AAA game in a new generation predicted to cost $70M; 2022 was the worst year for indie developers in almost a decade; the gaming investment market in Q2 2023 continued to struggle.
This week:
- SEGA President: Games for a new console generation will cost $70M+ to develop
- How to Market a Game: 2022 became the worst year for indie developers on Steam
- GSD: Hogwarts Legacy & Diablo IV are leaders by sales in Europe in H1 2023
- Drake Star: Gaming investments in Q2 2023
- Niko Partners: Console game market in China in 2023
- Call of Duty: Mobile revenue exceeded $3B
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SEGA President: Games for a new console generation will cost $70M+ to develop
- Yukio Sugino thinks that the development cost in Japan is increasing. The new normality with the next generation will be a $70M budgets.
- Considering this, SEGA is planning to increase its worldwide presence. 3.5k people are working in the company now, and 1.5k of them are overseas.
- Global markets generate 80% of SEGA’s PC & Console revenue. Mobile titles, in reverse, earn 90% of the revenue in Japan, the local market.
- The game development price increased sufficiently in the last few years. The Last of Us: Part II cost $220M. Shadow of the Tomb Raider development was somewhere between $75M and $100M. Forspoken, Callisto Protocol, and Saints Row budgets exceeded $100M – and all those projects haven’t found financial success.
How to Market a Game: 2022 became the worst year for indie developers on Steam
As a benchmark, How to Market a Game considered titles that passed 1,000 reviews on the platform.
- In 2022 there were 420 such games. A year before – 532. In 2020 – 577. The smallest amount of 1,000+ reviews games were in 2016 & 2017 – 422.
- Wherein, the number of new indie games on Steam is increasing every year. If in 2016 there were about 10% of successful indie releases, in 2022 this percentage dropped to 3.75%.
Interesting highlights:
- There were no indie titles in 2022 that failed the release but made a comeback with great live-ops and community management.
- Vampire Survivor clones were popular even at the end of 2022.
- Horror games do have a stable audience and sell quite fine.
GSD: Hogwarts Legacy & Diablo IV are leaders by sales in Europe in H1 2023
- 76.1M games have been sold in Europe in H1 2023. It’s much bigger than in H1 2022.
- The UK is the largest European market. British gamers bought 15.3M games (+5.5% YoY). Germany is next – 14M (-11% YoY); then France – 11.1M (+8% YoY); Spain – 5.4M (+6.8% YoY); Italy – 4.9M (+2.7% YoY).
- Among all sales, 29.1M copies sold were boxed copies. It’s 9% less than a year before. The Legend of Zelda: Tears of the Kingdom is the most popular boxed game of the first half a year.
- Hogwarts Legacy is the best-selling game of H1 2023 in general. Its sales are 69% higher than Elden Ring’s, which topped the charts in H1 2022.
- Despite being on sale for just a couple of weeks, Diablo IV has already reached third place by sales. The Legend of Zelda: Tears of the Kingdom is in the 4th place (but only physical copies are counted).
- FIFA 23 is selling 24% better than FIFA 22.
- Hogwarts Legacy sales in the UK in H1 2023 are 124% better than FIFA 23.
Drake Star: Gaming investments in Q2 2023
- The value of disclosed M&A deals in Q2 2023 surpassed $6B. The majority of this amount comes from the Scopely with Savvy Gaming & SEGA with Rovio deals. Overall, there were 44 M&A deals in Q2 2023.
- The public gaming companies index from Drake Star (includes top-25 public gaming companies with $1B+ capitalization) increased by 15% in H1 2023.
- AppLovin (+144.3%); SEGA (+53.8%), and Unity (+51.9%) are leaders of growth. Embracer (-43%), NCSoft (-34.2%); Keyword Studios (-33.6%) are companies whose stock prices dropped the most.
- 196 private investment deals happened in Q2 2023 – it’s less than in Q1 2023 (200). Amount of deals exceeded $700M. More than 80% were early stages.
- BITKRAFT is the leader in a number of deals in H1 2023. Andreessen Horowitz, Griffin Gaming, Makers Fund, and Play Ventures are next.
Niko Partners: Console game market in China in 2023
Niko Partners is covering both white and grey sales.
2022
- The volume of the console gaming market in China in 2022 reached $2.29B (+7.8% YoY). $1.1B from hardware sales; $1.19B – from game sales.
- The number of console gamers in 2022 reached 16.7M (+8.3% YoY).
2023 – estimation
- In 2023 the console gaming market will reach $2.37B. $1.1B will take hardware sales; $1.27B – game sales.
- The number of console gamers in the country is expected to reach up to 18.1M.
2027 – forecast
- The size of the console gaming market is expected to reach $2.48B (+1.6% CAGR). Hardware sales will be around $830M; games sales – $1.6B.
- The number of console gamers is supposed to increase to 22.9M.
Chinese console gaming market-specific feature
- China has its own console versions with dedicated stores and complex content moderation. Many players prefer to buy imported consoles from other countries (grey import). Before 2015 there was a 15-year console ban in China.
Call of Duty: Mobile revenue exceeded $3B
- Activision Blizzard reported this in a Q2 2023 report.
- It took almost 4 years for a game to achieve this milestone. It was launched in October 2019.
- Activision Blizzard is currently working on a Call of Duty: Warzone Mobile release. It’s projected to happen this fall. The company states that both games will be operated as they’re offering different experiences for users.
