Global games market set to decline for first time this year, but don’t worry

Technology

A new report predicts that the games market will decline in 2021, but there’s no need to worry—the fall can be blamed entirely on the pandemic. The industry is expected to rebound fast, passing the $200 billion milestone in 2023.

In its latest games market estimates report, Newzoo predicts that 2.9 billion players worldwide will help the global games market generate $175.8 billion this year. That marks a decline of 1.1% compared to 2020, the first recorded fall the analytics firm has recorded.

A year-over-year decline would be a concern for any industry, but as we all know, 2020 was an unprecedented year. The pandemic and resulting restrictions saw the number of people opting for home-based entertainment skyrocket, and the arrival of the PS5 and Xbox Series X/S gave the games market a further boost. It generated $177.8 billion last year, up a massive 23.1% YoY.

While the pandemic had a positive impact on the games industry in 2020, the disruption it caused to global supply chains, game development, and chip creation is now being felt. As a result, the PC games market is set to decline 1.7% to $35.9 billion in 2021, with $33.3 billion spent on downloaded/boxed games and $2.6 billion on browser games. Consoles game revenue is predicted to drop 8.9% to $49.2 billion.

As we all know, the global chip shortage is expected to last into 2022—Sony said demand for its PS5 will outweigh supply throughout next year—and the scarcity of hardware is negatively impacting the market. The lifting of lockdowns, meanwhile, may result in a short-term decline in the levels of engagement as more people pursue outdoor activities after months of being stuck indoors.

Not every segment of the industry looks set to fall in 2021. Mobile and tablet games, which haven’t been as affected by the pandemic, will grow by 4.4% to $90.7 billion. However, Apple’s removal of the IDFA (Identifier for Advertisers) “will disrupt how many mobile game companies measure the success of their marketing campaigns,” writes Newzoo.

The good news is that 2021 is expected to be an anomaly; by 2023, revenue is predicted to reach $204.6 billion, with mobile gaming the fastest-growing segment.