There are, littered throughout the history of video games, certain years of radical, fundamental change. We can look at the major crashes in the US games industry in 1977 and 1983, where bloated software libraries and hardware gluts destroyed confidence in the medium and cleared out dozens of companies. We can also look at the arrival of the Sony PlayStation and Sega Saturn in 1994, which made 32-bit processors and rendered 3D visuals the entire focus of the industry, expunging a generation of competing products, from the Philips CD-i to the Atari Jaguar. I think 2023 could be one of those years of radical change, not because of some major new technical landmark, but because the structure of the games industry is now dissolving and remaking itself.
First, we’re going to see a lot more consolidation this year, as major corporations bet on continued growth in the gaming sector. The big precursors were Microsoft’s 2021 purchase of Bethesda and Take-Two’s acquisition of Zynga last year, but that was just the beginning. Tech giants Amazon, Alphabet and Meta are circling the industry eyeing up legacy publishers such as Square Enix and Electronic Arts to get a foothold in the industry, and a neat leg up toward what they all think is the next big thing: the metaverse. But it’s Microsoft’s ongoing attempt to take over Activision, currently being investigated by competition regulators in the US, Europe and the UK, that will be a major focus during 2023.
Whatever way this plays out, there will be vast ramifications. Jon Shiring, co-founder of new studio Gravity Well, is an industry veteran who previously worked on Call of Duty at Infinity Ward and Apex Legends at Respawn Entertainment. He is sceptical about Microsoft’s chances. “Can you find any examples of a company successfully beating the FTC? I can’t … Plus, will Activision shareholders sit around for years waiting to find out?”
Call of Duty is set to play a vital role in Microsoft’s attempt to purchase Activision. Photograph: Activision Blizzard
But Shiring is also clear why the deal is vital to Xbox. “Microsoft wants to get Game Pass on other platforms,” he says – Game Pass being Xbox’s game subscription service, offering a library of titles for a monthly fee. “Making hardware sucks [as a business]: they just want to offer a subscription. Sony is absolutely terrified of allowing Game Pass on PlayStation – this has been going on for a while behind the scenes … If Microsoft can get a good chunk of gamers paying a monthly sub on their competitor’s boxes, they will have taken a page from the old MS playbook. Embrace and Extend is back. Let the other folks lose money on hardware, you take the profit every month.”
This is only part of a broader economic vibe shift set to hit the industry this year. “The global games market declined in 2022, so how it’s going to respond in 2023 is one of the key questions at the start of the year,” says Piers Harding-Rolls, research director at industry analysis firm, Ampere Games. “The market is less predictable than it has been for many years due to the difficult macroeconomic backdrop, the post-pandemic …….