The pandemic bubble has not finished bursting | This week in business

Last year, we wrote in this space about the uncomfortable reality of how much the gaming industry has benefited from the pandemic, noting that the industry has headed for COVID-19 with seven consecutive months of year-over-year declines from U.S. consumers. of the NPD group final expenses.

Then the pandemic was declared in March 2020 and the game pitted (at the time of that column) 13 consecutive months of double-digit year-over-year growth.

That series was discontinued the following month as those year-over-year comparisons became much more difficult once they were made against the close of the pandemic months of the year earlier, but the industry continued to do fairly well in the fall, mixing some months of single-digit declines with some major gains until October, when sales increased 16% year-over-year thanks to a strong list of new releases.

This appears to have marked a tipping point, as November was down and the sector hasn’t gone up since.

STATISTICS | 7 – The number of consecutive months of year-over-year decline in US consumer spending on NPD Group games, following this week’s May sales report down 19% year-over-year.

This isn’t particularly surprising, as many publishers have told investors to expect a slowdown once restrictions on the pandemic loosened and people started to revert to habits and hobbies they weren’t able to pursue during the lockdown.

Even then, they were optimistic that the industry would end up in a stronger place than it was before the pandemic, with companies like Take-Two predicting they would keep a significant portion of the increased commitment due to the pandemic.

This has been true for some companies so far – EA reported record engagement for Apex Legends and growth in active player accounts last month – but that’s not all.

STATISTICS | 100 million – Activision’s monthly active users for the first quarter of 2022, the lowest number since the free launch of Call of Duty Mobile in 2019.

You can blame some of this on the underwhelming Call of Duty Vanguard, but Blizzard’s engagement also dropped, dropping 19% year-over-year to 22 million, the lowest number since the company started reporting engagement metrics in the 2016. King’s engagement was also down 3% year-over-year.

Activision Blizzard isn’t the only company seeing these trends.

CITATION | “As the world began to settle into a new normal, there was a moderation of trends to the benefit of our industry during the height of the pandemic.” – Take-Two explains its lower net bookings to investors last month.

And while the pandemic hasn’t been blamed either way, Embracer’s negative organic growth for the full year and Devolver’s low sales expectations make it pretty clear that we’re no longer seeing a rising viral tide that lifts all levels. ships.

The thrust of the pandemic is fading, but I suspect there is still some time before we get to anything that approaches a new normal. For one thing, there isn’t much in the way of reinforcements on the way.

CITATION | “We took a look at what happened to Cyberpunk 2077 and thought ‘yes, we’re delaying [our game]. ‘ … We knew our game wasn’t in the best shape, maybe we could fix it with an update on day one … but we saw Cyberpunk and decided it wasn’t worth the risk. I suspect it was a wake-up call across the industry. “- A US game director of one of the world’s biggest game franchises was among the people talking to us about why the rest of the release list for year is so scarce.

A disappointing series of showcase events this month didn’t provide too much optimism for the rest of 2022 either, though it’s worth noting that Nintendo and Sony haven’t exactly shown everything up their sleeves.

And then there’s the inconvenient fact that the pandemic isn’t actually over, and that has consequences not just for customer habits but for the supply chain. This week, Xbox CFO Tim Stuart told investors that recent lockdowns in China make the company predict supply chain problems until at least next year.

Also, the US appears to be headed for a recession, and as we all should have learned after 2008, the games are not recession-proof.

CITATION | “The entertainment industry is not anti-cyclical despite what they say. After the financial crisis of 2008 we have suffered, our competitors have suffered, our numbers have suffered and we do not wish it to anyone”. – Strauss Zelnick of Take-Two, which retraces the 2011 crisis.

So the games are in a bit of a crisis. The console and PC space has an obvious shortage of needle engines in the months to come, mobile devices have also been down – NPD’s mobile partner Sensor Tower reported that U.S. consumer spending on Google Play dropped by 23. % yoy in May – and macroeconomic conditions do not seem too favorable for the short and medium term.

Spending on games is still well above pre-pandemic levels, like This was underlined on Twitter by Mat Piscatella of NPD Group, but it is clear that the sector is returning some of the initial thrust of the pandemic. What is less clear is how much further it has to fall and how much of that thrust it can hold in the long run.

The rest of the week under review

STATISTICS | 17 – The number of showcases, live streams and shows summarized in our summary All the announcements of the major events not exactly E3 this month.

CITATION | “Free-to-play games like these are likely to prove crucial in Xbox’s goals of growing its PC Games Pass audience outside of its core territories. In particular, games like League of Legends are exactly the products that make it. company must sign to push profitable Asian markets. ” – Our Chris Dring claims that the partnership between Xbox and Riot Games was the most important secret news of the Xbox-Bethesda showcase.

CITATION | “What we’ve come to realize over the past few months is that there are many truths about our company – individual and collective, experiential and data-driven – and they can sometimes be difficult to reconcile.” – The directors of Activision Blizzard, shortly before disclosing the results of their investigation of themselves, who found that management did nothing wrong and last year’s shocking revelations were only unscrupulous criticism from the media and a state agency that bizarrely persecutes a company for unknown reasons.

STATISTICS | 2018 – The time when Activision Blizzard began engaging with the California Department of Fair Employment and Construction on a pay equity survey at the company, according to the survey results.

CITATION | “Rushing” – As Activision Blizzard described the DFEH complaint when it was filed more than two and a half years later, in July 2021.

CITATION | “At Ubisoft we believe that women’s rights are human rights, trans rights are human rights and that equal rights for all are essential to create a world where everyone can be authentic and thrive.” – Anika Grant, Ubisoft’s chief people officer, and Raashi Sikka, vice president of diversity and inclusion, told employees of the US-based company that Ubisoft is reviewing the company’s benefits packages in the US. ” to ensure you and your family have access to the quality health care you need, “even as Republican politicians push for banning abortions and gender-affirming health care.

CITATION | “Without action, both companies are likely to maintain, and even strengthen, their hold on the industry, further restricting competition and limiting incentives for innovators.” – The UK Competition and Markets Authority has said it will investigate Apple and Google’s control of the mobile market, specifically their 97% share of the mobile web browsing market.

STATISTICS | 40% – The number of Joy-Con Switch controllers suffering from controller drift issues, according to a YouGov survey conducted by the UK consumer control body. Which?

CITATION | “On behalf of 343, I apologize for making a celebrated moment a painful moment.” – Bonnie Ross, Head of Industries 343, offers no explanation as to how a cosmetic for Halo Infinite commemorating Juneteenth, the American holiday celebrating the liberation of slaves, was initially released under the name of a species of monkey. Separately, a 343 community manager had said that the name Bonobo referred to an internal toolset used by the studio, which is an explanation I might accept once accidentally “Microsoft Word” or “Google Docs” accidentally appears in. GamesIndustry.biz titles.

CITATION | “Embracer is based on the principles of freedom, inclusion, humanity and openness. The transaction with SGG will not change this in any way.” – Lars Wingefors of Embracer Group reassures people concerned that an investment by the Saudi Arabian government will not change the principles of a company that held an AMA session on the message board that helped bring us GamerGate, QAnon and an assortment of mass shootings.

CITATION | “That’s the genius part of this PC launch – Sony is making everyone guess. For gamers who want to play Sony’s first party games at launch, waiting for the alleged PC release is not a viable option in the circumstances. Without a recurring updated list of which PlayStation first party games will be released on PC, it’s much better to just buy a PS5 and stop worrying. ” – Industry consultant Sam Naji says Sony’s scattershot approach to PC ports of PlayStation-exclusive titles allows the company to have its cake and eat it too.

CITATION | “Interactive entertainment is being consumed on a different level [than linear media like TV and movies], about 45 hours a month and in a different way. Maybe that’s two or three or four properties in a month. It is certainly not more than 100 properties. So it’s not clear if your large audience wants to access many hundreds of games in a month and is willing to pay for them. It’s possible a small subset of the audience may want it, but I don’t think it’s a broad base, because that’s not how people tend to consume interactive entertainment. “- Strauss Zelnick explains why he’s skeptical that subscription services like Game Pass will take off. in games, how Netflix and its peers have reshaped television and movie habits.

CITATION | “So far, no service is truly appealing to the industry’s entire audience, which means there’s still a lot to do in terms of who becomes a market leader in this increasingly important industry.” – With the launch of Sony’s revamped PS Plus, GamesIndustry.biz Contributing editor Rob Fahey evaluates the status of subscription services in the industry in his Friday column.

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