Home > Latest News > Gaming Industry In Turmoil, Will Xbox Part Company With Activision?

Gaming Industry In Turmoil, Will Xbox Part Company With Activision?

The gaming industry got a massive kick along during the early days of COVID, now questions are being raised about 2021/2022 with some big brands facing delays while one of the biggest players in the industry, Activision Blizzard is facing a possible ban by Microsoft’s Xbox boss.

Demand for games has started to fall while brands such as Activision are in turmoil as staff walk out due to actions of management.

Microsoft head of Xbox Phil Spencer said he is “evaluating all aspects of our relationship with Activision Blizzard and making ongoing proactive adjustments,” in light of the recent revelations at the video game publisher.

In an email to staff seen by Bloomberg News, Phil Spencer said he and the gaming leadership team are “disturbed and deeply troubled by the horrific events and actions” at Activision Blizzard Inc. He referred to the Wall Street Journal story earlier this week that said Chief Executive Officer Bobby Kotick knew of sexual harassment at the company for years and that he mistreated women.

The problem at Activision comes as retailers such as JB Hi Fi and EB Games face a slowdown in demand according to Global Sales Data, the agency that monitors digital and physical game sales across nearly 50 countries around the world.

One area of concern for bricks and mortar retailers is a move to online sales and subscription selling with JB Hi Fi seen as a potential winner due to their large online presence and their pedigree selling gaming and music content.

The company’s senior games analyst and Australia/New Zealand territory manager Aidan Sakiris and video games consultant Sam Naji offered attendees to a conference in London this week a deeper look into the effect COVID-19 has had on full-game sales since 2019, charting the many spikes around lockdowns and hit new releases, as well as offering insight into how well games are performing in 2021.

GSD reported a major increase on spending in online stores, driven largely by older and back catalogue titles — especially when heavy online promotions were run during lockdowns.

As a result, Sakiris declared 2020 as being “one of the strongest performing years we’ve seen in video games.” But for all the uplift seen in the sales data, he believes the effects of the pandemic are being more keenly felt in 2021.

The presentation was based on full-game boxed sales from twenty-three countries and full-game download sales from 49 countries, encompassing PlayStation Store, Xbox Store, Nintendo Switch eShop and Steam.

Sales data was largely taken from the January to August periods, in order to offer a like-for-like comparison between 2019, 2020 and 2021.

Participating publishers include Sony, Microsoft, Ubisoft, Take-Two, Activision Blizzard, EA, Capcom, Bandai Namco, Warner Bros, Sega, Milestone, Square Enix, Koch Media, Konami, Nacon, Paradox Interactive, Reply Forge, Codemasters, Dontnod Entertainment, Focus Home Interactive (now Focus Entertainment), Quantic Dream, Microids, UsTwo Games, Strelka Games, and Tiny Bull Studios.

The introduction of stay-at-home orders, lockdowns and other measures that restricted travel led to significant increases in spend across the whole video games, and this was boosted by key releases in the first half of the year. Doom Eternal, Final Fantasy 7 Remake, The Last of Us Part II and Animal Crossing: New Horizons were cited as particularly big hits.

“COVID-19’s largest impact on video games so far is on new software releases,” he explains. “What we saw last year was strict stay-at-home orders but also a range of new software releases coming from key and major franchises. This year, consumers have become more accustomed to stay-at-home orders, but we’ve also seen a lack of new releases in the market due to COVID-19. We’ve seen a number of major titles being pushed out of 2021 into late 2021 or into 2022 and beyond.”

31 million boxed games were sold during this period in 2019, which rose 6% to 33 million in 2020, due to the launch of major titles such as Animal Crossing and The Last of Us.

Online sales grew by 70% year-on-year from 27 million units to 45 million units, driven largely by back catalogue titles.

During January to August 2021, boxed game sales dropped by 15% to 28 million, while downloads dropped 24% to 33 million.

The retail decline is attributed in part to software delays and the lack of new releases, while the digital drop is due to less promotional activity compared to 2020.

Games delayed out of 2020 into 2021 would have been delivering sales throughout the first half of this year, with GSD pointing to Halo Infinite, Deathloop, Kena Bridge of Spirits, Outriders, The Medium, and Tales of Arise as key examples. Halo’s absence was particularly felt because it’s “a special title for the Xbox brand and one of those games that really drives sales for the Xbox ecosystem,” according to Sakiris.

Due to COVID and lockdowns around the world numerous games have been delayed.

This year and into 2022 a lot of games under development are stalled and have not been released they include Horizon Forbidden West, Gotham Knights, Hogwarts Legacy, God of War: Ragnarok, Ghostwire Tokyo, Far Cry 6, Gran Turismo 7, Rainbow Six Extraction, Battlefield 2042, Dying Light 2, Back 4 Blook, Sifu, Riders Republic, The Lord of the Rings: Gollum, Vampire: The Masquerade – Bloodlines 2, Stray, The King of Fighters 15, New World, Lego Star Wars: The Skywalker Saga, and DLC for Cyberpunk 2077.

Sakiris put particularly emphasis on the delay of Far Cry 6, originally due in February 2021 but not arriving until October.

This is a franchise that performs well in the first half of the year and GSD expected it to drive growth in H1 2021.

Following the launch in November 2020, of PlayStation 5 the industry saw 1.9 million boxed games sold across January to August 2021, compared to 0.4 million Xbox Series X|S games.

While the new generation launches “have provided overall growth to the industry,” Sakiris says Sony and Xbox consoles — both current gen and previous — have been impacted by the lack of third-party releases in 2021.

The best performing platform in 2021 was the Nintendo Switch.

Between January to August, 13.5 million boxed games were sold — that’s actually 6% up on the 12.8 million sold during the same period in 2020.

This was described as particularly impressive given the “exceptional growth” Switch saw in 2020 in the wake of Animal Crossing, plus the ongoing strong sales of back catalogue titles such as Zelda: Breath of the Wild and Mario Kart 8 Deluxe.

By comparison, PS4 sales declined 37% from 14.9 million in the first eight months of 2020 to 9.3 million in 2021. Xbox One also declined 46% from 3.2 million to 1.7 million, with PC dropping 52% from 1.8 million to 0.9 million.

Out of the top ten best-selling retail games of 2021 five of the top six are Nintendo titles.

68% of the total units sold across the Top 10 were sold on Nintendo Switch.

Super Mario 3D World sits comfortably at No.1 and is the only Top 10 title to release in 2021. (Unsurprisingly, FIFA at No.2 breaks up the streak of Nintendo games because EA’s sports series historically performs well across Europe)

GSD predicts the strong 2022 line-up of new games should reverse this trend back in retail’s favour, especially as consumers start going to high streets again and continue their preference for physical discs.

You may also like
PC Support Coming To PlayStation VR2
Nintendo Tipped To Release Two New Mario Games
Nintendo’s Wii U & 3DS Online Services Shut Down
New PS5 System Update Rolling Out
Nintendo Takes Legal Action Over Dodgy Game Play On Windows & Android Devices