largest gaming trade show

The world’s largest video game trade show, Gamescom, opens its doors on Tuesday in Germany, arriving at a challenging time for an industry grappling with layoffs and studio closures.

Organizers anticipate that the event, running until Sunday in the western city of Cologne, will attract over 300,000 attendees. Companies are generating excitement with upcoming major releases such as “Indiana Jones and the Great Circle” and “Call of Duty: Black Ops 6.”

The video game industry is projected to generate over $180 billion in revenue this year and attract more than 3.4 billion players, according to the Newzoo analyst firm. However, sales are still below the peaks experienced during the pandemic.

Explanation

While smaller studios face survival challenges, major publishers are implementing significant cost-cutting measures, leading to thousands of layoffs.

“I see studios that inspired me going out of business, and it terrifies me.” David Rabineau , French developer

Sharp Downturn

According to Game Industry Layoffs, a website that tracks industry layoffs, companies have laid off at least 11,000 workers so far this year, surpassing the total for all of 2023.

American company Bungie, known for “Halo” and “Destiny,” is the latest to announce significant layoffs, revealing last month that it would cut 220 positions—17 percent of its workforce. The game maker, acquired by Sony in 2022, cited an attempt to expand too rapidly and a “sharp downturn in the games industry” as reasons for the layoffs.

Rabineau, a frequent attendee of Gamescom, noted that publishers are reducing their budgets and becoming more selective . “They want to take less and less risk,” he observed.

Stephane Rappeneau, a professor of video game economics at the Sorbonne in Paris, explained that publishers are facing difficulties. During the pandemic boom, investment firms heavily invested in video games, but now they are shifting to  artificial intelligence.

Aging Consoles

Mat Piscatella, an analyst at US market research firm Circana, described the past year as “tumultuous.” He noted that the three major consoles—Nintendo’s Switch, PlayStation 5, and Xbox Series—are past their peak performance.

Piscatella also pointed out that older games such as “Fortnite,” “Minecraft,” and “League of Legends” continue to dominate player engagement and spending, overshadowing new releases.

Gamescom’s publicity has focused heavily on upcoming game announcements. However, according to Newzoo, games released before 2018 accounted for nearly 61 percent of total time. Spent playing on computers and consoles worldwide last year, excluding China and India.

“Breaking through with new video games has never been more difficult,” remarked Piscatella. Despite these challenges, he remains optimistic about the industry’s recovery. The anticipated release of “Grand Theft Auto VI” next year and the launch of a successor to Nintendo’s Switch are expected to provide a significant boost.