There are, littered throughout the history of video games, certain years of radical, fundamental change. We can look at the major crashes in the US games industry in 1977 and 1983, where bloated software libraries and hardware gluts destroyed confidence in the medium and cleared out dozens of companies. We can also look at the arrival of the Sony PlayStation and Sega Saturn in 1994, which made 32-bit processors and rendered 3D visuals the entire focus of the industry, expunging a generation of competing products, from the Philips CD-i to the Atari Jaguar. I think 2023 could be one of those years of radical change, not because of some major new technical landmark, but because the structure of the games industry is now dissolving and remaking itself.
First, we’re going to see a lot more consolidation this year, as major corporations bet on continued growth in the gaming sector. The big precursors were Microsoft’s 2021 purchase of Bethesda and Take-Two’s acquisition of Zynga last year, but that was just the beginning. Tech giants Amazon, Alphabet and Meta are circling the industry eyeing up legacy publishers such as Square Enix and Electronic Arts to get a foothold in the industry, and a neat leg up toward what they all think is the next big thing: the metaverse. But it’s Microsoft’s ongoing attempt to take over Activision, currently being investigated by competition regulators in the US, Europe and the UK, that will be a major focus during 2023.
Whatever way this plays out, there will be vast ramifications. Jon Shiring, co-founder of new studio Gravity Well, is an industry veteran who previously worked on Call of Duty at Infinity Ward and Apex Legends at Respawn Entertainment. He is sceptical about Microsoft’s chances. “Can you find any examples of a company successfully beating the FTC? I can’t … Plus, will Activision shareholders sit around for years waiting to find out?”
Call of Duty is set to play a vital role in Microsoft’s attempt to purchase Activision. Photograph: Activision Blizzard
But Shiring is also clear why the deal is vital to Xbox. “Microsoft wants to get Game Pass on other platforms,” he says – Game Pass being Xbox’s game subscription service, offering a library of titles for a monthly fee. “Making hardware sucks [as a business]: they just want to offer a subscription. Sony is absolutely terrified of allowing Game Pass on PlayStation – this has been going on for a while behind the scenes … If Microsoft can get a good chunk of gamers paying a monthly sub on their competitor’s boxes, they will have taken a page from the old MS playbook. Embrace and Extend is back. Let the other folks lose money on hardware, you take the profit every month.”
This is only part of a broader economic vibe shift set to hit the industry this year. “The global games market declined in 2022, so how it’s going to respond in 2023 is one of the key questions at the start of the year,” says Piers Harding-Rolls, research director at industry analysis firm, Ampere Games. “The market is less predictable than it has been for many years due to the difficult macroeconomic backdrop, the post-pandemic consumer cool-off, the Ukraine war, changes to mobile privacy, delays in game development, China market disruption, market and competition regulation, and less than optimum availability of console hardware.”
Harding-Rolls says he expects the console market to stabilise in 2023, but there are underlying issues caused in part by the Covid crisis, and things are going to be especially tough for new or small studios. “Finances in 2023 are bleak,” says Shiring. “Some publishing deals were signed with a fixed budget in 2021 or earlier, and 10% inflation has eaten a big hole in that money. Studios have to figure out how to do more with less.” He also says that many studios that acquired venture capital support in 2022, but not enough to actually ship a game, may find that their next investment rounds won’t raise as much as expected due to the shaky economy; so now they’re potentially over-valued and under-funded.
It’s not just an economic shift that developers are going to have to deal with. Cultural changes are happening fast, and audiences and game types once considered niche are likely to become much more important going forward. “In recent years, we’ve seen an increase in video game genres diversifying and appealing to completely new audiences,” says award-winning game developer Lucy Blundell. “Wholesome Games, for example, has tapped into a thirsty market for cosy games, so I believe we’ll start to see more of this in 2023, with specialised curation and streams coming from all corners of the industry. Like books and movies, video games now have something for everyone, and ‘Game of the Year’ lists will become much more tailored to the individual.”
Game developer Lucy Blundell sees cosy games as an increasingly important genre. Her next project Videoverse is an exploration of teen lives on old-school gaming networks. Photograph: Lucy Blundell
Blundell expects to see a new generation of player-creators using cheap development tools to make games that explore Gen Z hot topics such as gender, sexuality and mental health. And while autobiographical and issue-based games have been a feature of the indie sector for years, the sheer power and influence of this generation could have a much more profound effect from now on. Look at how Netflix, currently the major entertainment source for young adults, is now being seriously threatened by TikTok with its emphasis on user-generated, meme-based, hyper-aware content. Gen Z’s progressive voice, and its ability to rally support – and condemnation – for major brands is a very big deal. It will be interesting to see how Harry Potter tie-in Hogwarts Legacy fares this year, considering the backlash against JK Rowling’s gender critical stance from Harry Potter’s core millennial fanbase.
In a febrile atmosphere of economic uncertainty, generational change and platform diversity, the old certainties of game design are likely to collapse – including the whole concept of genre. “The notion of genre can be considered as a way of grouping works within a medium to market to people, so that they are buying things that are similar to something they already like,” says game designer and consultant Will Luton. “But as access to content is now so cheap and easy in music, movies, TV and games, the need for genres starts break down. This is exacerbated by influencers and algorithmic delivery that can more accurately uncover good content that you like.”
Titles such as Vampire Survivors represent the merging of genres into uncategorisable gaming forms
Luton thinks games are behind the curve when it comes to the era of genre entropy, but the success of difficult-to-categorise titles such as Fall Guys and Vampire Survivors hints that we’re catching up. “Musicians such as Lil Nas X, who combines rap, hip-hop, country and pop, or directors like Bong Joon-ho, who combines drama, comedy, horror, crime and sci-fi themes in his movies, are decidedly post-genre … This year and beyond we’re going to see less strict adherence to genre, as a new generation of designers who cut teeth across lots of platforms and game types, begin to get works to market.”
The concept of genre is dissolving, but so is the very divide between passive screen entertainment (movies, TV) and interactive media (video games). Look at how television is now exploring fresh forms of game-like content with the arrival of explorative new shows such as The Traitors, The Rehearsal and Kaleidoscope, which blur the boundaries between role-play, interactivity and narrative. Look at the success of Sam Barlow’s game Immortality, a modern reinterpretation of the interactive movie concept.
The forces at work in 2023 are affecting every facet of the video games industry, from production to funding to player culture. It’s the sort of perfect storm that has led to seismic change in the past. And 2023 may just be the maelstrom from which the modern video game industry truly emerges.