The global video game market is expected to grow modestly in 2024 amid weak console sales, according to a new report from research firm Newzoo. The gaming industry will grow 2.1% to $187.7 billion, down from January’s forecast of 2.8% growth to $189.3 billion.
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Almost half of all consumer spending on games in 2024 is expected to come from the US and China. According to CNBC, citing Newzoo, the US will bring in $47 billion in sales, and China will bring in $45 billion.
Michiel Buijsman, chief gaming market analyst at Newzoo, said that despite sluggish growth in 2024 and a 1% decline in console gaming revenue this year, next year will be more dynamic for the gaming industry.
Major releases, including a successor to the Nintendo Switch flagship console and a new game in the iconic Grand Theft Auto franchise, should boost the industry’s outlook. Nintendo President Shuntaro Furukawa said in May that the company plans to announce the launch of the next Switch console in the fiscal year ending March 2025. Meanwhile, Take-Two-owned Rockstar Games plans to release the highly anticipated Grand Theft Auto VI in the fall of 2025.
Analysts say these major releases could breathe new life into an industry that has struggled to match the growth rates seen a few years ago. Between 2020 and 2021 in particular, the market experienced huge growth as people spent more time indoors due to COVID-19 lockdowns. However, recently, a significant shift in consumer habits has impacted the dynamics of the gaming sector.
On top of that, since the beginning of 2023, massive layoffs began in major studios around the world. Microsoft laid off 1,900 employees in its gaming division in January, just three months after completing its acquisition of Activision Blizzard. The following month, Sony announced it would lay off 900 workers in its PlayStation division. Unity, Twitch, Playtika and social platform Discord also announced a series of cuts.
A key challenge for game studios this year will be “controlling costs in a crowded and increasingly consolidated market,” Buisman said. Developers will have to deal with the competition between free-to-play games and premium releases, and be prepared to use generative AI in both game development, marketing and operations.