In keeping with tradition, and hot on the heels of releasing my 2016-2017 Annual Games Business Map report via M2 Insights, for several clients last month, I can now move on to discussing my Top 10 - 2018 Games Industry predictions.
For starters, with any prediction they’re exactly that. Nothing more than a personal opinion and speculation for what might come to pass this year. However; these predictions are also based on over 2 decades worth of working in the games industry and dozens of in person meetings, and personal research that occurs every year. So, with all that in mind, time to move on to my best educated guesses for the games industry this year.
Top 10 2018 Games Industry predictions:
1. The future is now – with mobile
I’m hoping this isn’t a surprise – to anyone! Mobile gaming isn’t just the future – it’s now. For starters, the global SmartPhone (iPhone, Android) market continues to be white hot. It has the largest install base; (Approx – 1.8B Mobile SmartPhone Gamers) and is on track to tie the #1 gaming software market in the world – which is PC – in games software revenues. Not only is the mobile SmartPhone market the-biggest-thing in gaming; but the other two major gaming platforms, PC & Console, are also heading in this direction. Most notably with Nintendo pivoting their console market from being a niche living room device to mobile with the successful launch of their Switch. On the PC front, gaming laptops are also becoming increasingly more ubiquitous amongst gamers; especially so now that mobile graphics cards are closing the gap with their desktop counterparts.
2. The end of Gaming exclusives? I hope so
Game publishers are finally waking up to the fact that they’ve been leaving big money on the table with Console exclusives. I believe we’re going to see fewer & fewer exclusives over time as a result. Some quick examples: Grand Theft Auto V I believe blew away Rockstar’s expectations in terms of PC Sales. Destiny 2 is no longer just for Consoles, & now found on PC. Seeing Mario being licensed and coming to SmartPhones is also a big move for Nintendo. Why not have one’s games on every conceivable platform if you can?
3. Are Consoles dying?
I touched on the fact that Nintendo pivoted towards mobile in a bigger way with the Switch. This pretty much just leaves Sony & Microsoft left to duke it out in the living room. While I’ll blog in more depth on this one later; the facts are in, overall the traditional Console market has been slowly shrinking year over year. The reasons are many; but the younger generations seem to be both 1) prioritizing time and money on mobile platforms, (e.g SmartPhones, and even Tablets), as well as 2) a resurgence back to PC in large part thanks to eSports. Long term, the best Sony and Microsoft can hope for is a move towards more of a services based option (e.g. Live, Steam, Amazon); and to turn the Console into nothing more than a design specification for optimal play of games on a 4K, and the next gen of televisions sitting in the living room. Expect to see more purchases of companies like Playfab as the execs at gaming companies try to globalize their positions.
4. Retail software games market evaporates
What happened to PC gaming early on, is now happening to the Console games market. Retail is largely becoming a thing of the past. I find it highly ironic that even boxed Console games nowadays are becoming harder to find. Not to mention the impacts of an evaporating pre-owned Console sales market. Even my discussion with one of the managers at a local GameStop confirmed that shelf space is shrinking for Console games and moving towards SmartToys. As I mentioned in my 3rd prediction, what this heralds is a race by all the bigger games companies to copy Valve’s Steam service, and or to roll their own like Blizzard’s Battlenet.
5. “Reality” settles in for Virtual Reality
Yes, reality is finally settling in for the Virtual Reality Head mounted display (aka HMD’s) market. In short, it’s proven to have a viable install base for mobile class devices with a hair over an estimated ~50M units in combined sales over the past few years of release. Not bad. However; not so for the higher end premium class of HMD’s such as the Oculus or HTC Vive. Which I may have to adjust even further down from nearly 6M units in combined sales to a lower 5.1 to 5.2M units. (I’m waiting for some more holiday #’s to trickle in). Sadly; while super cool, the higher end experience is not currently on track to be a viable install base by any stretch of the imagination for any games developer or publisher. I’ll leave it up to you, the reader, to speculate on what that spells for any company that made huge bets in spending time, $, & resources in that direction.
6. Will Unity be bought?
I doubt it for this year; but it wouldn’t surprise me if they did. Unity continues to be a great multi-platform game engine. Every iteration continues to get better and better; and if game publishers are increasingly looking at options to provide additional services – then Unity becomes a natural option to take a second look at.
7. Amazons bid to become a top 10 Games Publisher
Expect to see Amazon unveil more of its plans as it matures into a first party games publisher. I tongue in cheek like to call it EA 2.0 because of the migration of some big players who’ve migrated from EA over to Amazon. Given all that talent popping up over there - It really shouldn’t be a surprise to anyone to see some more big licenses and or original IP get announced soon to start priming the pump. The question becomes, what pieces (e.g. technology, games companies) are they missing that they need next?
8. Apple will continue to ignore gaming
I fully expect Apple to continue to practically ignore the gaming software space. I really just don’t get it. At least Microsoft is waking up to the fact that they need to start taking PC Gaming seriously again due to a flagging Console games market. Yet, with Apple, I just don’t understand why they don’t take a look at their own data. Fully 2/3rds or more of people with an iPhone, or even an iPad, play games on that device. Especially so if there’s a child in the house. (Pokemon Go anyone?). If there’s one thing the games industry has taught me in the past 20 years or so, it’s that if you ignore the gaming software space – you do so at your own peril. Mobile devices are the end game. The human hand isn’t getting any smaller. So why not use a market leading position to also pave the way for additional convergence in the gaming space? They are leaving 10’s of big $B’s on the table.
9. Gaming Software Revenues will hit $100 Billion
1/10th of a Trillion Dollars will be spent on just gaming software this year. Isn’t that cool? Bear in mind that this is just on the software side of the house; on all gaming devices and platforms. Doesn’t include spending on eSports, adjacent markets and the like.
10. AI/Machine Learning – biggest game changer in our lifetimes?
Artificial Intelligence has been in games for decades in one iteration or another. Obvious examples range from the historic Deep Blue chess match against Kasparov in ’96 to more recent examples like: Starcraft II, F.E.A.R, or Arma 3. I fully expect games to be one of the biggest power user/consumers/integrators of AI/ML moving forwards. Expect to see more integration not just in the games, but in how games will be bought, sold, accessed, building teams with friends, and so forth. We live in exciting times, and I expect AI/ML to be the “Big Thing” on the software side for a very long time.
So, there you have it. Those are my biggest predictions for this year. We’ll see how many come to pass. I hope you’ve enjoyed the read.
Sincerely,
Matt
For more information: Please feel free to reach and contact matt@thoughtops.com
