users in non-gaming social activities.

IDFA landing, games that rely heavily on marketing and user acquisition will be affected

The launch of Apple’s IDFA policy will slow down the development of the mobile game market. According to App Annie’s data, the mobile game market is expected to grow by 20% in 2021, butNewzoo predicts that mobile games will generate 90.7 billion U.S. dollars in revenue in 2021, a year-on-year increase of 4.4%.

It can be seen that the revenue share of mobile games accounted for more than half of the global market, because compared with PC and console games, the impact of the epidemic on the mobile game market is relatively small, and for the mobile game itself, the development difficulty is relatively low. This means that mobile games will not suffer a major blow due to changes in working conditions and delayed launch of the game.

Wijman said that the upward trend we saw last year is permanent for the market. This is why our forecasts for 2022 and 2023 are higher than before the epidemic. We believe that many new players will experience a special period. Develop new habits and they will continue to play games. But even with this in mind, our forecast for this year is still a slight drop.

After the official landing of Apple’s IDFA New Deal, it will break the model of many mobile game companies measuring the success of their marketing activities. In iOS 14.5 released last week, Apple has allowed users to choose not to be tracked. Without IDFA user tracking data, it will be difficult for game companies to find users who are willing to pay.

This change will mainly impact products that are monetized through advertising to achieve commercialization, as well as games that rely heavily on precise user positioning. Many successful mobile game publishers in the industry will improve their strategies through user acquisition and marketing performance, but Newzoo predicts that this may be overshadowed by other potential growth drivers on a global scale.

“Game products that rely heavily on user acquisition, new user experience, and marketing will be affected,” Wijman said.

In fact, a large part of the growth of the mobile game market comes from the Chinese market. Even without IDFA, the ecosystem of Tencent and NetEase is still very strong. Relying on first-party player data is just one of the ways for mobile game developers and publishers to solve IDFA problems. Newzoo believes that mobile game developers will be able to adapt to the new rules and quickly resume growth. This is also its right to 2021 and the future. One of the important reasons for the optimistic outlook of mobile games.

The game market will continue to grow in the future

In the next few years, the game market will continue to grow and is expected to exceed US$200 billion by the end of 2023. Newzoo predicts that from 2019 to 2023, the game market will grow at a compound annual growth rate of 7.2%, reaching US$204.6 billion. Therefore, Newzoo re-examined the game market revenue forecast released in April 2020, so as to have a clearer understanding of the impact of the epidemic on the game industry.

Not long ago, InvestGame conducted statistics on investment, acquisitions, and public offerings in the game industry. According to its data, in the first quarter of this year, in the first quarter of this year, more than 39 billion U.S. dollars of funds flowed into the game industry, and throughout 2020 Among them, only 33 billion U.S. dollars. This shows that the game industry will continue to move forward in 2021.

Newzoo said that the outlook at the time was that the market could maintain stable growth until 2023. However, due to the impact of the epidemic, this growth was mainly concentrated in the middle of 2020, so this year will be a year of correction. Although the forecast for 2021 has dropped slightly, their forecast for this year is still higher than the previous 12 months.

In the future, Newzoo predicts that the gaming market will generate 204.6 billion U.S. dollars in revenue in 2023, which is nearly 4 billion U.S. dollars higher than its estimated revenue in the previous 12 months. And, mobile games will become the fastest growing field in the next few years. However, Newzoo believes that this position is likely to be replaced by the console in 2022. Due to the impact of the epidemic, a large number of console games will be delayed until 2022. At the same time, the supply of hardware will be more abundant that year, and more players will be able to Bought a new host.

Wijman said that some growth markets, such as Latin America, have already experienced a slowdown in growth, but in general, Newzoo follows the IMF’s global economic forecast and can have a moderate impact on the gaming industry.

This Article is curated from Source and we only provide the English version of the Story.

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