Two years without growth is not very good.
The gaming industry has a difficult year ahead: market growth is expected to be minimal compared to 2023, but there is hope that the situation will improve in 2025. In an interview with Polygon, the head of Microsoft's gaming division, Phil Spencer, outlined his vision of the industry's problems.
“Astronomical money” is spent on the development of large games: now a game could well cost $300 million. This creates a bunch of problems that are not so easy to untangle. Previously, planning game budgets was easy: you estimate the number of copies you want to sell, estimate the profit and price, and based on this you can calculate the budget. Now everything is more complicated: there are a lot of platforms with different conditions, subscription services and discounts have appeared already at release, and games are created by very large teams. Game budgets are such that publishers are trying to take less risks. Just to recoup costs, you may need to sell several million copies, which is a big number.
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The desire to reduce risks means that developers will experiment less, and this is not very good for the development of the industry. The console market has not grown over the past year, all market participants are fighting for the same players, and not for new audiences. Growing budgets are dangerous for exclusives , sold on fewer platforms: they have a particularly difficult time recouping development costs. At the same time, exclusives must earn money not only for themselves, but also to co-finance the production of consoles. The release of Microsoft games on the PlayStation is a consequence of the company’s desire to increase sales of old games and at the same time prevent the stagnation of the console market.
It is assumed that the Xbox Series consoles are selling much worse than the PlayStation 5. Spencer did not specify whether Microsoft plans to actively release its games on competitors' devices in order to compensate for the decline in console sales.
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