As gamers return to real-world pursuits and cut spending in the wake of economic woes, gaming companies are in trouble.
Console producers, video game publishers and gaming chipmakers are seeing less demand, which has gone against the wisdom that gaming is “recession-proof,” the Financial Times reported Saturday (Aug. 13).
The sector had previously been doing well, seeing more demand during the quarantine period and the early months of the pandemic. But more recently, Sony and Microsoft have posted sales declines, and other companies have followed — gaming chip producer Nvidia has seen lower Q2 revenue due to a weakness in its gaming business.
Meanwhile, Activision Blizzard, which is currently seeing an acquisition from tech giant Microsoft, has seen a 15% drop in sales for the quarter, which happened due to weaker sales for the console and PC market, along with a “poor response” to its newest Call of Duty game.
This has only confirmed the fears of some in the industry, including Strauss Zelnick, CEO of Take-Two Interactive, which makes the popular Grand Theft Auto series. He told investors said he didn’t think the entertainment business was “recession proof or even necessarily recession resistant.”
“If you are feeling the pinch of inflation, specifically with regard to non discretionary expenditures like fuel and food, you could imagine that if you’re playing a game, you might choose to spend a bit less or spend a bit less frequently,” said Zelnick.
That said, gaming has still been a big earner for companies like TikTok owner ByteDance, which generated $1 billion in mobile game player spending in the year to June 20, 2022.
See also: ByteDance Generates $1B in Mobile Game Player Spending in Past Year
That was a 16% boost year over year, according to data analytics company Sensor Tower. The company has also set up a dedicated gaming business, which would go alongside TikTok and its Chinese version Douyin.
ByteDance also bought gaming studios Moonton and C4 last year, which came with several popular overseas games.