Video game industry isn’t ‘recession-proof’, sales will fall in 2022

The PlayStation 5 logo pictured at a store in Kraków, Poland.

Nurphoto | Getty Images

Video game sales are set to fall annually for the first time in years as another industry that boomed in the coronavirus era faces the bleak prospect of a recession.

According to a study by market data firm Ampere Analysis, the global gaming and services market will shrink by 1.2% year-on-year in 2022 to $188 billion.

The sector grew 26% from 2019 to 2021, reaching a record $191 billion. Video game sales have been growing steadily since at least 2015, Ampere data shows.

Gaming received a huge boost from the 2020 Covid-19 shutdowns as people spent more time indoors. The launch of next-gen consoles from Microsoft and Sony that same year also bolstered the fortunes of the industry.

However, the arrival of Microsoft’s Xbox Series X and S machines and Sony’s PlayStation 5 proved to be a double-edged sword – logistical disruptions and the lack of key components have meant that buyers have had great difficulty picking up one of the new consoles in the United States found on store shelves or online.

Russia’s invasion of Ukraine – along with supply chain shortages and rising inflation – further worsened the prospects for gambling. Numerous gaming software and hardware manufacturers have decided to shut down their operations in Russia, including Microsoft and Sony.

According to Ampere, Russia was the 10th largest gaming market in the world in 2021. But it’s expected to fall to 14th place in the global rankings this year and lose $1.2 billion in value, the company said.

Piers Harding-Rolls, head of research at Ampere, said the figures show the gaming industry is not “recession-proof” as cost-of-living challenges posed by higher prices are likely to weigh on consumption.

“After two years of tremendous expansion, the gaming market is poised to return some of that growth in 2022 as multiple factors combine to undermine performance,” Harding-Rolls said.

“Nonetheless, the year will end well ahead of pre-pandemic performance and the outlook for the sector as a whole remains positive, with growth forecast to return in 2023,” he added.

According to Ampere, the market is expected to grow again in 2023, with sales expected to reach $195 billion.

Other industry challenges include privacy changes from Apple, making it harder for mobile game developers to track iPhone users, and delays in blockbuster releases like Microsoft’s Starfield and Redfall.