Console’s prominence diminished at Gamescom 2022

For years, three of the most important exhibitors at Gamescom have been incumbent console producers Nintendo, Sony, and Microsoft, all of which have a tendency to make use of the occasion to advertise their newest {hardware} and upcoming unique first-and-third-party titles. However, two of those business giants had been conspicuous by their absence in Cologne this yr: Nintendo and Sony had no bodily presence on the present in any respect. Microsoft was current, however its presence on the present ground was about half the dimensions because it was in 2019 – when the final bodily present befell in 2019 earlier than the COVID pandemic put a halt on in-person occasions. Indeed, some firms stay understandably reticent to ship representatives to, or make investments closely in showcasing at, occasions like Gamescom throughout a interval of unprecedented ongoing uncertainty. But, arguably, with Starfield’s launch being pushed again to 2023 and the continued saga of its acquisition of Activision Blizzard, Xbox had the least motive of the three to exhibit: the approaching September 2022 launch of Pokémon Scarlet and Violet, and the scheduled November 2022 arrival of Sony’s flagship 4Q22 first-party title God of War Ragnarok would, in earlier years, create an enormous buzz in Cologne. Instead, their absence on the present painted a bleak – if admittedly incomplete – image of the present state of the console market.

Fittingly, the relative silence at this yr’s present this additionally coincides with a definite slowdown within the console house, with all three producers reporting lower-than-expected engagement and year-on-year declines in some console segments throughout H2 2022. Some correction was, in fact, anticipated following the pandemic-induced gaming increase however different elements – corresponding to {hardware} provide limitations, particularly in Sony’s case – have exacerbated stagnation within the house. To compound issues additional, the market-leading Switch has now very a lot entered the decline part of its lifecycle, which means that it’s not a driving pressure of development it as soon as was.

Omdia is seeing proof of PS5 provide beginning to meet up with demand in some key markets, and expects a return to some semblance of normality in 2023. However, inflationary pressures and foreign money actions have compelled Sony to extend the advisable value of the PS5 in choose markets, together with the UK, Europe and Japan. While this isn’t anticipated to impression Omdia’s present PS5 quantity gross sales forecast, which stay dictated by provide ranges reasonably than demand, it would signify an $87.5m improve in anticipated {hardware} income in 2022 for Sony in comparison with our earlier forecasts. In 2023, the income uplift arising from PS5 value will increase might be approaching $400m. Even so, the console section as an entire – together with {hardware}, software program, add-on content material, and on-line subscriptions – will decline by 2.5% this yr in comparison with 2021, which itself noticed a 4.5% decline on 2020’s record-breaking efficiency.

Yet there may be mild on the finish of the tunnel: Omdia expects the console market to return to pre-pandemic development cadences in 2023, when it would develop by 5.3% to as soon as once more surpass $40bn. Let’s hope that, because the console market begins to resemble its former, pre-pandemic self, as will the Gamescom expo in 2023.

B2B temper upbeat—notably in advert tech

While the B2C present ground at Gamescom 2022 was notably diminished in scale in comparison with earlier years, the enterprise space was buzzing with exercise. The rising complexity of the video games tech ecosystem highlighted in Omdia’s current Games Tech Market Landscape Database was very a lot in proof, with a big share of the 237 firms profiled in that database in attendance. Particularly noticeable was the big presence of firms like AWS and Xsolla, that are rising—in very alternative ways—as key pillars of the ecosystem.

But maybe essentially the most placing growth on the B2B facet this yr was the expansion of promoting. At the final Gamescom in 2019, there have been few advert tech firms to be seen. At the time, in-game promoting was a sufficiently novel subject that the few firms within the house had been primarily targeted on elevating consciousness. Fast ahead to 2022, and we see a much more mature market with the likes of AdvertInMo, Anzu, Bidstack, and extra attending to do enterprise—not simply to get their names out.

The temper among the many in-game promoting firms Omdia spoke to was upbeat regardless of the current downturn within the broader gaming market. The shock announcement in June that Admix, as soon as a number one in-game promoting participant, was pivoting away from promoting had additionally achieved little to dampen expectations. Across the board, the sensation was that the market was gaining actual traction. The current publication of measurement requirements for in-game promoting by the Internet Advertising Bureau (IAB) has helped to deliver standardization and legitimacy within the eyes of advertisers. Indeed, the heavy presence of in-game advert gamers at Gamescom recommend the main focus is shifting from successful over advertisers to persuading recreation builders. This was additional evidenced by a straw ballot by Omdia amongst in-game promoting firms at Gamescom which discovered that the majority had been investing way more assets in Gamescom than DMEXCO, an upcoming promoting business occasion on the similar venue.

Despite the continued turbulence in each the video games and digital promoting market, there are various causes for optimism about their intersection, in-game promoting. The cellular video games promoting market is adapting quick to the upheaval of IDFA, partially by shifting in direction of new codecs like rewarded and in-play promoting. Meanwhile, the rumored launch of recent promoting platforms for each PlayStation and Xbox subsequent yr appears set to deliver a serious enhance to promoting on conventional gaming platforms, whereas TV producers corresponding to Samsung are beginning to make extra noise about their potential to trace, measure, and goal players throughout their gadgets. Omdia might be exploring all of those traits intimately within the forthcoming In-Game Advertising Forecast which can present the primary complete quantification of this quickly rising market.

ByteDance reaffirms its dedication to gaming and VR

ByteDance’s presence at Gamescom was inconceivable to disregard. A big TikTookay sales space (at 650 sq. meters) stood by the doorway to one of many central halls of the present, with a giant stage and gameplay space. Popular German and English-speaking TikTokers hosted a packed program, which included unique gameplay of Capcom’s upcoming Street Fighter 6. Additionally, video games from Capcom, Konami, Sega, and Warner Bros. had been obtainable to play. TikTookay additionally had a sizeable presence within the B2B space. Meanwhile Pico, which ByteDance acquired in 2021, was the one VR headset maker exhibiting on the present – it showcased two video games operating on Pico Neo3 Link standalone VR headsets. Gamescom was well timed for Pico, which earlier this yr introduced growth of its enterprise actions and system gross sales within the US and Europe.

It’s not new for media firms to exhibit at Gamescom, with a notable instance being Netflix in 2019. However, in distinction to Netflix in 2019, ByteDance already has a sophisticated involvement within the gaming house throughout a number of fronts. Since 2020, it launched Danjuan Games in China – a storefront devoted to cellular titles and inaugurated its personal indie recreation publishing arm Pixmain. Most notably, in 2021, ByteDance acquired Moonton Games for $4 billion – the corporate’s largest gaming acquisition to this point.

According to Sensor Tower knowledge, ByteDance-owned cellular video games generated 142 million downloads and $461 billion in web income globally in 2021 (Moontoon Games’ Mobile Legends: Bang Bang was accountable for about half of these). ByteDance has additionally not too long ago began experimenting with informal in-app video games on TikTookay. In choose markets, TikTookay customers can play and document themselves enjoying 9 totally different HTML5 video games by way of its new ‘MiniGame’ part. Earlier this yr, TikTookay confirmed that it’s exploring bringing extra video games via integrations with third-party recreation builders and studios.

With a powerful displaying at Gamescom, ByteDance has underlined its ambitions in gaming and VR. Although TikTookay will supply extra playable video games in-app, Omdia believes that ByteDance’s main focus will stay making TikTookay a key vacation spot for games-related video content material to be able to drive the engagement and advert income on its platform. On the VR entrance, many will welcome the elevated competitors in a tool class more and more dominated by one firm; in response to Omdia’s Consumer VR Headset and Content Revenue Forecast 2021-2026, Meta accounted for 59% of VR headset gross sales globally in 2021. ByteDance’s wholesome funds and confirmed experience within the tech house makes it one of many high firms to look at in gaming.

Further studying

Games Console Content & Services Database (August 2022)

Games Tech Market Landscape Database – August 2022 (August 2022)

“As Admix Pivots to Web3, is there still a future for in-game advertising?” (June 2022)

Consumer VR Headset and Content Revenue Forecast Report: 2021-2026 (January 2022)