[Software] New hardware, more layoffs, AI in game dev: Analyst predictions for 2024

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Every year, we turn to a panel of trusted analysts to ask them what they see coming down the road, and ask them to assess their predictions from the previous year. This year we've got all of last year's participants returning: Niko Partners' Lisa Cosmas Hanson, Midia Research's Karol Severin (offering the firm's take alongside Perry Gresham), Kantan Games' Dr. Serkan Toto, and Ampere Analysis' Piers Harding-Rolls. We've also got one newcomer in Newzoo's lead analyst for games Tom Wijman, who will be assessing 2023 predictions made a year ago in a three-part series on the company's blog. As always, thanks to all our panelists for taking part in our New Year's tradition. Lisa Cosmas Hanson and her team at Niko Partners Lisa Cosmas Hanson Last Year's Predictions Mobile, PC and console games will embrace hybrid monetization – Generally true although advertising has yet to emerge on console. Game related M&A deal value will dip significantly in 2023 – True: There was a sharp decline in deal value. We anticipate imported game titles in Mainland China to receive ISBN licenses in 2023 for the first time since June of 2021 – True: This happened early in the year. Blizzard will re-enter China after it ends its partnership with NetEase in January – False: Although we originally didn't expect the games to re-launch until 2024, so this is now our prediction for this year. VTuber industry to become more intertwined with Japan's games industry - True: Hololive even created a game brand. Korean game rating agency will likely restructure following the scandal of 2022 – True. (Editor's note: The heads of the Game Rating and Administration Committee's management planning, game content management, and self-regulatory support departments resigned after an audit discovered an embezzlement scheme where the organization's funds were diverted to mine Bitcoin.) Blockchain games to decline in Southeast Asia – True. More than ten international game companies will open offices in MENA – False . Esports tournaments will be held in a hybrid online/offline manner – True. Mobile shooters will drive esports growth in 2023 – Half true: Although PUBG Mobile remains king and Valorant Mobile is not a factor yet. 2024 Predictions Asia and MENA to account for over 60% of global PC and mobile games revenue Niko Partners' ongoing market coverage includes Mainland China, East Asia, Southeast Asia, South Asia and MENA, which accounted for over half of total global spending on video games. When isolating PC and mobile games, these markets have traditionally accounted for just shy of 60% of global player spending. We believe that growth from all markets, but especially India, Indonesia and Egypt, will push these markets over 60% of worldwide totals in 2024, per Niko's estimates for worldwide as well as our specific market coverage. Out of App Monetization will account for 25% of mobile games spending in Southeast Asia "As pressure continues to build, we expect Apple and Google to make further concessions this year, leading to an increase in revenue generated from... alternate payment channels" Lisa Cosmas Hanson As legislation continues to favor the opening up of walled gardens for mobile platform holders, we see an opportunity for mobile game publishers to generate higher revenues from alternative monetization strategies including out-of-app monetization. As pressure continues to build, we expect Apple and Google to make further concessions this year, leading to an increase in revenue generated from alternative app stores, out-of-app monetization, and other alternate payment channels. A video game acquisition with a value of over $2.5 billion will be announced (a Top Ten deal) There was a sharp decline in the total number and value of video game related mergers and acquisitions in 2023 as macroeconomic headwinds, strategy shifts, and weaker performance in new technology sectors impacted deal-making. Niko Partners expects to see a recovery for video game related M&A in 2024, with at least one deal with a value of over $2.5 billion. This would qualify it as one of the top ten largest video game related M&A deals of all time. We expect the buyer or target company to be based in Asia and MENA. The ratio of female gamers in India and MENA will surpass 40% Niko research shows, when excluding mainland China, 46% of gamers in Asia and MENA are female. However, this drops to 34% when we isolate India, Saudi Arabia, Egypt and the United Arab Emirates. With increased initiatives for women gamers in these markets, more inclusive games, and a 2x faster growth rate for female gamers compared to male, we project that female gamers will account for a larger share of the gaming po[CENSORED]tion over the next three years. Instant games will reach over one billion MAUs in Asia and MENA Super apps such as TikTok, Facebook and WeChat are placing a larger emphasis on instant gaming through mini games and cloud games. While games on these platforms have traditionally been in the hypercasual genre, we are starting to see players embrace hybrid-casual titles through instant gaming platforms, which monetize through both ads and IAPs. We believe these games will be accessed by over a billion users over the next three years and encourage the conversion of non-paying users to payers. 2024 will be a year of new console hardware announcements 2023 was a strong year for console gaming as hardware supply returned to normal and multiple high quality AAA titles launched following prior delays. Niko Partners expects 2024 to be hardware oriented with a next generation console announced by Nintendo. We also expect mid-generation consoles from PlayStation, as well as a new entrant in the dedicated PC gaming handheld segment. Generative AI will be implemented into games for players Generative AI became the hottest topic of 2023 and many game companies are already utilizing the technology to support professional game development. However, its utilization across this aspect requires a rethink of game design principles, user acceptance, and poses legal concerns. Instead, we believe games in 2024 will primarily use generative AI to enhance user interaction and experience by including new ways to interact with gameplay systems, NPCs and UGC.

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