Game Over? Inflation Has Hurt Video Game Demand
By: SoFi General · January 12, 2023 · Reading Time: 3 minutes
Thumbing Through Data
Inflation is an all-consuming beast. As costs for food, housing, and transportation rise, there’s less money left over for fun – which, for around two-thirds of Americans, includes video games.
As discretionary spending has dipped, gaming in particular has felt the squeeze. App analytics company Data.ai says mobile game spending fell 5% across the globe. But it’s not just mobile games. According to Ampere Analytics, global sales of games and services – including console and PC games – were on pace to slip 1.2% year-over-year in 2022 as of July.
Mobile gaming’s contraction is particularly notable given how much the industry has invested in app-based video games over the past few years.
Pricing Pressure, Plus…
Rising prices have certainly played a role in mobile gaming’s struggles, but they don’t tell the whole story.
In 2020, both Microsoft (MSFT) and Sony (SONY) released next gen gaming consoles, increasing competition among gamers who might otherwise be playing on mobile apps. Gaming in general then took a hit in 2021, which intensified last year as COVID-19 restrictions eased and in-person activity increased.
It also seems people are spending less time gaming when they are on their phone or tablet. Data.ai’s research shows non-gaming apps performed better by comparison last year, such as TikTok, dating apps, and streaming platforms. The number of non-gaming app downloads grew 13% year-over-year in 2022.
The Push for Privacy
Many industry observers are anticipating more challenges for the gaming industry — especially app makers. That’s because Apple’s (AAPL) new privacy rules, established in 2021, make it harder to promote new apps to users based on their past preferences. Between inflation and privacy rules, Data.ai predicts the total amount spent within apps on games will fall another 3% in 2023.
Following Apple’s push for privacy, Google-parent Alphabet (GOOGL) is taking similar steps. When these go into effect, limiting tracking on Android apps, mobile gaming will face a new hurdle. At the very least, optometrists may cheer as gamers cut down their screen time – for one reason or another.
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