As an executive-level recruiter working across the video game industry, I have had the privilege of meeting influential leaders across the market who are eager to share their thoughts (and concerns) on the current climate and leadership-level hiring plans, as well as the industry’s present state and challenges.
Let’s not sugar coat it, this past year has been marked by significant events that have affected the industry, such as the ongoing war in Ukraine, a global cost-of-living crisis, massive layoffs in tech and video games, recruitment freezes, the rise and plateau of Web 3.0 agendas in some areas, crypto winters, and challenges in competitive gaming (esports) to attract or retain sponsorship partners and secure investment. The topics of user acquisition and retention in mobile games are constant, along with market saturation. Game developers are compelled to scale up quickly due to technological advancements and changes in revenue models. As the game industry adjusts to these pressures and undergoes a period of transformation, consolidation has become a key buzzword.
What’s happening in the industry?
According to recent research by Enders Analysis, game makers need to have a broad library of titles for subscription services and the ability to deliver products across all platforms. Franchises are expanding beyond games to TV and film, with successful adaptations such as HBO’s The Last of Us. Sony currently leads the field with dedicated studios capable of producing high-quality games and bringing together production teams from games and TV studios. Microsoft’s pending acquisition of Activision Blizzard will give them a mobile games division that’s up there with Apple and Google, as well as boosting its subscription offerings with big hitter franchises like Call of Duty. In response, Sony’s PlayStation may need to acquire a significant developer to remain in the race.
Electronic Arts and Take-Two are attractive acquisition targets due to their leadership and diverse portfolios, while Ubisoft has been facing a crisis where it needed to address its long-term relationship and equity position with Ubisoft CEO, Yves Guillemot, who reportedly told staff the onus is on them to reverse the company’s fortunes after it provided a dire financial update back in January and shelved various titles.
PC gaming is becoming a crucial platform for subscription services, with Amazon, Microsoft, and Sony competing for market share. Apple is struggling to attract major developers by not implementing an easier development pipeline. Epic Games is transforming Fortnite into a mass-market entertainment medium, which will have significant implications for how media and entertainment owners engage and distribute content on the platform. UK TV broadcasters should collaborate with UK game makers to create excellent TV shows instead of hastily creating poor games based on TV IP for licensing income.
Subscription services such as Apple Arcade and Netflix Games are transforming the mobile game industry by providing access to high-quality games without the relentless monetisation found in free-to-play games. However, major game developers are hesitant to include their premium titles in these services. With Microsoft’s purchase of Activision, there is potential for the company to bring its Game Pass subscription to mobile devices, creating a platform-agnostic subscription service available across all devices.
While mobile game revenue growth is predicted to remain stagnant in 2023 due to the impact of the COVID-19 pandemic and a mature market, by 2025, global sales of mobile games are expected to surpass $115 billion, which is almost double the combined sales of the global music and box office industries. The free-to-play model remains dominant, with revenue generated from non-subscription in-app payments. Regulators in the UK and Europe are slowly moving towards limited regulatory controls on loot boxes, and the US administration has successfully targeted individual companies, such as with the recent settlement with Epic Games.
What does this mean for talent?
So, where does all of this leave us for talent in the coming year?
This year will undoubtedly continue to see a lot more change and consolidation, but the games industry is resilient and agile. It has the potential to become the world’s largest media and entertainment sector by revenue. It is undergoing transformation at every level, with talent at the heart of everything driving and supporting this change.
After a much slower than anticipated start to the year in VC & PE activity in the sector, we’ll hopefully see more investors backing the market later in the year, recognising the potential in games, as well as exciting new technologies that support or surround the sector. Experienced leadership and talent are always required to aid this growth and development, and this will undoubtedly generate new positions at the C-Suite and board levels, with a need for more Non-Executive Director (NED) or Board Advisory roles to help guide and drive those businesses through growth or choppy waters.
We’ll also see more requirements in strategy and corporate development to set and maintain a robust structure, direction, and look at the opportunity for M&A. Transformation and consulting/advisory skills are also key in a market like this to drive the projects or implement new structures and push technological advancements.
Finally, those who have the experience and passion to set and drive new people, culture, and diversity agendas will be front and center, as some of the larger businesses look to right some of the previous wrongs from a cultural perspective.
While recent times have not been all sunshine and rainbows, there are many reasons for talent in the games industry at all levels to feel optimistic about the future. Exciting opportunities for growth are on the horizon, but it’s important to recognise that this will require consolidation, transformation, and over and above all, great people in the driving seat.
