Analyst predicts rare decline in video game market

 The global video game market will shrink in 2022, according to a new industry analysis that blames multiple factors.

Why it matters: If correct, it’ll prove that gaming, which surged at the onset of the pandemic, doesn’t operate in a bubble.

Researchers at Ampere Analysis predict a 1.2% market decline for the year, from $191 billion to $188 billion.

For context, growth had been rapid for years, rocketing up from $95 billion in 2015, according to Ampere.

Between the lines: The expected downturn is blamed on declines in most major gaming sectors and the impact of “heavy inflation, with an increasing cost-of-living squeeze.”

Ampere sees mobile gaming taking a 1.3% hit, down to $111 billion due to revamped privacy settings that have stymied established advertising and user acquisition models.

PC gaming had dipped due to the pandemic’s closure of gaming cafes in Asia and bounced back, but it faces cannibalization from mobile gaming. The console market is pegged for a slight drop due to hardware manufacturing woes and game delays.

Ampere only predicts growth in cloud subscription services, to $300 million, but it’s a meager portion of the overall industry.

What they’re saying: “The idea that the games market is ‘recession proof’ is a fallacy,” states the Ampere report.

But it also notes that gaming offers a high value for money spent, offering some hope that cash-strapped people will still find it worthwhile to play and pay.

In May, Take Two chairman Strauss Zelnick offered a similar take. He told investors that gaming “will be affected by an overall slowdown,” but noted that the industry wasn’t hit as hard as others in 2009.

Last week, Nintendo president Shuntaro Furukawa shared a rosier view with stockholders: “In terms of the impact of global inflation on our current business, our entertainment business generally has not been affected by macroeconomic considerations.” He noted reports about inflation in Europe and the U.S. but said they didn’t have a “major effect on our sales at the moment.”