The pandemic bubble did not burst This week in business

Last year, we wrote in this space about the uncomfortable reality of how much the gaming industry has benefited from the pandemic, noting that the industry has turned to COVID-19 with seven consecutive months of declining annual NPD Group users in the United States. costs.

The pandemic was then declared in March 2020, and the Games marked (during this column) 13 consecutive months of double-digit growth on an annual basis.

This series was discontinued the following month as those comparisons for the year became much stricter after being made against the pandemic months of the previous year, but the industry continued to do quite well in the autumn, mixing several months in single digits. with some bigger profits in October, when sales increased by 16% on an annual basis thanks to a large number of new editions.

This seems to have marked a turning point, as November was down and the industry has not risen again since.

STATISTICS | 7 – The number of consecutive months of NPD Group’s annual declines in US consumer spending on games has fallen by 19% year-on-year since this week’s May sales report.

This is not particularly surprising, as many publishers have told investors to expect a delay once the pandemic restrictions are eased and people begin to return to habits and hobbies they could not pursue during the blockade.

Even then, they were optimistic that the industry would be stronger than before the pandemic, with companies such as Take-Two predicting that they would retain much of the increased pandemic involvement.

This is true so far for some companies – EA reported a record commitment to Apex Legends and growth in active player accounts last month – but not all.

STATISTICS | 100 million – monthly active users of Activision for the first quarter of 2022, the lowest number since the launch of the free game of Call of Duty Mobile in 2019.

You can blame some of that on the disappointing Call of Duty Vanguard, but Blizzard’s commitment also fell, by 19% year-on-year to 22 million, its lowest number since the company began reporting engagement in 2016. Even the commitment of King was down 3% year on year.

Activision Blizzard is also not the only company to see these trends.

QUOTE | “When the world began to return to a new normal state, there was a moderation of trends that benefited our industry during the pandemic. – Take-Two explained its lower net provisions to investors last month.

And while the pandemic was not blamed in either case, Embracer’s negative organic growth for the year and declining Devolver sales expectations make it clear enough that we no longer see a growing viral surge lifting all ships.

The escalation of the pandemic is fading, but I suspect that there is still a short way to go before we achieve something that is close to normal again. On the one hand, there is not much in the way of reinforcements coming.

QUOTE | “We took a look at what happened to Cyberpunk 2077 and thought, ‘Yes, we’re postponing [our game]. ‘ … We knew our game wasn’t in the best shape, maybe we could fix it with an update from day one … but we saw Cyberpunk and decided it wasn’t worth the risk. I suspect it was a wake-up call for the whole industry. “

An incredible series of demonstration events this month also did not provide much optimism for the rest of 2022, although it is worth noting that Nintendo and Sony did not show exactly everything up their sleeves.

And then there is the embarrassing fact that the pandemic is not really over, and this has consequences not only for customer habits, but also for the supply chain. Xbox CFO Tim Stewart told investors this week that the latest blockades in China make the company expect supply chain problems at least until next year.

In addition, the United States seems to be heading for a recession, and as we all had to learn after 2008, the games are not resistant to recession.

QUOTE | “The entertainment industry is not countercyclical, despite what people are saying. After the financial crisis of 2008, our competitors have suffered, our numbers have suffered and we do not wish it on anyone.” – Strauss Zelnik of Take-Two, looking back on the 2011 crisis.

So the games are a little messed up. Console and computer space is short of obvious needle-moving devices in the coming months, and mobile devices are also shrinking – NPD Sensor Tower’s mobile partner said US consumer spending on Google Play fell 23% year-on-year in May. and macroeconomic conditions do not appear to be very favorable in the short and medium term.

The cost of games is still well above pre-pandemic levels Matt Piscatela of the NPD Group said on Twitter, but it is clear that the industry is returning some of the initial impetus to the pandemic. It is less clear how much more it needs to fall and how much of this boost it can hold in the long run.

The rest of the week in review

STATISTICS | 17 – The number of demonstrations, live broadcasts and broadcasts summarized in our collection of all announcements of major not-quite-E3 events this month.

QUOTE | “Free games like these are likely to be crucial to Xbox’s goal of expanding its PC Games Pass audience beyond its core territories. In particular, games like League of Legends are the right products for a company to sign in order to enter lucrative Asian markets. ” Xbox-Bethesda.

QUOTE | “What we have realized over the last few months is that there are many truths about our company – individual and collective, experienced and data-based – and sometimes they can be difficult to reconcile. – The directors of Activision Blizzard, just before releasing the findings of their investigation on themselves, which found that management has done nothing wrong and the value of last year’s shocking revelations are just useless media criticism and a government agency, strangely pursuing a company of unknown reasons.

STATISTICS | 2018 – The moment Activision Blizzard begins to engage with the California Department of Fair Employment and Housing to investigate fair pay in the company, according to the findings of the investigation.

QUOTE | “Hasty” – How Activision Blizzard described the DFEH complaint when it was filed more than two and a half years later in July 2021.

QUOTE | “At Ubisoft, we believe that women’s rights are human rights, trans rights are human rights, and equal rights for all are essential to creating a world where everyone can be their own self and thrive. – Ubisoft CEO Anika Grant and Vice President for Diversity and Inclusion Raashi Sika tell US-based company employees that Ubisoft is reviewing the company’s US benefits packages “to ensure you and your family have access to the quality health care you need, ”even when Republican politicians are pushing for a ban on abortion and gender-based health care.

QUOTE | “Without intervention, both companies are likely to maintain and even strengthen their control over the sector, further restricting competition and limiting incentives for innovators.” – The Competition and Markets Authority of the United Kingdom said it would investigate Apple’s and Google’s control over the mobile market, especially their 97% share of the mobile web browsing market.

STATISTICS | 40% – The number of Switch Joy-Con controllers suffering from controller deviation problems, according to a study by YouGov conducted by the British consumer monitoring organization Who?

QUOTE | “On behalf of the 343, I apologize for turning a celebration into a hurtful moment.” was released live under the name of a species of monkey. Separately, Community Manager 343 said that the name Bonobo refers to an internal set of tools that the studio uses, which is an explanation I could accept after accidentally having “Microsoft Word” or “Google Docs” accidentally shown. in titles.

QUOTE | “Embracer is built on the principles of freedom, inclusion, humanity and openness. The deal with SGG will not change that in any way.” – Lars Wingefors from Embracer Group assures concerned people that an investment by the Saudi government will not change the principles of a company that held an AMA session on the bulletin board, which helped us introduce GamerGate, QAnon and a set of mass shootings.

QUOTE | “This is the genius part of the launch of this computer: Sony makes everyone guess. For gamers who want to play Sony games first on startup, waiting for the supposed PC version is not a viable option in the current circumstances. Without a recurring up-to-date list of PlayStation first games to be released on PC, it’s much better to just buy a PS5 and stop worrying. “- Industry consultant Sam Naji says the scattered approach to Sony’s computer ports on exclusive PlayStation titles allow the company to have its own cake and eat it too.

QUOTE | “Interactive entertainment is consumed at different levels [than linear media like TV and movies], about 45 hours a month and in different ways. These are maybe two, three or four properties in one month. Certainly not more than 100 properties. So it’s not clear if your wide audience wants access to many hundreds of games a month and is willing to pay for them. A small part of the audience may want this, but I don’t think it’s a broad base because it’s not the way people tend to consume interactive entertainment. “- Strauss Zelnik explains why he is skeptical of subscription services like Game Pass will evolve in gaming the way Netflix and the like have changed TV and movie habits.

QUOTE | “So far, no service is really appealing to the entire public, which means you still have to play for who will be the market leader in this increasingly important sector.” – With the release of Sony’s updated PS Plus Editor Rob Fahey assesses the state of the industry’s subscription services in his regular Friday column.

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