The world’s largest video game trade show, Gamescom, opens its doors on Tuesday in Germany at a sensitive moment for an industry battered by layoffs and studio closures.
Organisers expect the event, which runs until Sunday in the western city of Cologne, to welcome more than 300,000 people as firms hype forthcoming big releases like “Indiana Jones and the Great Circle” and “Call of Duty: Black Ops 6”.
The industry is expected to generate more than $180 billion in revenue this year and attract more than 3.4 billion players, according to the Newzoo analyst firm.
But sales are far from the peaks reached in the pandemic.
While smaller studios are struggling to survive, big publishers are imposing dramatic cost-cutting exercises and thousands of workers are being laid off.
“I see studios that inspired me going out of business and it terrifies me,” David Rabineau, a French developer who heads independent studio Homo Ludens, told AFP.
At least 11,000 workers have been given their marching orders already this year, more than for the whole of 2023, according to Game Industry Layoffs, a website that tracks the numbers.
American firm Bungie, creator of “Halo” and “Destiny”, is the latest to announce layoffs, saying last month it would cut 220 positions — 17 percent of its workforce.
The game maker, bought by Sony in 2022, said it had tried to expand too quickly and pointed to “a sharp downturn in the games industry” more widely.
Rabineau, a regular at Gamescom, said publishers were lowering their budgets and being more selective over the games they would take on.
“They want to take less and less risk,” he said.
Stephane Rappeneau, professor of video game economics at the Sorbonne in Paris, said publishers were struggling with a drop-off in funding.
Investment firms had poured money into video games during the pandemic boom, but they were now turning to sectors like artificial intelligence.
“Publishers are passing on these financing difficulties to the studios,” said Rappeneau.
Mat Piscatella, an analyst at US market research firm Circana, said it had been a “tumultuous year”.
He pointed out that the three major consoles — Nintendo’s Switch, PlayStation 5 and Xbox Series — were past their peaks.
He also highlighted that older games like “Fortnite”, “Minecraft” and “League of Legends” continued to capture players’ time and money, to the detriment of new releases.
The publicity for Gamescom has leaned heavily on the promise of new games being announced.
But according to Newzoo, games released before 2018 accounted for nearly 61 percent of the total time spent playing on computers and consoles last year worldwide, excluding China and India.
“Breaking through for new video games has never been more difficult,” said Piscatella.
But despite all the difficulties, he said he hoped the industry had weathered the storm.
The long-awaited release next year of “Grand Theft Auto VI” as well as Nintendo unveiling its Switch successor should give the industry a boost, he said.