Trends & Challenges for the Gaming Industry in 2022

The gaming industry is set for another meteoric year in 2022, with forecasts indicating the rise will continue into 2025 to reach a predicted $256.97 billion market worth.

The Covid-19 pandemic however has forced the industry to adapt and reckon with itself in a number of ways.

Whilst practical concerns surrounding supply chain disruptions and material shortages still abound, 2022 is also set to be a year in which the industry both reaches for the future and reckons with its past.

Labour Movements

2021 was the year in which some of the industry’s giants faced multiple allegations of enforced overtime, workplace bullying, discrimination, and sexual harassment. 2021 was also the year in which employees took matters into their own hands and sought industrial action to combat the myriad issues they faced.

Whilst many studios, including Ubisoft and Naughty Dog, were accused of mistreating employees there was one company in 2021 which saw a catastrophic nosedive in public opinion: Activision Blizzard.

Allegations of misconduct at the company first arose when the California Department of Fair Employment and Housing filed a lawsuit in July 2021 against Activision Blizzard. The lawsuit was a result of a two-year investigation into the company’s treatment of women that highlighted a ‘breeding ground for harassment and discrimination against women.’ Further reports by the Wall Street Journal also highlighted multiple allegations made against CEO Bobby Kotick, including sexual harassment and threats of violence against staff.

Following an $18 million settlement and a statement by the company promising significant structural change, a planned layoff of 20 employees at subsidiary company Raven Software prompted a mass walkout of 60 employees and the forming of the ABK alliance labour union.

The union was largely hailed as the first of its kind at a major video game studio and prompted calls for further unionisation within the industry.

A recent poll conducted by the Game Developer’s Conference (GDC) found that more than 50% of developers now support unionisation. Many are anticipating that the Covid-19 pandemic will have a significant impact on the formation of labour unions, as employees seek to maintain flexible work practices established during lockdowns.

Signs in recent months indicate the trend towards increased scrutiny over industry working conditions could well continue into 2022.

An announcement of a brand new Star Wars game, usually a cause for celebration amongst gamers, at the 2021 Game Awards was met with backlash across social media due to multiple allegations of workplace misconduct against its developer Quantic Dream. If consumers continue to factor in reports such as these then studios will have to do all they can to address their own workplace culture in 2022.

Supply Chain Issues

Despite the world being in the midst of a global pandemic, 2021 was supposed to the year of a new and exciting console generation. Sony’s PlayStation 5 and Microsoft’s Xbox series X/S were set to herald in a new era of next-generation gaming alongside a suite of new features: higher frame rates, high dynamic range (HDR) lighting, 4K resolutions, improved loading times, and more.

The first 12 months of the ‘next-generation’ have proved difficult for Microsoft and Sony however. Whilst many gaming industry consumers are used to shortages of new product in the first year following a launch, the scale of hardware shortages this generation has been unprecedented and many consumers are set to be disappointed with supply chain issues likely to continue well into 2023.

It’s fair to say unique factors have affected the console marketplace in the past 12 months. Shortages of silicon and semiconductor chips have plagued the global manufacturing sector since the start of the pandemic, with supply chain bottlenecks causing further delays to goods production. Demand for video game consoles has also been incredibly high during the pandemic with the industry forecast to reach $180 billion in 2021.

Despite this, other hardware and video game providers have continued to thrive throughout the pandemic. Nintendo’s Switch console, launched in 2017, has consistently outsold both Sony and Microsoft’s efforts despite facing many of the same issues and is arguably the perfect hardware for crowded households in lockdown. There is a real risk that should Microsoft and Sony not resolve their supply issues, consumers could migrate to platforms such as the Switch.

Subscription Gaming

It’s strange to think how Microsoft previously stood as an outlier in the world of subscription gaming. When their Game Pass service launched in 2017 they were competing in a fairly dormant marketplace, with Sony’s rival Playstation Now largely acting as a rental service for individual titles.

As of January 2021 Game Pass hit 18 million subscribers and is set to continue to grow through 2022. The recent $69 billion acquisition of Activision-Blizzard is set to further expand Microsoft’s subscription offering and places them as one of the dominant forces within the console gaming sector.

In response to the success of Game Pass other major players in the gaming industry have upped their efforts to offer competitive subscription offerings. Nintendo incorporated an extensive library of legacy titles into its online offering, whilst Apple launched its ‘Apple Arcade’ service in 2019 as an alternative to free games with in-app purchases.

Many analysts however are awaiting the reveal of Sony’s long-rumoured competitor to Game Pass, codenamed ‘Project Spartacus’. Reports have indicated the service could be comprised of three tiers, with the top and most expensive tier allowing access to a library of games from across multiple Playstation console generations.

Sony will have an uphill battle to compete with Game Pass’s offering however, especially after Microsoft’s $69 billion acquisition of Activision Blizzard in January 2022. Whilst the deal is still subject to antitrust regulations the merger could substantially increase the number of titles available through Game Pass, including huge franchises such as Call of Duty and Overwatch.

Metaverse – AR & VR

The metaverse is set to be a key theme after Facebook’s rebrand to Meta in October 2021. The prospect of the metaverse is a digital space in which augmented reality (AR) and virtual reality (VR) combine to bring users fully into virtual worlds.

The rise of cheaper and more accessible headsets is set to dominate the conversation surrounding access to the metaverse. In previous years VR headsets have been expensive, unwieldly, and tied to powerful computing equipment in order to function properly.

The launch of the Oculus Quest 2 in 2021 might have been a bit of a game changer however; the headset is markedly cheaper than prior efforts and can operate independently of a PC. With sales of the Quest 2 on track to reach 2m in Q4 2021 the impact of such an item of the metaverse’s prospects could be significant.

The impact on the industry of Facebook’s rebranding cannot also not be overstated. Reports indicate Meta wants to dominate the space, although many potential consumers would prefer a more ‘utopian’ vision.

Mark Zuckerberg’s enthusiasm for the vision of a metaverse captured a huge amount of industry and consumer attention, although developer interest could be remain muted for the near-future following the flop in prior years of VR.

The high cost and difficult process of VR game development has led to a shift in game development for the platform, and one that is likely to continue into 2022. In order to counter motion sickness and issues with designing movement systems for the platform, Meta is set to focus on game experiences more in-line with mobile gaming. Reduced price points and shorter development times are set to provide a steady flow of content for the Quest 2.

Work on the metaverse still has a long way to go however. In its recent acquisition of Activision-Blizzard, Microsoft stated the move was in part to ‘power the construction of the metaverse’. Should companies of such size and influence continue to buy into the space then 2022 could see a further rise of these virtual worlds we could all someday be living in.

Practical concerns are at the forefront of many of the industry leader’s concerns. Ongoing shortages of parts and labour have affected the output of the newest console generation. This in turn is leading to a rise in digital games and subscription services, one that is set to continue through the introduction of the model by even more prolific companies.

2022 is also set to be one in which the gaming industry continues to reckon with itself and its many years of entrenched labour practices. The Microsoft buyout of Activision Blizzard has made the outcome of investigations surrounding the latter less clear, but the PR fallout is likely to continue to drive the conversation surrounding workplace culture.

On top of all this, this year will see the industry looks to what had previously been the realm of science fiction; the metaverse. With hardware becoming more affordable and companies such as the recently rebranded Meta throwing their weight behind the idea, this pipe-dream could move within touhing distance of a feasible product.