The holidays won’t save the game industry’s terrible year

The holidays won’t save the game industry’s terrible year

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Wednesday, Nov. 9, 2022

The holidays won’t save the game industry from its terrible year

Video game sales around the world have slumped in 2022, and experts predict that even the holiday shopping season won’t rescue the industry from its terrible year.

The pandemic lockdowns powered growth in video games last year and in 2020, as couch-bound gamers searched for a distraction from COVID-19. From 2019 to 2021, the global video game content and services market grew 26{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, jumping from $151 billion to $191 billion, according to Ampere Analysis.

That growth cooled in 2022, as the pandemic eased and the economy faltered. Microsoft (MSFT), Sony (SONY), EA (EA), and Take-Two (TTWO) each saw year-over-year sales declines. Nintendo (NTDOY) says it expects to sell 2 million fewer Switch consoles this year due to continued chip shortages, though it raised its sales forecast thanks to the weaker Japanese yen. Even mobile gaming sales are declining, with NPD Group predicting a 9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} drop in the third quarter of 2023 from the same time a year earlier.

While the holiday season traditionally brings huge game sales, experts predict a muted fourth quarter thanks to a lack of new, exciting content. We’d usually see hot titles for the holidays, but pandemic-related delays have pushed many games into 2023. Yes, the pandemic has eased enough to get people off of their couches — but it’s still throwing snags in the supply chain. Those disruptions could strike a blow to an industry that’s already suffering from year-over-year comparisons to its pandemic-driven highs in 2021.

“This holiday season is set up to be a natural let-down just from a quantity perspective,” Jefferies analyst Andrew Uerkwitz told Yahoo Finance. “If you look at the number of games last year to this year, it’s actually down. There’s been over 100 games delayed over the last 24 months. And that’s publicly announced delays.”

Few games, but plenty of eager gamers

Game companies traditionally release their biggest titles in the lead-up to the holidays to get their hits out during the busiest shopping season of the year.

A man walks an advertisement of Nintendo Switch at an electronics retail chain store in Tokyo on Oct. 13, 2021. Japanese video game maker Nintendo recorded a 34{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} surge in fiscal first half profits Tuesday, Nov. 8, 2022, as products for its Switch console like

A man walks an advertisement of Nintendo Switch at an electronics retail chain store in Tokyo on Oct. 13, 2021. Japanese video game maker Nintendo recorded a 34{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} surge in fiscal first half profits Tuesday, Nov. 8, 2022, as products for its Switch console like “Splatoon 3,” a paint-shooting game, sold well. (AP Photo/Koji Sasahara)

Last year, the gaming giants fired off a host of big-name titles including “Halo Infinite,” “Battlefield 2042,” “Metroid Dread,” and “Call of Duty Vanguard” to name a few. While “Battlefield” and “Call of Duty” underperformed expectations, the titles were still among the best performing of the year in terms of U.S. sales. This year will be different.

“As it happens, this holiday season we don’t have a very big release schedule,” Wedbush analyst Michael Pachter told Yahoo Finance. “There is no ‘Cyberpunk.’ There is no ‘Battlefield.’ We have the games that come out every year, which are ‘FIFA’ and ‘Call of Duty.’ ”

“God of War Ragnarok” and “The Callisto Protocol,” two highly anticipated games that launch Wednesday and in December, respectively, could help improve sales, but there’s no guarantee that they’ll lift the entire industry.

To be sure, people are still looking for games to play. Activision Blizzard’s “Call of Duty Modern Warfare II,” which came out in October, sold $1 billion worth of copies in its first 10 days on the market. Over at EA, some 10.3 million players jumped onto “FIFA 23” in the game’s first week of availability in September.

Even so, EA cut its full-year net bookings forecast on the strong U.S. dollar, which is hurting overseas sales, from between $7.89 billion and $8.1 billion to between $7.65 billion and $7.85 billion.

FILE - The Activision Blizzard Booth is shown on June 13, 2013 the during the Electronic Entertainment Expo in Los Angeles. Microsoft is buying Activision Blizzard, Tuesday, Jan. 18, 2022,  for $68.7 billion to gain access to blockbuster games including Call of Duty and Candy Crush. The all-cash deal will let Microsoft accelerate mobile gaming and provide it building blocks for the metaverse, or a virtual environment.  (AP Photo/Jae C. Hong, File)

Activision Blizzard sold $1 billion worth of copies of ‘Call of Duty’ in 10 days this year. (AP Photo/Jae C. Hong, File)

Gamers will have to wait until next year to get their hands on new titles. According to Uerkwitz, more than 100 games that were initially scheduled to be released in time for the holiday season are delayed until sometime in 2023 either due to quality checks or because of COVID-related slowdowns.

“And that’s publicly announced delays,” Uerkwitz explained. “That’s not games that quietly got delayed internally or whatnot. And so just a lack of quantity of high-profile AAA games I think has been a large part of the year-over-year decline in PC and console.”

Then there’s the drop in mobile games sales. According to SensorTower, mobile game spending dropped 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year to $21.1 billion in Q1 2022 and 6.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year in Q2 to $20.1 billion.

“The reason that 2022 will be down overall, isn’t necessarily that consoles and PCs have had a rough year, although they had, it’s because mobile gaming appears to be on track to drop 6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} or 8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996},” Lewis Ward, IDC research director of gaming, eSports and VR/AR, told Yahoo Finance. “If that happens, even if consoles and PCs had a great year, we could probably still be down year over year.”

PS5 by PlayStation is displayed in a GameStop in Manhattan, New York, U.S., December 7, 2021. REUTERS/Andrew Kelly

PS5 by PlayStation is displayed in a GameStop in Manhattan, New York, U.S., December 7, 2021. REUTERS/Andrew Kelly

That doesn’t mean that the holiday season will be a complete bust. According to Pachter, if there is a year-over-year decline in sales, it will likely be somewhere in the 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} range. That said, even a small decline means that the overall downward sales trend for the year won’t change.

A brighter 2023

While the holiday season could be a let-down for the gaming industry, the year ahead should offer some relief despite high inflation and foreign exchange headwinds. That’s because a large number of big-name games are expected to hit the market in 2023.

“Assuming recessionary concerns dissipate, and inflation gets back under a reasonable level of control or back to a baseline norm of low single digits in 2023, the baseline that the gaming industry was on before COVID will probably reassert itself,” Ward explained.

High-profile games set to launch in 2023 include Nintendo’s “Legend of Zelda: Tears of the Kingdom,” Ubisoft’s “Skull and Bones,” Activision Blizzard’s “Diablo 4,” Bethesda’s “Starfield,” and a slew of others.

Those titles alone will likely sell millions of units. Toss in annual releases like “Madden” and gamers dropping their cash on online games like “Call of Duty: Warzone 2.0,” and 2023 will look far better than gaming’s terrible 2022.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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Omicron Unravels Travel Industry’s Plans for a Comeback | Business News

By DAVID KOENIG and YURI KAGEYAMA, Associated Press

Tourism businesses that were just finding their footing after nearly two years of devastation wrought by the COVID-19 pandemic are being rattled again as countries throw up new barriers to travel in an effort to contain the omicron variant.

From shopping districts in Japan and tour guides in the Holy Land to ski resorts in the Alps and airlines the world over, a familiar dread is rising about the renewed restrictions.

Meanwhile, travelers eager to get out there have been thrown back into the old routine of reading up on new requirements and postponing trips.

Abby Moore, a librarian and associate professor at the University of North Carolina, Charlotte, was scheduled to leave for Prague on Wednesday. But the day before her flight, she started having doubts when she saw that Prague had closed its Christmas markets and imposed a city-wide curfew.

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“I wasn’t really concerned about my trip until the Czech Republic started what looked like a mini-lockdown process,” said Moore, who decided to reschedule her travel to March.

Less than a month after significantly easing restrictions for inbound international travel, the U.S. government has banned most foreign nationals who have recently been in any of eight southern African countries. A similar boomerang was seen in Japan and Israel, both of which tightened restrictions shortly after relaxing them.

While it is not clear where the variant emerged, South African scientists identified it last week, and many places have restricted travel from the wider region, including the European Union and Canada.

For all the alarm, little is known about omicron, including whether it is more contagious, causes more serious illness or can evade vaccines.

Still, governments that were slow to react to the first wave of COVID-19 are eager to avoid past mistakes. The World Health Organization says, however, that travel bans are of limited value and will “place a heavy burden on lives and livelihoods.” Other experts say travel restrictions won’t keep variants out but might give countries more time to get people vaccinated.

London-based airline easyJet said Tuesday that renewed travel restrictions already appear to be hurting winter bookings, although CEO Johan Lundgren said the damage is not yet as severe as during previous waves. The CEO of SAS Scandinavian Airlines said winter demand was looking up, but now we “need to figure out what the new variants may mean.”

“In the past year, each new variant has brought a decline in bookings, but then an increase once the surge dissipates,” said Helane Becker, an analyst with financial services firm Cowen. “We expect the same pattern” this time.

Israel’s decision to close the country to foreign visitors is hitting the nation’s tourism industry as it geared up for the Hanukkah and Christmas holidays. The country only opened to tourists in November, after barring most foreign visitors since early last year.

Just over 30,000 tourists entered Israel in the first half of November, compared to 421,000 in November 2019, according to government figures.

Joel Haber, a Jerusalem-based guide, said during a typical Hanukkah holiday his calendar would be chock full of food tours through Jerusalem’s colorful Mahane Yehuda market. Instead, he has just one tour a day.

“Tour operators like me are the first to get hit and the last to emerge and are directly prevented from working by a government decision,” Haber said.

In the West Bank city of Bethlehem, revered by Christians as Jesus’ birthplace, local businesses expected a boost from Christmas tourism. The Bethlehem Hotel, one of the largest in the city, has operated at a fraction of capacity for the past 18 months.

“Everyone who had bookings over the next two weeks has canceled, while others are waiting to see what happens next,” said the hotel’s manager, Michael Mufdi. “I don’t know how much longer we can last, but we are doing our best.”

The pandemic already caused foreign tourism in Japan to shrink from 32 million visitors in 2019 to 4 million last year, a trend that has continued through this year.

As worries surfaced about omicron, Japan on Wednesday tightened its ban on foreign travelers, asking airlines to stop taking new reservations for all flights arriving in the country until the end of December. Prime Minister Fumio Kishida has pushed for avoiding “the worst-case scenario” and reversed a relaxation of travel restrictions that had been in effect just three weeks.

The crowds of Chinese shoppers who used to arrive in Tokyo’s glitzy Ginza district in a stream of buses to snap up luxury items have long disappeared. Restaurants and bars have been forced to restrict hours.

In Asakusa, a quaint part of town filled with souvenir shops, rickshaw drivers, and stalls selling traditional sweets, news of the omicron variant made little difference this week. Vendors say there hasn’t been any business for months except for a few local customers.

Boat charter operator Tokyo Water Taxi started on the city’s waterfront in 2015, when hopes were high for cashing in on the booming tourism trade. With the variant pushing the return of foreign visitors far into the future, the company is trying to look on the bright side.

“It’s growing popular with Tokyo residents, who have lost other ways to entertain themselves,” said company spokeswoman Yuha Inoue.

In Europe, Alpine ski resorts worry about how to keep up with requirements such as ensuring all skiers are vaccinated or recovered from infection and have tested negative for the virus.

Matthias Stauch, head of the German ski lift operators association VDS, said many are small family businesses that lack the staff to perform such checks. Meanwhile, the association is warning about “massive” economic damage to the tourism sector if there is another lockdown.

Travel executives argue that government decisions about restrictions should wait until more is known about omicron, but they admit it’s a difficult call.

“If you wait, by the time you have all the data it’s probably too late to stop community spread because (the virus) is already here,” said Robert Jordan, the incoming CEO at Southwest Airlines. “If you jump ahead, you run the risk of the measures being more impactful than the actual cases.”

About a month ago, Javier Barragan and his husband booked a visit to Paris for later this month. When news of omicron hit, they were concerned but decided to go ahead with the trip.

“The way that it was in the news, there’s a sense of ‘Oh, is this worse? Is this different?’” said Barragan, who lives in New York. France’s health protocols — the couple will have to submit vaccine cards to enter the country — made them feel more comfortable. Also, both got booster shots.

They did, however, buy travel insurance that will cover cancellation for most any reason.

Koenig reported from Dallas and Kageyama from Tokyo. Associated Press writers Mae Anderson and Tali Arbel in New York; Dee-Ann Durbin in Detroit; Tia Goldenberg in Tel Aviv, Israel; Jack Jeffery in Bethlehem, West Bank; Frank Jordans in Berlin; Pan Pylas in London; and Mogomotsi Magome in Johannesburg contributed.

Follow AP’s coverage of the coronavirus pandemic at https://apnews.com/hub/coronavirus-pandemic

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