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Newzoo expects a ‘lean year’ for the industry but also predicts growth for 2024

For months now we hear the heart wrenching tales of thousands of games industry professionals losing their jobs. We are anxiously checking the number of layoffs like we are watching the Doomsday clock slowly creeping towards midnight. But what do the numbers say? Well, according to Newzoo, the games industry is bouncing back from the decline in 2022. In fact, last year already saw some recovery and for the coming year it’s expected that the trend will continue (and grow 1.3% to $189.3 billion).

In their latest free report, Newzoo is optimistic about the total market outlook for PC and console. They call the ever-growing install base of the Xbox Series and PlayStation 5 generation one of the main growth drivers this year. And even though this year’s release catalog is expected to be less impressive than 2023’s, live-service games, and back catalog sales will make up for it. Also, after two years of negative growth, due to difficult market conditions, especially around user acquisition, mobile gaming is likely to recover.

Mobile devs go PC

Speaking of mobile gaming, more game companies focus on evolving existing games instead of launching new games. A shift driven by rising user acquisition (UA) costs and market saturation. That also turns mobile developers to launch their existing mobile games on PC as a way to boost both retention and engagement. Another way of diversification is to develop new games specifically for PC (and console). For this purpose, leading mobile game companies have established new studios dedicated to developing for other platforms.

Despite the projected growth, Newzoo predicts that it will be a ‘lean year’ for many companies. The industry is restructuring after facing corrections in a post-COVID world and increasing interest rates. The cash and investments that flooded the market during the pandemic have dried up considerably, and funding massive new projects is no longer a top priority. Games companies will employ risk reduction strategies like avoiding new IPs. And cutting costs by laying off staff will likely continue for a while. 

Newzoo also expects the new Nintendo console this year, likely accompanied by a new 3D Mario game. 

Top Image by diana.grytsku on Freepik


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