For gamers and those following the video game industry, 2023 is shaping up to be a significant year, one that could change the shape of the industry as a whole.
After a pandemic era boom in game sales, revenue growth dipped in 2022––$184.4 billion, down from $192.7 billion in 2021––even as player numbers increased to 3.2 billion, according to a report from Newzoo. Newzoo predicts the industry will return to the regular growth it’s seen over the last decade. But Celia Pearce, a professor of game design at Northeastern University, says there are several industry-shaking trends––a growing labor movement, corporate consolidation and calls to reform toxic workplace culture––that will define games in 2023.
Pearce hesitates to predict 2023 will herald a tidal wave of change for the industry but emphasizes the waves felt this year are the result of ripples that started, or grew, in 2022.
In terms of the games themselves, the blockbuster model of big budget, graphically intense, 40+ hour experiences will continue to dominate video games in 2023––but Pearce questions if it’s sustainable. The smaller, cheaper and faster computer chips get, the more expensive, labor-intensive and time-consuming game development gets. At a certain point, it comes down to basic economics.
“What’s been trending in the last two decades on the console and PC side is the computers are getting better, faster and have more graphics, and what that means is that you have to have more and more people working on [games] and they’re more expensive,” Pearce says. “But guess what? The cost of games hasn’t gone up in 20 years.”
Last fall, for the first time in decades, AAA developers started charging a bit more for their games, increasing the price of select titles from the industry standard $60 to $70. But if developers want to continue making games like “God of War Ragnarok,” especially as unions start to have a say in pay and work hours, those prices will have to shift industry-wide in 2023.
“I don’t see how they’re going to be able to spend more and more money while still charging the same amount for the games,” Pearce says. “This is part of why indie games have become a viable economic tier because they’re shorter and cheaper.”
Last year, Pearce says, the industry was defined by three major trends that will continue to impact the industry in 2023: unionization, mergers and the ongoing saga of California regulators’ gender-based harassment lawsuit against industry giant Activision Blizzard.
Game industry workers have been trying to unionize for decades in an attempt to improve labor conditions in an industry defined by low pay, crunch culture and harassment at every level. In that sense, 2022 was a milestone. In May 2022, quality assurance workers at Activision Blizzard-owned Raven Studios voted to form the industry’s first major union. And they weren’t alone; workers at studios big and small made moves to unionize. The year ended with testers at Microsoft’s ZeniMax Studios, which is responsible for major franchises like “The Elder Scrolls,” “Doom” and “Fallout,” becoming the first union at Microsoft, which announced it would remain neutral in union decisions.
“It’s so ridiculous to say that 2022 is an important union year, but in our backwards, [messed] up industry, it is shockingly groundbreaking that there’s a union,” Pearce says.
“I think [unionization] is going to become a trend,” she adds. “And I think the other thing that’s going to happen is it’s going to become a competitive edge for companies that have better working conditions. Unions will become something that actually attracts employees.”
The consolidation of the video game industry, which Pearce doesn’t see slowing down any time soon, could also play an unexpected role in the labor movement. The Swedish Embracer Group and Chinese Tencent have quietly acquired game studios, but Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard got the most attention last year. That includes the attention of the Federal Trade Commission, which is attempting to block the acquisition, and the European Union, which is investigating Microsoft’s deal.
“It’s going to continue to both happen and be controversial,” Pearce says of these kinds of mergers and acquisitions. But she notes that Microsoft’s acquisition of Activision Blizzard could be a boon for the labor movement, given the former’s neutrality agreement and the latter’s refusal to acknowledge unions.
“If Microsoft ends up having the first labor union and then it buys five other companies, then all those companies are also going to have a labor union,” Pearce says. “Those things are not unrelated.”
Activision Blizzard is also at the center of an ongoing gender-based harassment lawsuit that Pearce predicts will make bigger waves in 2023. The state of California filed a lawsuit against the “Call of Duty” and “World of Warcraft” publisher in 2021, citing a “pervasive frat boy workplace culture,” “sexist culture” and the company’s failure to take action when employees lodge complaints. The story continued in 2022, as Activision Blizzard counter-sued the state and more sexual harassment lawsuits were filed against the company.
Pearce anticipates other states will likely follow the example set by California.
“The game industry has gotten away with the most egregious and illegal discrimination for decades without any kind of intervention or supervision,” Pearce says. “It’s not insignificant that California is the state that did this. It is by far the biggest state for the game industry in the U.S., so that in and of itself is significant.”
But Pearce predicts in 2023, the biggest change in the video game industry won’t come from the U.S.
“If I could say one thing about 2023, it’s going to be China, China, China,” she says.
While most people know names like Microsoft, Sony and Nintendo, Tencent, a Chinese multinational company, has, behind the scenes, become the biggest player in the industry.
“What everyone should be really worrying about––and I have been saying this for years––is Tencent,” Pearce says. “Most people don’t even know what Tencent is, and Tencent is the biggest game company on the entire planet.”
The company behind Chinese social media app WeChat now owns 20 studios, including “League of Legends” developer Riot Games, and has minority stakes in even more, like Remedy, Epic Games and Activision Blizzard. The company announced plans to step up its investment in international investments and outright acquisition.
More than just Tencent, China’s renewed involvement in the industry, after the country relaxed restrictions on new development and importation of games, could mean massive growth for the industry in 2023.
“Once a game gets in China, it’s going to have multiple exponential increases in sales,” Pearce says. “That’s where the future of the game industry is: It’s games from China and games to China.”
Cody Mello-Klein is a Northeastern Global News reporter. Email him at email@example.com. Follow him on Twitter @Proelectioneer.