Next-Gen

3 ways Covid-19 will shape the next generation of video games

Stay-at-home orders have sparked a surge in gaming, but what are the longer-term effects?

Like all entertainment industries, the Covid-19 pandemic has had a substantial impact on the games industry. On the marketing side of things, E3 2020 was cancelled and replaced with a months-long calendar of events hosted by developers, publishers, and console makers. On the development side, GDC's recent State of the Industry report revealed 33 percent of developers had games delayed due to the pandemic.

With the PS5 and Xbox Series X due to launch later this year, industry observers have plenty of questions about what the ongoing global health crisis could mean for the industry, which has benefited in some ways from stay-at-home orders, and suffered in others.

Candice Mudrick, Newzoo's Head of Market Analysis, discussed that impact during GamesIndustry.biz's State of Gaming event on July 30. During her presentation, she discussed exactly how the PS5 and Xbox Series X generation of gaming will be impacted by Covid-19. Here are three of the biggest takeaways.

3. The role of publishers will shift

Mudrick predicts a shift in game publishing thanks to Covid-19 and the upcoming new console generation. While publishers used to be key channels of distribution, marketing, and investment, their roles will shift to be more IP and service-driven due to the Covid-19 pandemic.

"Everything is about the content; content is king," she says. "There are fewer games and bigger games that are being released [by publishers] each year, as developers focus on fewer titles but making sure that those titles are really strong." Smaller publishers will have to focus more intensely than ever on growing their userbase and investing in strong IP.

This means the next generation could see more games-as-a-service titles, like Destiny 2 and Halo Infinite. More publisher-specific subscription services may also pop up, which we are already seeing with the likes of Xbox Game Pass, EA Access, and Uplay+.

"There will be a change to how publishers operate, and potentially some publishers may disappear or the concept [of publishers] may change," she adds.

2. Lower console sales

Mudrick predicts the Covid-19 pandemic will dampen next-generation console sales at launch.

"Disruption of game development processes does lead to delays or cancellations will have a downward effect on console sales," she explains."If there is a recession, if people are continuing to be out of work and they don't have a revenue stream ... then there will be a limit on the number of people that can afford an expensive new console."

Many consumers will likely look to lower-cost avenues for gaming, sticking to older hardware like PS4 and Xbox One, or lower-cost mobile games.

This mindset may make the cheaper PS5 Digital Edition or rumoured digital-only Xbox Project Lockhart consoles more appealing. It will also bolster subscription services like Xbox Game Pass, which Newzoo predicts will keep growing in the next console generation.

Cash-strapped gamers may be reluctant to shell out hundreds on a pricey new console right away.Sony

1. Higher software sales

Even though people may not be super eager to buy a brand new console, a negative impact on the software sales of games is much less likely.

"In an extended lockdown period, if people don't have any other outlets for entertainment, the increase in gaming and the importance of gaming as a social connector does go up," says Mudrick.

Successful games like Animal Crossing: New Horizons already show this, and the trend will likely continue with Xbox Series X and PS5 games.

Mudrick also predicts sales for "lower cost avenues for gaming" will go up with next-generation of games as people spent less on more expensive hobbies like travelling. Overall, this could mean that cheaper versions of the platforms, cheaper games, and subscription services are all more successful.

The Inverse Analysis Overall, Newzoo does predict Covid-19 will hurt next-gen console sales in the intermediate term, despite gaming's short-term boost in popularity. On the software side of things, we should expect to see more games-as-a-service titles and subscription services. The pandemic has intensified an industry trend toward of more ongoing, service-focused games. In that sense, Microsoft actually seems to be a bit ahead of the curve of Sony.

PS5 and Xbox Series X will be released in late 2020.

Related Tags
Share: