Video game predictions for 2024
New interactive experiences emerge as game makers push beyond play
The SuperJoost Playlist is a weekly take on gaming, tech, and entertainment by business professor and author, Joost van Dreunen.
The annual ritual of guessing what the new year will bring is an odd practice.
If nothing else, the pandemic should have removed all doubt about our ability to accurately predict what’s next. Perhaps because of it, there are now also more people covering interactive entertainment. That has resulted in a bunch of cluttered opining. Continued consolidation? When is that ever not the case? More layoffs? You don’t say.
Fortunately for us, there is a new toy that can help filter the deluge of opinions and prognostications. Enter AI.
What follows is a summarized account of several dozen articles from analysts, games journalists, and industry observers that offered a forward look at gaming in 2024. Using ChatGPT and Claude.ai, I’ve compiled the most notable insights and observations related to the most relevant companies in the industry with minor edits to keep things readable. Naturally, I’ve added my own comments and predictions.
Let’s get to it.
TL;DR
Microsoft will push into mobile in 2024, offering a discounted version of Game Pass on app stores in pursuit of its lofty goal of reaching 100 million monthly actives for its subscription service.
Sony is in transition and adapting to a new market environment. It’s initiated a wide range of projects across entertainment categories beyond just gaming and has an enviable library of intellectual property.
Nintendo is in the hot seat to announce a ‘Switch 2’ at an anticipated price of $400, but it’s unlikely that the Japanese juggernaut will care to hurry.
Epic Games’ recent collaboration with LEGO suggests it will successfully maintain momentum (and income!) as it continues to compete on four fronts simultaneously.
Tencent’s domestic struggles will further galvanize its efforts to expand internationally. Because of its size ($34B annually), what happens to Tencent domestically may depress expectations globally.
Demand for Apple smartphones has stalled and in key markets, the firm is experiencing massive declines. It puts pressure on the first batch of Vision Pro devices which will sell 350,000 units in its first year.
As Embracer’s struggles continue, Asmodee, the board game maker that it acquired for $3 billion, will find a new owner in 2024 at a 30-40% discount.
In 2024, we’ll witness the release of a highly-anticipated title that achieves over $1 billion in revenue but is nonetheless broadly regarded as a financial failure.
Rather than serving as an equalizer, generative AI will further bifurcate the games industry’s supply side.
As the games industry transitions to the next console cycle, we’ll see the emergence of a ‘luxury’ class audience.
In 2024, the first billion-dollar franchise will spring from user-generated content as it becomes a dominant revenue model for large-scale social games
I find it generally more useful to call out specific firms and their plans. Industry trends aren’t climatological phenomena; often, drivers of change are directly related to the corporate needs of the most powerful firms. Here are the largest ones today.
Microsoft
“…will leverage its Xbox ecosystem and Game Pass subscription service as primary catalysts for growth in 2024. With the Activision Blizzard deal closed, expectations are high for Microsoft to anchor Game Pass' value via exclusive content drops while pioneering game streaming and business model innovation. Analysts predicts Game Pass will stand apart as the only subscription able to offer streamed next-gen releases on day one. This early-access streaming capability seen as a key advantage over rival services. On the mobile front, multiple experts forecast Microsoft attempting expansion via a dedicated Xbox gaming store on Android first, then potentially iOS. With its gaming industry influence enlarged, Microsoft appears positioned to disrupt across segments in 2024 - from living room consoles to cloud infrastructure to mobile devices and beyond.”
My take: Confusion around how team Xbox plans to deploy its first-party titles and Game Pass service across different devices and platforms will need to be cleared up. Xbox’s track record with intellectual property hasn’t been quite as stellar as that of its competitors Sony and Nintendo. What I see emerge is a strategy centered on making a broad range of content available using different pricing models to the largest possible audience. That’s very different from an aggressive, console-focused strategy reliant on exclusives. I predict that Microsoft will push into mobile in 2024, offering a discounted version of Game Pass on app stores in pursuit of its lofty goal of reaching 100 million monthly actives for its subscription service.
Sony
"…enters 2024 facing formidable gaming industry headwinds across multiple fronts – from questions plaguing its software output and live service capabilities to struggling adoption curves in virtual reality and looming platform competition, analysts paint an unsettled picture for the PlayStation brand. Experts predict organizational chaos inside Sony’s studios leading to likely game delays or cancellations. On the hardware side, while a beefed-up PS5 “Pro” iteration is expected as soon as this year, analysts see PlayStation losing ground - forecasting Xbox to surpass Sony in player numbers following Microsoft’s Activision Blizzard deal. With Sony perceived to be reacting to industry shifts rather than leading them in areas like mobile and subscription services, 2024 could be defined by the company battling to protect its market position rather than innovating to expand it. Yet brand loyalty and the possibility of re-aligned creative teams finding their footing could still produce PlayStation surprises before 2025’s likely next-gen console shakeup."
My take: That all seems a bit dramatic. Sony is in transition and adapting to a new market environment. It’s initiated a wide range of projects across entertainment categories beyond just gaming and has an enviable library of intellectual property. Its PlayStation still outsells the Xbox Series X|S on a (higher than) one-to-two ratio. The Bungie layoffs didn’t go over well. Making cuts in the community management team weakens the firm’s connection with its fanbase, which is an important reason why a title like Baldur’s Gate III was so successful.
Nintendo
"…enters 2024 on the brink of major change, as analysts widely expect the iconic gaming company will unveil its next console generation dubbed "Switch 2" this year. Multiple experts predict a mid-2024 announcement of the successor system followed by a holiday season release date. Expectations are the new Nintendo console will retain Switch's successful hybrid portable/docked play while featuring upgraded internals. One analyst anticipates a $400 price point and only iterative enhancements over the base Switch. First glimpse may come via a flagship 3D Mario title anchoring the Switch 2's launch. Until then, Switch software lineup looks murky; experts anticipate Nintendo holding major IP reveals for the next console. So 2024 could mean a sendoff for Nintendo's best-selling console as anticipation builds for evolved hybrid play that propels the storied Nintendo brand into its next era."
My take: Nintendo is clearly in the hot seat but I doubt it’ll care to hurry. Anticipated to cost $400, the new console comes at an odd moment as the Japanese game maker just released the sequel to its popular Zelda franchise. It seems ill-advised to not have both a new Mario and a Zelda title available for the Switch 2’s alleged release. A similar tactic contributed to the poor launch of the Wii U. It provides credence to the suggestion that Nintendo will release a ‘Switch Mini’ instead. Maybe. Given that Nintendo relies for almost half of its total units shipped on 1st party content, it makes little sense to release brand-new hardware without the necessary titles.
Epic Games
“After navigating industry turbulence in 2023, Epic Games enters 2024 with its bedrock Fortnite franchise at a transitional moment – while some analysts foresee Epic struggling to sustainably grow Fortnite’s core multiplayer modes in a maturing games-as-a-service market plagued by oversaturation, others see glimmers of a vibrant gaming metaverse primed to blossom as Epic expands the Fortnite universe into a hybrid world blending player-driven experiences with developer-crafted narratives and gameplay. Analysts point to possible cracks emerging across live service titles next year, suggesting 2024 brings further monetization and engagement headaches for Fortnite as it contends with upstart virtual worlds. Yet with ventures like Lego and Rocket League partnerships manifesting new virtual spaces bridging pop culture with gaming self-expression, multiple experts predict tailwinds for metaverse gaming marketplaces like the one Epic is steadily constructing inside Fortnite as it charts a groundbreaking course into gaming’s uncanny valley.”
My take: Despite recent victories, Epic Games remained involved in a four-front war. It is taking on Roblox, Google/Apple, Valve, and Unity at once. That puts a lot of pressure on Fortnite on which it relies to fund its efforts. The recent collaboration with LEGO was hugely successful, fortunately, but let’s see if Team Sweeney can maintain the momentum.
Tencent
“Facing an increasingly restrictive regulatory environment in China hampering growth in the world's largest gaming market, analysts predict Tencent will aim to aggressively expand its gaming business reach and monetization capabilities internationally across 2024 as a counterbalance. One analyst states that "leaders like Tencent...have focused on expansion in the West" amidst tougher domestic policies and limitations put in place by the Chinese government - spanning content approvals to maximum play time for youth to in-game monetization practices. Yet success is hardly guaranteed despite Tencent's scale, as factors like restricted access to China's highly lucrative player base could offset or undermine its global gaming ambitions over the long term. With storm clouds still hovering over the gaming future in its home territory, Tencent appears tactical rather than transformative - working to mitigate lost opportunities in China through a more aggressive worldwide footprint across game publishing, partnerships, and investments throughout 2024.”
My take: The largest game company in the world with $34 billion in revenue gets painfully little airtime. That’s a shame. The Chinese market has slowed considerably since regulators have cracked down by restricting playtime for young people, which, considering its size, is likely to impact global revenue numbers in the year ahead. For example, the worldwide mobile games market was down -2 percent in 2023. Despite the US, Europe, and Latin America all experiencing sustained increases in consumer spending on mobile games during the second half of 2023, Asia’s decline (-12 percent in December) dragged global numbers for the year. What happens to Tencent domestically may depress expectations globally.
Apple
“The overarching theme shaping Apple’s 2024 gaming outlook is impatience – after years of anticipation, analysts finally expect the technology giant will unveil its initial foray into virtual and augmented reality hardware + software this year via the launch of its high-end Apple Vision Pro headset. One analyst predicts an early 2024 debut focused squarely at enterprise use cases rather than consumers, complete with a lofty $3,500 price tag that puts the headset out of mainstream reach by design in these early stages. Expectations are that Apple will take a signature gradual approach of testing the budding VR/AR market initially before lowering price barriers over time to increase accessibility as it builds out its gaming ambitions on the software side. So 2024 marks a major milestone for Apple getting skin-in-the-game on immersive new computing frontiers, but the company’s gaming intentions likely won’t fully materialize until the Vision Pro's successors arrive farther down the road.”
My take: Apple is in a tough spot. Demand for its smartphones has stalled and in key markets, the firm is experiencing massive declines. In the first week of 2024, sales in China dropped 30 percent w/w as competitors started to gain market share. And discounting its smartphones has not revitalized Apple’s momentum. What the firm needs is a new product category where it can lead that is sufficiently expensive so other consumer electronics firms cannot follow (e.g., spatial computing). But the first batch of Vision Pro devices is, of course, a pilot. I expect the Vision Pro will sell around 350,000 units in its first year, purchased largely by affluent Apple die-hards and creatives. Casual consumers beware. Historically, the first iteration of any Apple device tends to be replaced and quickly upgraded. It’s generally better to buy the second or third generation of any of their new hardware. Battery life is a common salient and a serious roadblock for consumer electronics meant to be used extensively. Based on those initial sales, Apple will decide exactly how fast it will move. Not sooner.
Bonus section
Having read everything and spoken to everyone, I naturally wanted to share a few predictions all my own.
Prediction 1: Asmodee, the board game maker that Embracer acquired for $3 billion, will find a new owner in 2024 at a 30-40% discount.
The influx of capital inflated the momentum for incoherent organizations like Embracer who now have to decide what components to sell to improve margins. Rivals will gladly buy its assets for pennies on the dollar. I’d venture to claim there are existing offers starting with a ‘1’ while Embracer would likely prefer to accept anything starting with a ‘2’.
Like we’ve seen Netflix do over the past few years, we can expect intellectual property owners to set up their own internal gaming divisions to oversee the development and deployment of their franchises as part of a broader gaming strategy. Different from pure-play game makers, these IP holders tend to operate within a strict financial discipline, which will have a clear impact on their creative vision. That doesn’t mean it can’t be successful; it just means a different design opportunity.
Prediction 2: In 2024, we’ll witness the release of a highly-anticipated title that achieves over $1 billion in revenue but is nonetheless broadly regarded as a financial failure.
I should qualify: not because the game itself underperforms, like Cyberpunk 2077 or Anthem did, but because the cost of marketing, distribution, and live-ops are so out of hand that it never reaches financial sustainability.
In 2024, the industry structure will continue to shift in favor of platform holders. What will characterize the coming year is how game makers plan to deal with their dominance. These platform companies function similarly to landlords: they seek to extract the maximum amount of rent from the different tenants that inhabit their ecosystem. Subsequently, third-party content creators can expect to pay more for the privilege of access, either directly or indirectly through spending on search marketing, which will make the economics unsustainable.
Prediction 3: Rather than serving as an equalizer, generative AI will further bifurcate the games industry’s supply side.
Call it an onslaught of mediocrity. At first, small and medium-sized game makers will feel emboldened by the extra horsepower to write great in-game dialogue and clever marketing copy. But soon that will become a commodity.
The first examples of this trend have presented themselves with the New York Times suing Open AI over copyright infringement in the wake of Axel Springer’s deal with the firm. Publishers that own valuable intellectual property will try to keep it away from content-hungry large language models or be paid for it. Similar to the early days of Search, once the initial deals are signed, everyone else will be getting less.
Prediction 4: As the industry transitions to the next console cycle, we’ll see the emergence of a ‘luxury’ class audience.
The average selling price for a premium release has normalized around $70. Despite the initial clamor, video game execs say they’re not seeing any “pushback.” Fair enough. But while that may make sense for high-end blockbusters, a slew of mediocre titles charges the same without delivering something of equal value.
Gaming, in general, tends to be rather price-inelastic and has historically proven itself to be recession-resistant. Where other industries declined as part of a broader economic malaise, interactive entertainment managed to thrive during those moments. Combined with the fact that especially younger consumers are less likely to own a home and have access to significantly more disposable income, their spending habits tend to focus on experiential entertainment.
Two recent pricing innovations come to mind. The first was Apple’s announcement of the iPhone 15, complete with a remake of Capcom’s Resident Evil 4. The full game will set you back $59.99 (until January 17th the base game is half off at $29.99). The release is a clear indication that Apple is putting its new A17 Pro chip to work and entering the premium games market. Its ritualized marketing events also increasingly feature video game luminaries like Hideo Kojima. With its install base saturated, Apple is looking to increase its revenue per user.
Second, the recent release of EA Sports FC 24 made no qualms about its vision for the future. The base game is priced at $69.99 and the Ultimate Edition will cost you a cool $100. Once consumers seemingly had accepted the $70 price tag, publishers figured why not raise the price an extra 40 percent?
Building on this logic, interactive entertainment, especially the kind that centers on social interaction and online play, will formulate a kind of exclusive jet-setting class. Like business air travel and stadium skyboxes, in 2024 I expect the emergence of an upperclass in gaming.
Prediction 5: In 2024, the first billion-dollar franchise will spring from user-generated content as it becomes a dominant revenue model for large-scale social games
In the context of online multiplayer games, each player contributes value by at least being available as teammates or opponents to other players. That engagement is increasing organically as a subset of players becomes more deeply involved. Developing in-game assets and experiences for other players, and being able to financially benefit from it, will become a distinguishing practice for the most successful online titles.
After a breakout year in game releases, 2024’s release slate isn’t quite as exciting. Marketing costs are high, demand is uncertain. Better for publishers to outsource innovation and content creation to the millions of avid fans who live in their online worlds. A year from now I expect 2024 to be noted as the year in which the video games industry transitioned from interactive entertainment to a broader array of activities. To mitigate the increasing costs of operating within existing platform ecosystems game makers have started to formulate strategies around interactive experiences that extend beyond play.
Comments and questions, as always, are welcome.
Brilliant read - great job discussing each key player/company seperately, felt like I learned so much having it presented in that way. Thank you!