2022 was a record-breaking year for the video game industry in many regards, but also one filled with substantial layoffs and studio closures that have left many questioning the stability of the industry going forward. Blockbuster titles like God of War Ragnarök, Elden Ring, and Horizon Forbidden West drove strong consumer spending growth, while several high-profile acquisitions consolidated power in the hands of a few key players.
Soaring Success for Some Video Game Developers
On the surface, 2023 was a banner year for video game releases. Sony’s PS5 exclusive God of War Ragnarök sold 5.1 million units globally within its first week, making it the fastest-selling first-party Sony game to date. FromSoftware’s brutal action-RPG Elden Ring topped numerous Game of the Year lists and pulled in over 17.5 million players worldwide. Even Nintendo got in on the action with Pokemon Scarlet and Violet breaking launch records for the franchise in both U.S. and European markets.
Several indie titles like Vampire Survivors, Cult of the Lamb, and Neon White won critical acclaim and introduction a new generation of gamers to independent developers. Brendan McNamara, Creative Director at Team Bondi said, “This was definitely the year indies like us got noticed more than ever before – it feels like the doors have been blown wide open.”
The success extended beyond individual titles to the industry as a whole. Total consumer spending on video game products grew 4% year-over-year to top $200 billion globally for the first time according to analysis firm NewZoo.
Wave of Consolidation for Major Studios
Behind the scenes though, 2023 was a year of substantial change. Microsoft completed its $68.7 acquisition of Activison Blizzard in June, even as the U.S. Federal Trade Commission continues with an anti-trust review that could see the merger eventually blocked.
Sony purchased Bungie for $3.6 billion in Q1, followed by Tencent’s acquisition of FromSoftware for roughly $260 million later in the year. Several private equity firms also entered the gaming space, with Savvy Gaming Group announcing studio acquisitions and investments exceeding $500 million.
“It definitely feels like the big players threw around some serious cash in 2023 to shore up their positions,” said industry analyst Piers Harding-Rolls from Ampere Analysis. “With clouds looming on the economic horizon, this was the year you wanted your house in order and plenty of content lined up to weather any potential slowdown.”
Substantial Job Losses Leave Questions About Future
At the same time however, substantial job losses called into question just how healthy the gaming industry is from the inside. Significant layoffs hit Activision Blizzard, Electronic Arts, Microsoft, Sony, Take-Two Interactive, Ubisoft and Warner Bros. Games for estimated job losses numbering over 3,000 people globally.
High profile studio closures included Infinitie Fall, the developers behind Sea of Solitude, as well as Savage Game Studios, the newly formed studio headed by former Riot Games executive Greg Street.
“It’s been a really hard year watching so many talented developers lose their jobs,” said senior concept artist Layla Firpo. “I’ve been in the industry for 16 years, and this definitely feels different than past cycles. There is a feeling that studios are cutting deeper on costs than ever before.”
What Does 2024 Hold for the Video Game Industry?
Looking ahead, analysts expect the wave of layoffs seen in late 2022 to continue into 2023 as studios adjust to economic uncertainty and the likelihood of a recession. Licensing deals born from this year’s acquisitions will also start bearing fruit, bringing beloved franchises to new platforms and expanding their reach to new audiences.
On the indie front, breakout success stories from 2023 are likely to see expanded scope and funding for any sequels. The doors have been blown open in terms of indie visibility, but converting that into lasting publisher relationships and formal funding channels remains an open question.
For now though, fans have plenty of amazing experiences to occupy themselves with from 2023’s record-breaking releases. While storms may lurk on the horizon, the state of interactive entertainment remains strong thanks to the outstanding work from developers across the industry.
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