May 25, 2024
Game industry predictions for 2024 | The DeanBeat



Predictions are foolish to make and yet the temptation to rush back into the breach is always a pull for me. The future is terrifying the more unknown it is, and so I and many other prognosticators try to see a pattern in the darkness ahead. All I can say once again is that I hope you are well and that we’ll all have a better year in 2024 than we had in 2023. This year was marked by 11,000 layoffs that I didn’t expect, given the resilience of gaming during tough economic times.

As such, it was a pretty unpredictable year. As I learned in the pandemic, I now think about predictions with both a sense of hope and a sense of dread. The compass seems broken when it comes to finding that unending paradise for the gaming industry.

Let’s review what we’ve seen as the pandemic threw off our ability to predict what will happen life, and how it did the same in the game industry. Game companies had a record year in 2020, and I wondered if it was a one-time bump thanks to the coronavirus forcing lockdowns. People played games to survive, repair their social lives, and distract themselves.

And yet while it was hard to top 2020, the game industry grew in 2021, according to market researcher Newzoo. Game companies bulked up as they dealt with the realities of remote work and had trouble shipping games. Just when it seemed the game industry could defy gravity and would get a boost from blockchain and the metaverse, Newzoo saw the industry shrink 5% in 2022. Consoles were in short supply. People returned to non-game in-person activities like travel, and the invasion of Ukraine caused havoc in the markets, followed by a crypto crash, high inflation, and global economic weakness. All of that took its toll.

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And while we saw game companies launch the best-reviewed games in 20 years in 2023, the sales didn’t follow. We saw another shock to the economic system with the October 7 attacks on Israel and the war in Gaza. Rapid advances in generative AI caused concern about jobs. And as the revenues fell short of expectations, the layoffs came in ever-growing waves. Mobile gaming still hasn’t found its footing since Apple focused on privacy over targeted ads.

The structure of the industry will likely further change thanks to the closing of the $68.7 billion acquisition of Activision Blizzard by Microsoft. This tells us that we can expect more changes ahead. I’ve called out publicly for ideas on social media, and so these predictions are informed by that input. I appreciate all of the followers and readers who have made suggestions. Shawn Layden helpfully predicted the 49ers would win the Super Bowl.

I’ll continue to wager we can expect games to continue to outgrow other forms of entertainment. I expect that trends such as Hollywood transmedia, the metaverse, Web3, cloud gaming, esports, mixed reality, user-generated content and other trends will come along to reinvigorate the game industry — as well as great new games in the core areas of the PC, console and mobile game industries. I’m so glad that we have one beacon ahead: Grand Theft Auto VI is likely coming in 2025.

For the usual comparison and embarrassment, here are my predictions for 2023, 2022, 2021 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, and 2012. At the bottom of the story, I’ve also given myself grades for the predictions I made a year ago for 2023. This year, I got eight “A” grades and three “B” grades.

Predictions for 2024

1) Gaming layoffs will continue

Amir Satvat puts in two hours to 10 hours a week into his game job and LinkedIn work.
Amir Satvat helped cushion game layoffs with his own employment resources.

It’s sad but very likely that layoffs will continue in gaming in 2024. The top 20 economies of the world are expected to grow at a range from minus 1.3% (Argentina) to 6.1% (India) while the U.S. is expected to stay out of a recession but produce weak growth of just 1.5%. In this environment, consumers’ pocketbooks will likely be under pressure again. That will likely weaken demand for games.

I can foresee that we still have too many good games coming in a packed calendar for 2024, if the first two months of the year’s release schedule are an indication of what’s to come. Amir Satvat’s estimates are the best we have to go by for now. With 11,000 layoffs in 2023 out of a total population of 300,000 game developers (just 3 percent cut so far), you could still argue that more drastic layoffs are possible. Given the layoffs, it is inspiring that Satvat was able to find jobs for more than 1,000 gaming people via his employment resources.

Given the uncertainties around demand, gamer tastes and the effects of AI on the workforce, I think companies will be in a cautious mode until either really good news materializes, or the companies realize that they don’t have enough people to get their games done. Sean Kauppinen foresees this lasting into the second quarter, when leaders will realize they don’t have enough of a pipeline of games coming. And Satvat himself thinks it may be August 2024 before we see an uptick in hiring. That all makes sense to me, though I can’t say I would be any good at predicting what quarter things will turn around.

Meanwhile, look for the entry-level jobs in gaming to switch more to user-generated content (UGC) for platforms such as Roblox, Minecraft and Fortnite.

2) AI will surge

Thistle Gulch pits AI characters against each other in a murder investigation inside a simulation.
Thistle Gulch pits AI characters against each other in a murder investigation inside a simulation.

It was just a year ago that OpenAI launched ChatGPT-3 and made the benefits of conversational AI and large language models (LLMs) obvious for all of us. Generative AI applications came out enabling ordinary folks to create imaginative concept art, and that took an immediate toll on the jobs for concept artists in gaming. It also enabled more non-artist developers to create their own concept art. And that’s the nature of the creative destruction of AI, taking away opportunities for some and creating new chances for others.

We can expect more adoption of AI to help rein in the budgets of triple-A games — something that Nexon CEO Owen Mahoney sees as a positive change, as no game developer wants to be one of thousands of people working in a content factory. Yet AI could very well be a force that puts more professional game developers out on the street even as it enables more UGC to prosper.

We see early tools enabling neophytes to create videos and 3D animations from a text prompt. We can expect more dynamic conversations from non-player characters thanks to generative AI, based on work being done by Inworld AI. And we can expect to see AI characters become the star of Westworld-style games — rather than human players — as envisioned by companies such as The Simulation by Fable.

With such games, we will discover if it’s still fun to play games when you’re managing a simulation, rather than moving around in the game world as a player.

On the industry level, we can expect that game startups innovating with AI tools will be the ones that get investment from venture capital firms, much like the metaverse and blockchain and VR rode the hype curves in the past. Our own Game Changers list, put together with Lightspeed Venture Partners, highlights the quality startups being funded in the modern VC funding environment.

I do expect that issues like copyright concerns — which prompted the New York Times to sue Microsoft — and labor issues could disrupt the whole AI party. Let’s hope the outcome will be good for games, and good for humanity.

3) Great games will still emerge

Alan Wake has to escape from The Dark Place in Alan Wake 2.
Alan Wake has to escape from The Dark Place in Alan Wake 2.

Out of the mess of layoffs, economic doldrums, and technological change, we’ll still get amazing games that set a new bar for quality entertainment. Don’t forget that we saw billions of dollars invested into games by game-focused venture funds that didn’t exist before. We saw investors of all kinds come into games a few years ago as a kind of shelter from the pandemic.

That money went to work and it is still being used by game developers to iterate on great ideas and eventually bring some of them to market. Good games take time to make, and great teams continue their work even if the economy turns weak for a couple of years.

Remedy Entertainment weathered 13 years before it brought the outstanding Alan Wake 2 (my favorite game of 2023) to the market. Starfield was in the works for a decade at Bethesda, and by the time Grand Theft Auto VI lands in 2025 it will have been in the works for around 13 years.

Great games find a way to get to the market and gamers discover them. That part of the industry isn’t broken.

4) Franchise games will dominate

Hogwarts Legacy

In the meantime, it will still be tough for brand new intellectual properties to pierce through the noise and become popular with gamers on their own. That’s why big companies from Warner Bros. to Playtika are all focused on franchise games, or those that come from well-known gaming properties like God of War or hit entertainment properties like Spider-Man.

It takes so many game developers to create these games on a regular cycle that there aren’t enough talented teams to spare for untested brand new properties — or so the conventional thinking goes. Since we’re in a downturn, you can bet that leaders of game companies will think in a safe and conservative way to preserve their own jobs, rather than take huge risks on something new.

Even when we get a brand new idea for a game, like Hogwarts Legacy or the upcoming Suicide Squad, you’ll see that its attached to an existing IP like Harry Potter or DC.

Activision Blizzard has a large chunk of its workforce — 3,000 or so people out of perhaps 13,000 — across 10 studios focused on Call of Duty. That’s how it ensures Call of Duty comes out every year as a premium game and it gets steady content for Warzone and Call of Duty: Mobile. That means there aren’t a lot of people left for secondary games like Skylanders or brand new IP.

And this is reflected in what gamers want to play. Players want the franchises, and the game companies are serving it up to them. Sequels and remasters are filling the calendar for next year. I don’t expect too much of this to change in 2024, and you’ll see below that indies are the solution.

5) User-generated content will continue to grow

Frontlines is a first-person shooter on Roblox from Maximillian Studios.
Frontlines is a first-person shooter on Roblox from Maximillian Studios.

User-generated content used to signal poor quality. But in the age of AI, automated tools can help take a user’s idea and make something good out of it. That’s why I expect UGC to continue to take off. It already has amazing platforms in Roblox, Fortnite and Minecraft.

Dave Baszucki, CEO of Roblox, said at the recent Roblox Developers Conference that he predicts a Roblox developer will be valued at $1 billion in the next five years. There are big Roblox dev studios with 200 people — like Marcus Holmström’s The Gang — with professional game developers. There are also home-grown Roblox studios run by CEOs who are 23 years old and have 10 years of Roblox experience. Some of the games, like Maximillian Games’ Frontlines, feature graphics like triple-A games.

On top of that, Overwolf has enabled modding to scale on the PC, with more than $201 million in payments to modders during 2023 alone.

6) Switch 2 will be announced

Switch OLED.
Switch OLED.

Nintendo launched its Switch hybrid console in March 2017, nearly seven years ago. By any measure, it’s due for an update soon, as in the good old days consoles showed their age by their fifth year. Of course, things are different now and consoles may last for 10 years.

But there are plenty of things that Nintendo could add to its capabilities to capture new sales in the market, like getting a Call of Duty game to run on the Switch 2 hardware. Of course, I don’t have inside information here and I don’t even know if Nintendo plans to launch the console during 2024. Nintendo has been pretty good about keeping secrets and figuring out ways to surprise and delight its customers.

But just like Apple, Nintendo needs to start telling developers how to make games for its new platform if it wants those games to show up in a timely manner. So I wouldn’t be at all surprised if it signals the Switch 2 is coming in 2024 and then ships it after that.

7) The Apple Vision Pro debuts to good reviews but poor sales

Apple Vision Pro
Apple Vision Pro

The word is that Apple will start shipping its initial mixed reality headset, the Apple Vision Pro, as early as February. You can expect good quality from Apple in terms of an experience that delights users. The Vision Pro will likely be focused on the high end of the market, with target customers including enterprises that might normally buy a Magic Leap 2 headset for training purposes.

There will be some consumer apps, but I wouldn’t expect any miracles in terms of outstanding games at the outset. Like AR and VR, I expect a slow burn in this market in 2024, and then it will turn into something more interesting over time as costs come down and technology advances.

I can’t imagine that many people beyond the core will want to buy the headset at its initial price of $3,500. Apple has priced it that high to see what the market of enthusiasts will bear, but it mainly expects developers to buy those headsets at the outset and deliver great apps and games. Once those start to appear, Apple will hone the manufacturing, lower the costs and start to bring the price down. It will also count on deals with wireless carriers to bring the costs down via subscriptions.

8) More consolidation will happen

With the $68.7 billion acquisition of Activision Blizzard King by Microsoft now approved, we can expect more of the same to happen. Rivals will likely need to bulk up with more game studios in order to stay competitive with Microsoft, which may have more than 20,000 people working in games.

Microsoft will likely push its subscription business even harder, hoping to gain an advantage over rivals like Sony and Nintendo that aren’t trying as hard to push that business model. Game companies will also have other reason to get bigger, like acquiring AI talent or new technologies in the ever-changing industry. I would expect a drive for openness to rise as well in tandem with this consolidation. You can expect to see efforts to create a fully open source game engine, AI tech, or metaverse to emerge as a counter to the walled gardens that the biggest companies and the tech giants can create.

The good thing is that this won’t be just an investment in acquisitions. If the game industry continues to be financially attractive, it will attract funding not only for mergers and acquisitions, it will also draw money for startups. And so the never-ending battle between small game startups and big corporations will continue and that will give a chance for the best ideas to emerge from either type of company.

9) Weakness in China

China’s government will likely continue to reign in the gaming business that has otherwise had stellar growth to date.

The government has already restricted the number of hours that young people can play in a week. Last week, China also cracked down on monetization, sending the market value of Tencent, NetEase, Krafton and others downward. The new rules limit spending by players on online games and institute a ban on daily login rewards, first-time purchase bonuses and any incentives game developers create for repeat spenders. Loot boxes are also going to be restrained and games in China must now store their data on servers in side the borders of China. 

The drop in the market value is ominous as both Tencent and NetEase have been heavy investors in the games industry, particularly as they expanded beyond Asia into the West. If that source of funding dries up, then game startups around the globe could feel the impact. On the plus side, China says it will take less time for the approval of new games coming to the market.

10) Hardware companies will get a competitive advantage with user acquisition for games

Samsung Game Launcher lets you click on an ad and move right into a game.
Samsung Game Launcher lets you click on an ad and move right into a game.

When Apple cracked down on privacy violations with the deprecation of the Identifier for Advertisers (IDFA), it hurt the ability for game companies to target advertising for specific users. That sent mobile game sales into a decline and made the business of acquiring users much harder.

But we’ve seen some new kinds of loyalty programs emerge. Consider the playable ads enabled by cloud gaming at Samsung. Samsung is of course a rival to Apple in a variety of ways. But ads were broken on its smartphones, as 90% of people who clicked on a game ad didn’t wind up playing the game due to the friction of having to register and download the game.

So Samsung came up with cloud-enabled playable ads, which, with the Samsung Game Launcher, take you directly into a game to try it out. This will likely be more successful when it comes to friction. And since Samsung sold you the smartphone, it already knows who you are. If you have games in the Samsung store, it knows what you like. And so this will give it a leg up in acquiring new users via its alternative store, which is more viable given the legal victory that Epic Games just score against Google. Of course, Apple could do something like this too, as can other hardware vendors.

11) Indies will be the source of original gaming hits

Dave the Diver was an original indie hit in 2023.

Now that game powerhouses are focused on franchise games and even innovation-minded triple-A firms like Ubisoft can take a long time to launch a new IP (think Skull & Bones), the indies are going to be the saviors of gaming originality.

Every year, I thank the indies for producing games like this year’s Dave the Diver from Mintrocket. Other 2023 indie hits included Sea of Stars, Cocoon, Gorilla Tag, Jusant, The Last Faith, Pizza Tower and Bramble: The Mountain King. Established indie teams that move on to original work after original work can take the risk out of that kind of game and might attract more investment.

For 2024, I look forward to titles like Light No Fire, which was announced by No Man’s Sky studio Hello Games at The Game Awards. I was amazed that this procedural graphics game was created by a team of six over the past five years. We’re not sure when it will ship, but it looks beautiful already.

The Super Mario Bros. Movie hit $1.35 billion in revenue.
The Super Mario Bros. Movie hit $1.36 billion in revenue.

The success of The Last of Us and The Super Mario Bros. Movie will inspire more games to get the Hollywood treatment. There are many such films already in the works like BioShock and Borderlands, but it takes a while for such works to land. We know that Arcane’s second season will be coming to Netflix. Fallout is coming as a streaming TV series, as is the second season of Halo. Tomb Raider is coming. We may expect new seasons for The Last of Us and Twisted Metal. And possibly even hints of a Zelda film. But I’m pretty sure that not every one of these is going to succeed. The ratio of duds and hits will probably start to even out, as gaming fans have no patience for work that is rushed to the market.

Grading my 2023 gaming predictions

1) Console and PC games will get stronger, but mobile games may get weaker with the economy

Letter grade: B

Analysis: Newzoo’s latest prediction shows this guess was on the mark. Newzoo predicted 0.6 percent growth for all of games, with the revenue number expected to hit $184 billion in 2023. PC games, bouyed by live service games, were expected to grow 5.2% and console games were expected to grow 1.9%, but Newzoo forecast that mobile games would shrink again by 1.9%. Since mobile is the biggest part of the game market at a little less than half of all revenues, the slowdown in mobile has a bigger drag on everything. Part of the result was 11,000 layoffs that I didn’t expect. Let’s hope that a recovery takes root soon, but a lot of that will depend on the world’s economic environment and whether gamers are excited or not about new titles.

PSVR 2

Original prediction: I expect that growth will resume for the game industry as a whole. At some point during the year, PlayStation 5 and Xbox Series X/S consoles will regularly be in stock at most retailers. The PlayStation VR 2 will debut in February and it will give a mid-life boost to the PS5. Nintendo may finally announce a replacement for the Switch, spurred by competition from similar devices such as the Steam Deck.

While Sony pretty much owned the holiday season of 2022, Microsoft should come back with a strong slate in 2023 with titles like Starfield, Redfall and more. Electronic Arts has Star Wars Jedi: Survivor and Dead Space. Suicide Squad: Kill the Justice League has a date, as does Hogwarts Legacy. Diablo 4 is coming, and Nintendo has The Legend of Zelda: Tears of the Kingdom. Square Enix has Final Fantasy XVI. Sony has Spider-Man 2. And the BioShock creator has Judas. The list goes on. As long as gamers can get their hands on new consoles, this list should drive demand.

I’m not so confident about mobile gaming, which has some cool titles like Warzone Mobile coming. It is vast and unpredictable, but it is driven by free-to-play gamers who may be more sensitive to economic doldrums and less hardcore than PC and console fans.

Letter grade: B

Analysis: The metaverse did not materialize in 2023. We saw bits and pieces of success, such as continued growth for online games like Roblox, Minecraft and Fortnite. But despite a solid launch for its Meta Quest 3 virtual reality headset, we didn’t see Meta emerge in a big way yet from its period of metaverse investment. We saw plenty of backlash for the metaverse from those who don’t think the hype was worth the reality. And yet there are cool things still coming for those who wait.

deep learning metaverse
Will we see the metaverse soon?

Original prediction: The metaverse is going to take a long time to develop. If it is to meet our imaginations of delivering something close to sci-fi books and movies — something akin to the Star Trek Holodeck — it’s going to take time. We will start laying the foundations for the metaverse in 2023 with the launch of 10G cable networks and real-time interaction. But it will take years to deliver the creative experiences and games that will inspire the masses to join.

There will be backlash against the metaverse, much like there is backlash against Web3 gaming and cryptocurrency. Noah Falstein calls this the “meta-averse” reaction, and it’s easy to foresee because no one is delivering on the metaverse for a while.

But I believe that all industries will converge on a 3D internet, and when we create the tools and standards to maximize interoperability and reusability of assets across many worlds, we’ll finally have something that attracts the masses. And I expect Hollywood to keep stoking the inspiration with cool metaverse visions.

Letter grade: A

Analysis: The hype disappeared from the metaverse market as Meta continued to lose billions of dollars a quarter with its heavy investments in the metaverse. We saw steady announcements from metaverse startups in terms of standards bodies forming and partnership deals. Ready Player Me made good progress in getting its metaverse avatars used in a wide array of indie games. Epic announced its Lego Fortnite game at the end of the year, and we saw steady growth for Fortnite, Minecraft and Roblox at a time when the rest of gaming was still mixed. Apple finally announced its coming Apple Vision Pro headset. So the walled gardens gathered their forces for the coming metaverse battle, and the forces in favor of the open metaverse — as captured in Wagner James Au’s book, Making a Metaverse That Matters — slowly pulled together. And on the enterprise side, corporations saw the value in creating digital twins that replicated physical factories in a digital environment to better measure performance.

You can draw or sculpt with the Meta Quest Pro.
You can draw or sculpt with the Meta Quest Pro.

What we’ll get instead are metaverse experiences that are smaller in scale and adhere to defacto standards, rather than real ones. Do not be deceived. This will be somebody’s metaverse, but it won’t be the open metaverse.

Back in March 2022, the Game Developers Conference released a survey that said 17% of game developers were working on a metaverse project, and 83% were not. If that survey were
done again today, I think we’ll see a swing toward more projects in the works. Those projects will include work on gaming galaxies (not quite real open metaverses) like Roblox, Minecraft, Dreams and Fortnite. But there are likely more platforms that will emerge for the metaverse, and you can bet that game devs will seize the opportunity to create content on these platforms.

That tells us that things are in the works, and more things are coming that will flesh out the metaverse. With luck, we’ll see how Apple makes its play in the metaverse (even though it won’t call it that) with the launch of its mixed reality headset for mobile devices. Meta’s Mark Zuckerberg has promised we’ll see the Meta Quest 3 VR headset emerge in 2023, and Sony may do well with it core gaming audience with PSVR 2.

At first, we’ll see metaverse applications that are interoperable within a single company, and then we’ll see some alliances form. After standards get worked out, we’ll see something like a real open metaverse emerge — I hope.

4) Gaming will disrupt other industries, and it will be disrupted by outside forces

Letter grade: A

Analysis: The global economic malaise continued in 2023, resulting in more than 11,000 layoffs at game companies (according to LinkedIn influencer Amir Rubin) — about five times more than a typical year for gaming layoffs. With inflation running high and economies disrupted around the world, consumers didn’t spend as enthusiastically as expected. Newzoo predicted we would end 2023 with paltry 0.6 percent revenue growth. It turned out that companies became inefficient in production with remote work during the pandemic. They hired a lot of people in response to user growth and in an attempt to be more productive. Many of their games finally shipped this year as users returned to other activities. The games didn’t do as well as expected, and so we saw the layoffs gather steam throughout the year. On the positive side, gaming expanded into the movies and TV with shows like The Last of Us on Max and The Super Mario Bros. Movie. That brought gaming’s disruptive power to other forms of entertainment.

League of Legends Worlds Championship 2022.
League of Legends Worlds Championship 2022.

Original prediction: Gaming has a good command on our leisure time and with each new generation of players there are more and more native gamers. Over the years, we have seen inexorable growth with generational change.

The average age of a gamer is 33, according to the Entertainment Software Association. And 69% of American homes have at least one gamer. And 97% of Americans view games as beneficial in some way. People play an average of 13 hours a week, up from 12 hours in 2021. And so that is taking audiences away from other pursuits, and it’s why we see Hollywood making so many game-related entertainment. Game technology — such as the cloud and game engines — is infiltrating other industries.

But this doesn’t mean that gaming will always grow. We saw how it was battered in 2022 by the Russian invasion of Ukraine, high inflation, high interest rates, two cryptocurrency disasters, and general economic malaise. Forces like government regulation in China and the closing off of markets like Russia have an effect. And COVID-19 and its aftermath had effects on gaming, such as suppressing in-person esports. I hope we don’t see more of the same in 2023, but we should expect this push and pull to continue.

5) Geopolitics will continue to interfere with global gaming

Letter grade: A

Analysis: This was the saddest prediction as the conflict between Israel and Hamas broke into open warfare on October 7, just when the Middle East was showing signs of greater cooperation among countries when it came to games. The move disrupted companies like Playtika, which has workers in two countries fighting wars: Ukraine and Israel. It’s hard to measure the impact this had, but the gravity was not unlike 9/11, which clearly had a devastating effect on many industries. While gaming is a force for good, it’s not clear how it will be able to cross borders fluidly, as both regulation and war can bring it to a halt. China’s own walls seemed to grow higher as it announced limitations on loot box mechanics in online games — a move that sent the prices of Tencent and NetEase tumbling in the stock market.

A statue from the 2014 war in Cherkasy: A Ukrainian soldier guards the White Tree of Gondor.
A statue from the 2014 war in Cherkasy: A Ukrainian soldier guards the White Tree of Gondor.

Original prediction: Our hearts go out to the victims of geopolitics. The Russian invasion of Ukraine has taken so many lives, and it has also scattered Ukraine’s rich game development community. Some are fighting. Some fled the country. Some relocated and now work remotely, sometimes without a reliable electrical grid.

Russia’s aggression has also inflicted wounds on its own game industry. Many game companies like Wargaming and My.Games have moved their developers out of the country. It’s fair to say that no one is investing in home-grown Russian game studios anymore. But the diaspora has provided much-needed talent for game companies with operations in other countries. Mytona moved its workforce out of Russia and has operations in places like Singapore and New Zealand.

In China, government restrictions have affected gaming. Popular gaming cafes had to shut down, and game studios had to shift to remote work. Many studios closed down altogether. Restrictions on launching new games kept a lot of foreign games out of the market. And curbs on game-playing for young gamers took a toll on demand. The result was weakness for one of gaming’s biggest markets. And leaders like Tencent and NetEase focused on expansion in the West.

Web3 game companies also saw a lot of regulations, some in reaction to scams. South Korean courts upheld laws prohibiting initial coin offerings. And censorship was alive and well in various jurisdictions in the world. Geopolitics will likely continue to stand in the way of a global game market.

6) AI will trigger big changes for games and game development

Letter grade: A

Analysis: This prediction was a no brainer as the effects of the generative AI revolution took hold during the past year and AI commanded center stage in discussions about the future of games. Startups like The Simulation by Fable pushed forward with games that use AI characters as the players. Ludo launched a suite of AI tools for generating assets and automating processes for game development. And Bitmagic unveiled AI tools for making user-generated content. And everyone else talked about AI’s effects — both good and bad — on the workforce of game developers.

The Simulation is a gonzo AI metaverse.
The Simulation is a gonzo AI metaverse.

We’re seeing a growing trend for AI characters as the main agents in games. Instead of playing as a character, humans will groom AI characters — like in Fable’s upcoming The Simulation — who will live in simulated game worlds and live their lives. In this came, humans are trainers, not players. Startups like Inworld AI plan to use the rapidly accelerating intelligence technology to make smarter non-player characters (NPCs) in games so that the engagement will seem so much more realistic. These games will draw us into the fantasy of gaming or give us compelling narratives that keep us involved.

On top of that, technologies like generative AI, AI art and AI chat will change game development. The technology may threaten a lot of jobs associated with grunt work — with impacts in areas as varied as programming, user acquisition and art. Many veterans won’t like the impact it will have on labor, but it’s hard to fight the wave if the technologies bring efficiencies that alleviate the high costs of game development. It may be better to think of new ways to work by taking advantage of the technology.

AI will help democratize game development, making it easier to do user-generated content. And it should make life easier for creators who make a living from celebrating game content. In fact, we may even see AI-based creators become celebrities in their own right. AI’s effects — like we’ve seen in many other industries — will likely be broad, deep and lasting. Don’t underestimate it.

7) Gaming for wellness will become a regular conversation

Letter grade: A

Analysis: I’ve noticed a shift in social media where people are more open about the state of their mental health, often asking for help and receiving kind words in return. Mental health startups like Tripp made good gains in the marketplace. Medicinal Media got its start as a publication highlighting the power of games for improving mental health. Mark Chandler’s TIGS returned as an in-person event. And we had a nice showing for a mental health roundtable at our GamesBeat Summit 2023 event in May, and the Entertainment Software Association CEO Stanley Pierre-Louis brought it up at a panel at our event as well. There’s no need for people to suffer in silence out of shame related to mental health. Or that’s what I hope will be the prevailing attitude for the future.

Mental health is an important issue in games.
Mental health is an important issue in games.

Original prediction: Before the pandemic, there were lots of memes around gaming addiction and violent games. The pandemic taught us that gaming brought us much-needed social and mental relief. Campaigns such as Play Apart Together helped raise awareness around gaming’s goodness.

The annual survey of the Entertainment Software Association found that many see mental health benefits from gaming. About 89% of people say that video games provide stress relief.

And 93% believe video games bring joy through play. Another 88% believe they build cognitive skills. Some 57% play to unwind, 46% play to escape, 44% play to use their brains, and so on.

Startups in gaming such as Tripp are dedicated to games that focus on meditation. Deepwell DTx is concentrating on games with therapeutic value. Nonprofits like Take This are dedicated to mental well being of game developers, helping them cope with stress and burnout. Streamers have raised the issue as they raise funds for organizations that can help. And conferences like TIGS and Games for Change helped normalize talking about mental health challenges in a public and humane way.

It’s a long overdue conversation in gaming, and there are lots of ways gaming can help.

8) Web3 gaming’s comeback chance will depend on a wave of high-quality games from legit game teams

Letter grade: B

Analysis: Web3 games made progress and they even raised billions of dollars more in a weak funding environment. I was a judge in the Gam3 blockchain gaming contest and noticed how much better the entries were from the 200-plus projects submitted. But we still saw fallout from the FTX scandal and the Binance regulatory action, and the mainstream players still sat on the sidelines. There are major projects that show the separation of the wheat from the chaff in blockchain games — Phantom Galaxies, Wildcard Alliance, Wreck League, and more come to mind — but we’ll have to wait for 2024 for more success.

Gods Unchained will adopt the 0x protocol to sell in-game items on the blockchain.
Gods Unchained

Web3 gaming has a poor reputation among gamers in the West, though it is more accepted in Asia. Many saw it as a bunch of scams, cash grabs, complicated technology, and poorly conceived business models. The believers see it as potentially disruptive, giving players ownership of their digital assets and ways to make money such as the resale of used games once offered.

Venture capitalists have poured tons of money into the space, with Web3 game investments account for half of all funding in the third quarter of 2022, according to Drake Star Partners. A lot of that money has gone to veteran game developers with triple-A ambitions, and their work hasn’t surfaced yet.

Chris Akhavan, chief business officer at Forte, believes Web3 gaming will make its comeback with a wave of high-quality games that will launch in the second half of 2023 and revive the overall space. These titles will come from legit game teams. I believe these teams will have their chance to prove themselves with gamers, especially in Asia, as nearly all South Korean gaming giants are investing heavily in the space, in addition to companies such as Animoca Brands and Square Enix.

There are also many strong and well financed startups in the space that have a lot of cash, like Sky Mavis, Sorare, Immutable, Horizon Blockchain Games, Mythical Games, Dapper Labs, Lucid Sight, Gala Games and Double Jump Tokyo. These companies haven’t shown all they can do with their resources yet.

While the crypto winter will clear away many of the weak companies and force consolidation, I think the survivors will show us the way.

9) Gaming will become more open

Letter grade: A

Analysis: Perhaps the biggest victory for openness in gaming was Epic Games’ victory in a jury trial over Google in its antitrust lawsuit this month. We won’t see the effects of this for some time as the case goes through appeals. But it could have an effect on regulators and lawmakers. Already, the European Digital Markets Act will take effect in 2024, requiring gatekeepers to enable alternative app stores on their platforms. Neal Stephenson’s own Lamina1 unveiled its plans for an open metaverse in partnership with Avalanche. The Open Metaverse Alliance for Web3 announced a plan to build metaverse standards with blockchain tech. And the Linux Foundation launched the Open Metaverse Foundation.

Epic takes a swing at Apple.
Epic takes a swing at Apple.

Original prediction: There are many forces at play that will make gaming more open. The web browser is poised for a comeback. Companies are working on ways to get around the restrictions of the app stores by turning to the open web. In the past, this meant bad graphics and limited interactivity. But new standards like glTF and proprietary technologies could enable speedier delivery.

The open web could be succeeded one day by the open metaverse. That won’t happen real soon, but enough people are talking about this that the conversation is top of mind at some of the biggest and most important companies in the industry.

Epic Games raised the issues of openness when it sued Apple and Google for antitrust violations. Without waiting for a final verdict in the appeals for that case in the U.S., the European Union and South Korea have forced changes that big companies like Apple and Google will have to comply with. One byproduct of the U.S. litigation and regulation in the EU is the right for developers to create their own third-party app stores.

Yet gatekeepers who create platforms still take a 30% cut of royalties. Matthew Ball, author of the bestselling book The Metaverse, has argued that this stands in the way of progress as it weakens the developers who are in the best position to push forward ideas like the metaverse. While the industry isn’t going to change overnight, the added awareness to the costs of closed platforms is a catalyst for change.

Epic isn’t fighting for this all by itself. The Open Metaverse Standards group has formed to push for better open standards, and USD is making progress as an interoperable 3D file format. Forte and Lamina1 have raised a lot of money and they believe that blockchain technology infrastructure can also improve the openness of sectors such as gaming, enabling players to finally own their stuff.

Overall, more business models and technologies — like Web3 or cloud gaming or subscriptions — will yield more choice for both developers and consumers.

Letter grade: A

Analysis: In October, Microsoft’s $68.7 billion acquisition of Activision Blizzard closed after 20 months of regulatory examination. By itself, that made the prediction correct. Q4 numbers aren’t out yet, but Drake Star Partners expected steady activity. Q3 saw $1 billion raised in 182 deals and a lot of M&A activity from Goldman Sachs, Take-Two, Behaviour Interactive, Capcom and Roblox. Tencent alone bought five companies during the quarter. Consolidation continued and you can bank on more.

Xbox is buying Activision Blizzard.
Xbox is buying Activision Blizzard.

Original prediction: Will the industry continue to consolidate? It’s a good bet that will happen, whether or not the $68.7 billion acquisition of Activision Blizzard by Microsoft closes. The Federal Trade Commission, focusing on the goal of openness and antitrust restraints, is suing to stop that deal.

But the economic slowdown will make life hard for a lot of startups and mid-size gaming publishers and developers. In that kind of economy, companies will combine to get bigger and rivals will counter the strategy with expansion plans of their own. Drake Star Partners reports that gaming deals on both the acquisition and startup investment front hit new heights in 2022, after record-breaking years in 2021 and 2020. So this isn’t a hard prediction to make that the trend will continue.

And as gaming continues to outperform other sectors, investor money will continue to move into the space. That will provide war chests for companies so that even the biggest companies in the industry will not be immune from acquisition pressures.

11) The realism and imagination of games will astound us

Letter grade: A

Analysis: This was an easy prediction to make as games have always made progress. Titles like Cyberpunk 2077: Phantom Liberty showed what games could look like — once you get the bugs out. And Alan Wake 2 did wonders on both fronts, with amazing shadows and lighting and crazy dream-like events like the concert of the Old Gods of Asgard. Atomontage closed the year with the release of its micro voxel tech for building out solid objects in game environments. It’s an easy bet to make this prediction every year.

Unreal Engine 5 can capture an open world.
Unreal Engine 5 can capture an open world.

Original prediction: This is perhaps the easiest prediction to make. Gaming has always made progress. But as Mike Abrash, CTO of Meta Reality Lab, has said, this isn’t a foregone conclusion. It depends on the brilliance and hard work of game developers making the best possible game they can.

With Moore’s Law slowing down and the need for sustainability, it isn’t a given that we’ll always have more computing power to make our games look better. But we haven’t taken full advantage of technology yet.

Game engines such as Unreal Engine 5.1 and Unity have been making steady progress, helping interactive entertainment catch up with the visual delights that we see in movies. Game teams haven’t been able to fully exploit these technologies yet, but they’re hard at work on amazing experiences.

And the demand is there because gamers are always seeking something that fulfills our imaginations, whether that comes in the form of better graphics or clever gameplay that we surprises and delights us.

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