Trends and challenges for the games industry in 2023
Leeann Nash December 13th 2022 - 4 minute read
2023 is already shaping up to be yet another massive year for the games industry. Between a packed slate of releases large and small, new hardware and projected growth of $74.93bn through to 2026, the future is promising.
However, the last few years have been an unprecedented challenge for developers and publishers. 2022 was arguably the last year wherein developers continued to get to grips with a new hybrid workflow, with work done during the pandemic due to begin paying off from 2023.
Yet, some seemingly evergreen problems look set to remain. Working conditions and supply issues remain big questions, while consolidation paints an uncertain picture for the shape of the industry.
Short supplies of consoles may continue to be a trend in 2023. The shortage is expected to continue until 2024, though consoles have become much more readily available.
Due to the less costly components, Microsoft’s Xbox Series S has been a consistent seller throughout the year, with the Nintendo Switch also seeing strong sales. PS5 and Series X consoles do tend to sell out instantly, but supplies remain a sticking point for consumers and the studios alike.
‘Next-gen’ arrives again
2023 marks the year where Sony and Microsoft first party developers are supposed to begin dropping support for the PS4 and Xbox One consoles, focusing entirely on the PS5 and Xbox Series consoles.
While the past year has seen the release of some ‘current-gen’ only releases, such as the recent A Plague Tale: Requiem and Gotham Knights, the lion’s share of games are still be being developed for both generation of consoles.
Around the release of the PS5 and Xbox Series consoles, executives from both Sony and Microsoft stated that support would likely continue until 2023. As we head into 2023, it will be interesting to see whether this bears fruit, and if the consoles will begin to receive more exclusive titles.
A continuing theme in the games industry, crunch will likely remain ever-present. Developers across the world continue the practice of extreme hours in the face of tight deadlines, despite a raft of criticism for the practice.
Recently, From Software – the developers of Elden Ring and the Dark Souls franchise – have come under fire for long hours and poor worker pay, with reviews coming into focus on the website Career Connection.
Anonymous workers expanded on the conditions in an interview with gamesindustry.biz, highlighting that it wasn’t an across-the-board issue. Some departments were better off, but that by and large the pay didn’t accommodate for the stress or even the cost of living within Tokyo.
In the west, the CEO of Striking Distance and Creative Director of the Callisto Protocol, Glen Schofield, came under fire for glorifying crunch in a tweet that expressed pride that he and his employees were working 6–7-day weeks.
It seems likely that crunch will remain a sore spot for the industry heading through 2023, as the slate of releases continues to increase.
Unionisation is likely to continue being a strong trend within the games industry in 2023. Following the allegations of abusive management and dire working conditions which have rocked various publishers and studios, many departments have begun embarking on the path toward unionising.
QA testers at Activision-Blizzard have managed to unionise in Raven Software and Blizzard Albany, while being represented by the Communication Workers Alliance (CWA). At the time of writing, QA testers in ZeniMax Media are aiming to unionise under the CWA and become Microsoft’s first official union.
The ground is laid for other departments to join the process, which could lead to an increase in unionisation throughout 2023.
During the second quarter of 2022, both Sony and Microsoft reported lower earnings than expected. Sony especially highlighted those profits had fallen by 49%, and cited the key driver of this as a combination of development costs and talent acquisition.
Shawn Layden, the former CEO of Sony Interactive Entertainment Worldwide Studios, highlighted in 2021 that the cost of development generally doubled per console generation. With factors such as rising global inflation and energy prices, these costs could accelerate at an even faster pace.
The impact this may have in 2023 could be one to watch – rising development costs may lead to studios cutting costs elsewhere. This could result in slimmed down development budgets, or perhaps further consolidation in terms of development technology.
For instance, Unreal Engine has become more and more popular with developers as a mean to eliminate the costs of developing an engine in-house.
The trend of large studios acquiring developers and publishers alike is very likely to continue throughout 2023, as Sony and Microsoft continue to diversify their portfolios of exclusive games.
However, the FTC has moved to sue Microsoft for the purchase of Activision-Blizzard, leading the deal to look unlikely to proceed. This could put a dampener on any further acquisitions in 2023. The large-scale deals have inched the industry closer towards monopolisation, which could have an impact on what games are available on which platforms.
Consolidation may also lead to a lack of diversity amongst games created, as technologies and assets are shared across wider groups of studios. It further adds to the pressure caused by spiralling development costs, by prompting studios to focus on what is guaranteed to sell, over more experimental titles.
Businesses such as Amazon, Netflix and Apple are likely to seek to break into the games industry, they may also make largescale purchases. For instance, a rumour swirled earlier in 2022 that Amazon was on the verge of acquiring EA.
2023 to be another ‘meteoric’ year?
So, 2023 is looking relatively optimistic for the games industry. With the challenges posed by Covid now firmly in the rear-view mirror, and a massive slate of new titles set for release over the next twelve months.
However, a lot of the challenges that the industry will face are largely the same as 2022. Working conditions, development costs and supply issues will remain thorns in the industry’s side.