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If life was a game of Mario Kartthe video game industry would have just slipped on a few banana peels.
After hitting record-breaking performance during the peak of the pandemic, the video game industry – both hardware and software – is collapsing as it grapples with two formidable Final Boss level threats: inflation and the real world.
Attention Grand Theft
“The world is on vacation” Andrew Wilson, CEO of mad and Battlefield publisher Electronic Arts said on an earnings call earlier this month — not the type of road trip vacation with hours of Game Boy playing in the backseat of a minivan. A post-lockdown world means gamers are spending less time with friends online and more and more time with real friends, and video game companies are feeling the heat. In July, Sony’s Playstation reported a 15% drop in player engagement and joined fellow Big Three console producers Nintendo (Switch) and Microsoft (Xbox) in posting a drop in revenue that exceeded expectations. analysts over the past quarter.
Supply chain constraints continue to hamper their ability to keep store shelves well stocked. Meanwhile, with inflation at its highest level since donkey kong and Mrs. Pac-Man From neighborhoods gobbled up in arcades, gamers are spending less money on new games and more time with the games they already have:
- “There’s definitely a feeling of global constriction right now. It’s pretty obvious that the US – which still accounts for nearly half of all global gaming revenue – is already in a recession,” said Laine Nooney, New York University professor and video game historian. Washington Post. “Video games have always been discretionary entertainment. With the rising prices of staples like gas and food, there’s less room in the budget for entertainment.”
- Nvidia, a major chipmaker, last week announced a decline in second-quarter revenue, marked by a 44% drop in gaming revenue. Meanwhile, Activision Blizzard, a major software producer behind Call of Duty and World of Warcraft currently being acquired by Microsoft, saw a 15% decline in adjusted sales.
“If you’re feeling the pinch of inflation, especially when it comes to non-discretionary spending like fuel and food, you can imagine that if you’re playing a game, you might choose to spend a little less or spend a little less frequently,” Strauss Zelnick, CEO of Grand Theft Auto-maker Take-Two Interactive, said when announcing disappointing sales guidance for the second quarter. Sounds like his studio may regret making a game known for its infinite replayability.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.