Berliner Tageblatt - Video game bosses gather at 'darkest hour' for industry

But no amount of glitz and glamour can put a sheen on what has been one of the worst years in the industry's history, marked by waves of layoffs and studio closures.

"Game industry continues to be just incredibly bleak behind the scenes," Mike Bithell, who heads a small British studio, posted on the Bluesky social network this month.

"Ecosystem is in free fall. Doubt there'll be an easy solution, or a quick one. This darkest hour has dragged out to a darkest couple of years."

At least 14,500 people in the sector were laid off worldwide in 2024, up from 10,500 in 2023, according to the Game Industry Layoffs website.

Many studios have also closed their doors.

In recent months, French giant Ubisoft announced it would close its branches in San Francisco and Osaka.

Sony-owned US studio Firewalk -- behind this year's spectacular flop "Concord" -- met a similar fate in October.

Yet the market is still growing and generated $188 billion in revenue in 2024, according to Newzoo analyst firm.

The problem is further up the chain.

Studios and publishers are struggling to raise funds as investors flock to sectors they view as more profitable like artificial intelligence.

As a result, the big fish in the sector are looking to diversify.

Nintendo has had success in cinemas with "Super Mario Bros. the Movie", which was the second biggest box office hit of 2023.

Others are pushing for a small screen audience with series such as "Fallout" or "Secret Level".

- Big turkeys, breakout hits -

The industry still has its share of surefire winners -- the latest "Call of Duty" was hailed as the best in the franchise so far by its publisher Activision Blizzard.

Older titles like "Fortnite", "Minecraft" and "Grand Theft Auto" are still big winners for their publishers.

"It's difficult for new games to break into what is a very established marketplace," said Daniel Ahmad, an analyst at Niko Partners.

But strong name recognition does not always guarantee success.

Hotly anticipated games like the second part of the remake of "Final Fantasy VII" and "Star Wars Outlaws" suffered disappointing sales this year.

And there are still occasional indie hits.

"Palworld", nicknamed "Pokemon with guns", did stellar business.

"Helldivers 2", an intergalactic war game paying homage to the film "Starship Troopers", also broke through.

The biggest sensation came from China with the runaway success of the action game "Black Myth: Wukong".

Ahmad said the game had sold some 25 million copies worldwide, though 70 percent of its business was in China.

Even so, "Black Myth", an adaptation of the classic 16th-century Chinese novel "Journey to the West", is well positioned to be the biggest selling game of the year.

- China takes lead -

Ahmad said the breakout game marked "a great moment" for China's industry.

The country benefits from lower development costs than in the United States or Europe, and is home to industry giants such as Tencent and NetEase.

More than 700 million Chinese play games, nearly a quarter of the world market.

And they are more accustomed to mobile games and free-to-play titles -- games with no upfront costs that feature optional in-game purchases.

"We're still in the very early stages of this big push from Chinese game companies to release AAA games," said Ahmad, using an industry term for games with the biggest budgets.

He said he expected more attempts at blockbusters from Chinese firms in the coming years.

And after a bruising 2024, some analysts see a global recovery on the horizon.

"Next year should see the sector rebound," said Charles-Louis Planade, an analyst at Midcap Partners.

The spectacular number of studios crashing in the past two years came after an unprecedented boom in the sector during the pandemic, when millions were ordered to stay in their homes to stop the spread of infection.

Planade said he expected "the end of the haemorrhage" of studios next year.

"Those who survive will benefit from a much more favourable competitive environment," he added.

Next year is also expected to see some major product launches.

Nintendo is expected to unveil the successor to its all-conquering Switch console.

And "Grand Theft Auto VI" will hit the shelves in the autumn.

Gamers will have waited more than a decade for the latest edition in the franchise, and its release is likely to give the entire industry a shot in the arm.

R.Adler--BTB