Logging Out: Gaming Revenue Is Dropping After Pandemic Highs

Logging Out: Gaming Revenue Is Dropping After Pandemic Highs

While gaming was in boom times during the early days of the pandemic, numbers for the industry have started to come back to earth.

While gaming was in boom times during the early days of the pandemic, numbers for the industry have started to come back to Earth. Earlier this month, NPD Group reported that domestic spending on video gaming in the United States came in at $12.35 billion in the second quarter of this year, a 13 percent decline from the same time in 2021.

“Higher prices in everyday spending categories such as food and gas, the return of experiential spending such as travel and attending live events, a lighter release slate of new games, and continued new generation console hardware supply constraints were all likely contributors to the decline seen in the second quarter,” Mat Piscatella, games industry analyst at The NPD Group, said in the release in early August.

“After a period of sustained growth, consumer spending continues to trend above pre-pandemic levels. However, unpredictable and quickly changing conditions may continue to impact the market in unexpected ways in the coming quarters.”

Another report this week, from Parks Associates, showed that despite that decline, gaming, especially in its cloud-based variety, remains hugely popular.

As of last year, per the report from Parks, “75% of heads of US broadband households report playing video games for at least one hour per week and 30% of US broadband households reported subscribing to or trialing at least one free or paid gaming service.”

Parks went on to describe cloud gaming as “an interesting market to watch going forward.” The firm predicted that the cloud gaming space is likely to have few new entrants, and also that demand is likely to rise for “an Aggregated Entertainment Experience.”

“There are numerous opportunities expected to be explored across the gaming, connectivity, and consumer electronics device ecosystem. LG’s announcement in early 2021 of the availability of Stadia and GeForce Now on new TVs is unlikely to be the only instance of device bundling and co-promotion,” Parks said.

“Along with smart TVs, tablets, smartphones, PCs, and streaming media players are qualified targets. Additionally, service providers, networking equipment manufacturers, game publishers, and other parties are also likely to collaborate, partner and/or co-promote in some way. The more that cloud gaming services mature in performance and proposition, the greater the likelihood that companies in markets adjacent to gaming will see added-value potential in a cloud gaming tie-up in some form.”

Parks also stated that technical issues with cloud gaming are likely to “dissipate” over time.

“Many of cloud gaming’s issues revolve around performance and over time, service speed and responsiveness will improve. Additionally, there will be a natural evolution in the average levels of network bandwidth and latency in consumers’ home networks and in their broadband connections. As technical issues become less of a concern, services’ subscriber acquisition and retention will gravitate back towards the typical dynamics of pricing, content package, and perceived value,” the firm said.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.