The global video games industry revenue has been forecasted to shrink in 2021 for the first time in many years. According to a report by game and esports data firm Newzoo (via VentureBeat), the market is expected to hit $175.8 billion in 2021, a 1.1% drop as compared to 2020’s $177.8 billion.
While 1.1% isn’t that big of a drop, it will be the first time that the revenue curve will dip since the data analytics firm started tracking, back in 2012. However, it must be noted that 2020 was an anomaly for the video games industry, along with many others. The Covid-19 pandemic forced people to stay indoors, resulting in an unusual rise in home-entertainment avenues like video games. So, the drop in 2021 could be viewed as the market re-adjusting itself.
“It is unique, at least in our history, that we project the declining markets for this year,” said Newzoo games market lead Tom Wijman in an interview with GamesBeat. “While we say the forecast is for the market to decline this year, in the long term, or over more than a few years, there is still very healthy growth for the market. And this year is basically the year where we slightly correct for what was a crazy 2020 for the games market.”
However, there are also a few other possible reasons for the 2021 market contraction, including the global semiconductor shortage, that has slowed down the production of consoles and gaming hardware across the industry. According to Taiwan Semiconductor Manufacturing Co., and other leading manufacturers, the shortage could last as long as 2023; so it will be interesting to see how the market shapes up next year.
2020 saw a meteoric rise in revenue for the industry, generating $177.8 billion, a 23.1% increase as compared to 2019. Wijman noted that unusually high revenues were reported by a number of companies in Q2 and Q3, when revenues are usually expected to decline. “That was particularly unique due to the pandemic. So the fact that the companies now are growing is expected. But in the next two quarters, we expect that companies will [see] declines,” he added.
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