3 Top Trends That Will Affect Gaming in 2023

Macroeconomic forces continue to affect every investing sector, including gaming. Although there has been a downward trajectory for gaming investments following the highs of early pandemic days into 2022, the new year could see remodeling of what gaming investments can accomplish.

There’s debate as to how resilient gaming is to a larger economic downturn. In 2023 the theory may be tested as ongoing inflation pressures and a potential recession is set to affect the viability of both video game spending and investments.

Here the Investing News Network (INN) presents the outlook for gaming investments in 2023.


Can gaming investments level up in 2023?

Raj Lala, president and CEO of Evolve Funds, told INN the outlook for gaming stocks remains high in his view.

The positive outlook is based on the way consumers see their gaming spending habits amid global economic pressures.

“A large number of gamers don’t see gaming and esports as discretionary spending. It’s a staple for their social lives,” he told INN.

Evolve offers investors access to gaming investments through the Evolve E-Gaming Index ETF (TSX:HERO). Among its top holdings, the fund includes NetEase (NASDAQ:NTES), Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA) and Nintendo (TSE:7974).

“Gaming is a cheaper form of entertainment, which makes the sector relatively recessionary resilient compared to some others,” the ETF executive said.

Lala added he is encouraged by a full effect transition to subscription-based revenue models in addition to the standard one-time purchase for a game or a piece of hardware.

As part of his mid-year review in 2022, Mat Piscatella, executive director and video game industry analyst at The NPD Group, said in the short term there were difficulties ahead due to ongoing scarcity for consoles and a lighter title release window.

“But in the long term, the growth prospects in the video game industry remain as strong as they’ve ever been,” he wrote.

Microsoft’s attempt to acquire Activision Blizzard under scrutiny

The biggest deal in the history of gaming investments is currently in limbo, due to regulatory reviews both in Europe and the US.

In early 2022, Microsoft (NASDAQ:MSFT) announced a proposed acquisition of gaming giant Activision Blizzard (NASDAQ:ATVI). The latter’s gaming catalogue encompasses popular titles like Call of Duty, World of Warcraft, Starcraft and Diablo.

As such, the deal has faced a significant amount of scrutiny from antitrust voices and Microsoft’s top competitor in the console landscape Sony (NYSE:SONY). The Call of Duty franchise in particular is a gaming console mainstay, and the deal would make it exclusive to PC and Microsoft’s Xbox console, leaving Sony’s Playstation in the cold.

At the onset of 2023, it’s clear the deal will continue to dominate the headlines this year, as Microsoft gears up for an ongoing legal battle with the FTC in the US.

If Microsoft is able to clear the regulatory hurdles, this deal will add a significant library of games to its catalog, henceforth strengthening its gaming subscription service Xbox Game Pass.

Sharing his view for 2023 with GamesIndustry.Biz, Piers Harding-Rolls, an analyst with Ampere Analysis, said he expects to see the deal go through but with more concessions than expected.

The analyst expects to see Microsoft having to concede a few points in order to complete its acquisition.

“Those could be focused on Game Pass inclusion of games and title availability on other services,” Harding-Rolls said. “I think there is a higher chance of the deal closing with concessions than of it being halted.”

In terms of timeline for when the deal could close, the analyst said its possible to see it done in the first half of 2023, if Microsoft concedes sooner than later. But if the two parties go to court, the deal could “drag on into the second half of 2023.”

The role of China for gaming in 2023

The Chinese gaming market represents a significant core of the entire landscape for video games.

However, for the first time in 20 years the country posted a decrease in gaming revenue in 2022, according to Niko Partners.

Many factors attributed to the 2.5 percent year-on-year decline in revenue, totaling US$45.44 billion.

But one of the most significant ones pointed to by experts was the lack of new games from international markets due to a freeze in new licenses by China’s video game regulator.

According to Lala, this situation will improve in 2023 as the country restarted its approvals in April 2022, and that will lead to increased options for Chinese gamers.

In fact, Niko Partners projects over 100 import games will get the coveted ISBN license in 2023 to enter the Chinese market.

“We anticipate that import game approvals will return to a regular cadence in 2023,” the researchers said.

Lisa Hanson, president of Niko Partners, told GamesIndustry.Biz, “There is a big backlog and many quality titles from numerous countries are in the queue.” The most recent approval of an imported game was in June 2021.

Investor takeaway

Video game investments struggled throughout 2022, and while an immediate recovery seems tricky, it’s clear the fundamentals of gaming remain strong.

Analysts and experts are bullish on both the spending trends and market conditions in 2023.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern hold no direct investment interest in any company mentioned in this article.

The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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