There are "safer ways to invest your money than video games."
Image credit: Claudio Divizia, Shutterstock
2023 was a harsh year for the game industry, with many studios closing and people being laid off left and right. Unfortunately, it seems like 2024 won't be much better.
According to publishing, development, and investment heads who have talked to GamesIndustry.biz, this year is going to be plagued with closures. They say that the video game market is oversaturated, and high-interest rates will prevent the field from growing because it's just not profitable.
"If 2023 was the year of layoffs, 2024 will be the year of closures," said a CEO of a public company. "Not just developers, but publishers, media, service companies... There are just too many unprofitable businesses in video games. We're looking at up to two years of pain."
There are "far safer ways to invest your money than video games," specialists believe. "Why take a gamble with a games company when you can just stick the money in the bank and earn 5%?" And companies can't raise video game prices, "there is simply no tolerance of any further price moves."
At the same time, some investors expect interest rates to come down, so we might see more investment but not until later this year.
One of the main problems right now is too many games. It's not 2020 anymore when people had more time to play while staying at home. Now we don't have time but have a lot of offers, which might sound good for consumers but isn't so great for business people. "The stores are saturated, not just Steam, and the games just aren't delivering the levels they were," commented one publisher boss.
GamesIndustry.biz's public company CEO, however, believes that some companies need to take risks to survive during this tough time. They stress that it's not so grim: people still invest in the industry, "lots of successful businesses are born during moments like this."
It's also important to understand that the issues in the field are not purely commercial: the pandemic, wars, and various political decisions affect the business as well. We just need to remember that the struggle is not going to last forever.
"And the situation is temporary. The games business is built on very solid foundations. And when things do start to grow again, we would hope to see a more sustainable and wiser games industry emerge on the other side."