What are the causes of the decline in video game revenues ?
The video games industry has grown by leaps and bounds thanks to the digital revolution. It now rivals cinema and music in terms of revenue. However, a worrying trend is emerging: the decline in video game revenues. Despite the increase in the number of gamers, analysts are predicting a decline in the budget of the video games industry. It is therefore important to examine the key factors behind this unprecedented situation. Here are some of the reasons behind the decline in revenues in what once seemed an invincible sector.
Free mobile games
Video game revenues have fallen, as you can read over here, for a number of reasons, and one of them is free-to-play mobile games. Indeed, free-to-play mobile games, with economic systems centred on microtransactions, have conquered a significant share of the market. Players are attracted by the ease of access and the ability to play without spending any money. Developers exploit this popularity by offering integrated purchases to unlock additional features or progress more quickly through the game.
This strategy enables them to generate revenue and keep players interested. These games offer an experience accessible to a wide audience, enabling players to enjoy interactive entertainment without having to invest financially. Thanks to these innovative business models, free-to-play mobile games continue to captivate and retain a significant number of players. That said, video games are gradually losing their place alongside them.
The evolution of multiplayer online games
The advent of free online multiplayer games has sparked interest among (younger) gamers, who can enjoy games with their friends for no money at all. Developers finance these games through microtransactions and paid features that allow for greater customisation. This trend has shifted gamers' attention away from traditional single-player games and towards interactive online experiences.
Free-to-play multiplayer games offer an attractive alternative, encouraging socialisation and community involvement. What's more, they offer discreet monetisation options that contribute to the profitability of titles. This evolution of the online gaming landscape has led to a change in players' preferences and habits. It has also led to an increased focus on multiplayer experiences with no upfront costs.
Game streaming sites
The rise of game streaming platforms has had a significant impact on the industry, with some platforms becoming very popular, offering players the chance to watch other players' games live. This new form of entertainment has captured the attention of gamers and often leads them to prefer watching to playing.
Players are attracted by the community aspect of streaming, where they can interact with streamers and other viewers. This trend has created a shift in behaviour, with traditional games taking a back seat. Instead, watching live is becoming an entertaining experience in itself. The emergence of game streaming platforms has therefore reshaped the landscape of video game entertainment. As a result, they are influencing gamers' preferences and consumption habits.
Video game market saturation
The video games market is facing saturation, with a profusion of titles available on all platforms. This abundance makes it difficult for developers to differentiate their products and capture the attention of gamers. As a result, many games find themselves relegated to the shadows, unable to generate the expected revenues.
This increased competition also puts pressure on prices, which can lead to a reduction in overall revenues. Developers have to compete to stand out in this crowded environment, investing in promotion and quality to retain players. Market saturation therefore poses challenges for industry players, requiring creative strategies to stand out among the many titles available.
Lack of innovation
A lack of innovation and the absence of exciting new franchises have contributed to the stagnation in demand for video games. Gamers are constantly on the lookout for new experiences and innovative concepts. As a result, a lack of novelty can lead to a decline in interest and revenues. Gamers are attracted to games that push the boundaries, offer new game mechanics and provide unique experiences.
When a lack of innovation prevails, players can become bored and look for more stimulating alternatives. So, to maintain excitement and boost revenues, developers must continually seek to innovate. They need to think about creating exciting new franchises and offering new and exciting gaming experiences.
Piracy and counterfeiting
The problems of piracy and counterfeiting in the video games industry can lead to considerable financial losses. Illegal circumvention of game protection measures and the marketing of counterfeit copies can hamper legal sales. This can easily reduce developers' revenues. These illegal practices undermine the value of original products and harm legitimate creators.
Piracy and counterfeiting deprive developers of legitimate profits and damage the industry as a whole. To counter these problems, copyright protection measures must be strengthened and the public must be made aware of the harmful consequences of these practices. Putting in place appropriate penalties to deter piracy and counterfeiting is also a considerable approach to combating the problem.