News Mash-Up - Week # 17

Musing of the Week: A quiet start to 2021 is nothing to be worried about, for now….

In GDC’s State of the Industry survey, about a third of developers had said working from home impacted development schedules. From a consumer point of view, it is difficult to quantify how much impact Covid-19 has had on game production. We know for sure the pandemic has had a huge positive impact on demand (see news below) but on the supply side, whether this extended “quiet” period in the first four months of 2021 is due to Covid-19, or if it was going to happen anyway, is debatable.

The game developers and studios will know. They will have decided whether games need more development time and if games need to be released at a further date. Each developer and publisher will make up their own minds as to whether working from home has increased or hindered productivity.

What we can do is assess how many new titles came out during the first 16 weeks of the calendar year and what sort of total sell-through the year has seen so far, compared to previous years. For physical disc full game sales tracked by European GSD, in the first 16 weeks of the year, there was a -3% year-on-year decline in new titles released during that period compared to the -16% decline in 2020 and the -3% decline in the year before that, 2019. In 2020, new titles sold -34% fewer units compared to new titles in 2019 and this downward trend continued in 2021 with a further -27% decline (new title unit sell-through) compared to 2020. The weaker release schedule of blockbuster titles in 2021 relative to previous years is worrying, but there is good news. The situation gets a lot better when looking at the total number of physical full game units sold. Video game software sales in 2021 was -5% lower than in the pandemic year 2020, but it was only -7% lower compared to pre-pandemic 2019, +9% higher than 2018. 

This further improves when looking at physical and network full game unit sales combined. In 2021 there is a -13% decline in unit sales compared to the spike in 2020 (brought on from the pandemic rush to buy games) but compared to 2019 it is +12% higher and compared to 2018 it is +25% higher. Unit sales in 2021 were 4 million more than in 2019 and 7 million more compared to 2018.

So, what is going on? It seems back catalogue is saving the day. The dearth of new games in 2021 is being offset by the high demand for older games. A lot of this pent-up demand could still be due to the pandemic as society has yet to fully re-open. People are still stuck at home and alternative entertainment options like restaurants, cinema and “going out” are still limited. Although the schedule for new game releases has slowed, the appetite for gaming is still healthy. The release of the new consoles and continued strong sales for the Switch have fueled this spending on back catalogue games.

Top News Items

• • GDC’s State of the industry survey was published, where up to four thousand developers were interviewed. There was an even split of opinions when it came to measuring the impact Covid-19 on the development cycle of games. Over half the developers are working on games for the PC.

• • According to Investgame.net, Q1 2021 was a particularly strong quarter for video game investments thanks to $25B in acquisitions, IPOs and direct investment. This is an increase of 150% over Q1 2020 investment spending

• • eSports will become an Olympic event. The International Olympic Committee (IOC) announced a new series of games called the Olympic Virtual Series. The championships will run from 13th May to 23rd June and will host five events from differing publishers.

• • Microsoft released its Q1 2021 earnings results. Xbox revenue for the quarter is 50% higher than last year, totaling $3.5B. Content spending increased by +34% and hardware spending increased by +232%.

  • From the 1st of August, Microsoft will decrease the commission it charges on its PC app store from 30% to 12%.

  • Sony’s 2020 Fiscal year ended with the PlayStation increasing revenue by a third to $25B. Digital software and add-on content sales combined increased by +44% and just under 8 million PS5 units had shipped by March end 2021.

• • FIFA 21 will be coming to EA Play basic subscription and GamePass on the 6th of May.

• • Take Two is in a joint venture with Google to produce efficient storage solutions for game developers. Dubbed Open Saves, it will use differing cloud-based solutions depending on data requirements.

• • CPU & GPU semiconductor manufacturer, AMD, made $3.5 billion revenue in Q1 2021. That is a +91% increase year-on-year.

    
    
    

New games

Week commencing Monday 3rd May 2021