Every year, we turn to a panel of trusted analysts to ask them what they see coming down the road, and ask them to assess their predictions from the previous year.
As with last year, our panel hit more often than they missed in 2021, though a few guesses were significantly off the mark. For 2022, we brought up possible areas to make predictions about -- supply chain issues, mobile platforms opening up, blockchain gaming/NFTS -- but left it up to our industry watchers to determine what they wanted to go on record about.
Thanks as always to our panelists -- Kantan Games' Dr. Serkan Toto, Ampere Analysis' Piers Harding-Rolls, The NPD Group's Mat Piscatella, and VoxPop founder Stephanie Llamas -- for being willing to share their thoughts on the future and to revisit their previous predictions even when they weren't quite spot on.
Piers Harding-Rolls, Ampere Analysis
Last Year's Predictions
● Console market including hardware sales to grow once again - Right. We won't know the year total for a few weeks, but even taking into account potential adjustments the console market will have grown again.
● Switch will be the best-selling console in 2021 and sales to consumers to be around 24 million - Right. Our end of year forecast is currently a little higher than that, but close.
● An updated Switch likely to be launched in 2021 - Right.
● PS5 and Xbox Series X|S to sell around 25 million combined in 2021 - The continued component supply chain issues means that this is likely to end up too ambitious. Our current forecast is 2 million shy of that.
● PS5 to outsell Xbox Series X|S in 2021 - Right.
● No global level cloud gaming service reveal in 2021 - Right.
● Proliferation of telco-based cloud gaming services in 2021 - Right.
● Amazon Luna expands to Western Europe - Wrong.
● Xbox Game Pass Ultimate on iOS and integrated into Facebook Gaming - Right and wrong.
● Google Stadia re-evaluation of product strategy - Right. This happened earlier than expected as the company ditched its first-party studio strategy and pivoted to the B2B space.
● Cloud gaming services will not disrupt console and high-end PC gaming markets - Right.
● EA and Ubisoft to pursue platform partnerships for subscription services - Hasn't really happened beyond the existing deals established in 2020. Ubisoft+ has expanded to new markets via Stadia, but EA Play has not arrived on Luna or Stadia.
● Xbox Game Pass to reach over 20 million subscribers and $2 billion a year business - TBC, but after a flat few months over later Q1 and Q2, I expect Game Pass to have achieved this subscriber target in the second half of the year.
PS Now to reach 4 million subscribers - TBC but likely wrong. I'm expecting the service to have missed this forecast, which we downgraded earlier in 2021.
● Continued M&A activity and industry consolidation - Right. Not a tough prediction, but this year has seen an enormous amount of funding and M&A activity, with Tencent and NetEase outdoing themselves in terms of the pure volume of deals closed.
Apple won't be forced to open its devices to third-party storefronts or third-party payment methods - Wrong, well partially. In a now famous legal ruling in the US, Apple is being forced to allow external links to other forms of payment outside of Apple's own IAP (although Apple is appealing).
● Consoles flat, no Switch Pro
I'm currently expecting the console market year-on-year performance to be quite flat in 2022 as Switch sales decline and we come off what has been an amazing couple of years for console gaming. Even so, Nintendo Switch family of devices will once again be the best-selling consoles in 2022 at around 21 million sold to consumers, aided by the release of Switch OLED. I'm not expecting a Switch Pro in 2022. We have a next-gen Nintendo console in our forecasts for late 2024, so I'm not convinced a 'Pro' model is going to appear at all.
PS5 will outsell Xbox Series X|S on a global basis. The predicted combined sales to gamers are around 28 million. PS5 and Xbox Series X will remain supply constrained, but I expect availability to improve slowly over the year and to be in a better place as we arrive at the holiday season.
● Sony rethinks subscription approach as Microsoft pushes Game Pass growth
I'm expecting PlayStation's subscription business to be overhauled in 2022 to position it more strongly for the future. I don't think we'll get new release first-party Sony games launching into PS Plus/PS Now anytime soon, so in this respect a rebooted service will still differ from Game Pass. However, new release third-party titles are on the table as we've already seen in PS Plus and the window for adding first-party games may be shortened. You can read more of our analysis on a potential overhaul here.
The release schedule of Xbox Game Studios coupled with increasing amounts of new third-party releases will drive growth of Game Pass in 2022. Eventually, we'll get one or more big third-party franchise releases going straight into Game Pass: this year we could see that happen. While console users are the core of Microsoft's service, its ongoing growth will increasingly rely on converting non-console users through its streaming functionality. I expect Game Pass Ultimate with streaming to come to more mobile-first markets in 2022, possibly with a mobile-only lower priced subscription.
Other subscription and streaming predictions:
- Pure cloud gaming services will remain incremental to the overall subscription opportunity
- Amazon Luna will come to Western Europe
- EA Play services to be better harmonised; eventually I expect EA Play to become one multi-platform service but that might happen in stages
- Netflix to start experimenting with streaming of games
- At least one games service to introduce video content or another SVoD player to launch a games content strategy
- One or more telco-based cloud gaming services to close
● Quest 2 continues to lead VR
I originally had PSVR 2 earmarked for an end of 2022 release. That's still possible but component supply chain conditions may delay its entry into the market. Quest 2 has had a strong 2021. It ends the year as an increasingly viable standalone platform for games developers and publishers. Meta's focus will be on broadening the appeal of the platform to different demographics in 2022 by pushing the content message beyond games. Quest 2 has good sales momentum behind it and that will carry through into 2022, making it the best-selling headset during the year. Under normal circumstances we could see a Quest 3 by the end of the year, but supply chain challenges might hamper timing.
● Mobile grows, but legal disputes the big news
While mobile gaming spending will continue to grow in 2022 driven by increasing adoption in mobile-first markets, I think the big news will be reserved for the ongoing legal disputes between the mobile platforms, app developers and regulators and the continued fallout from IDFA changes. Both Apple and Google are fighting cases on multiple fronts focused on storefront take rates and app store terms and conditions. 2022 could see: further compromises in terms of platform take rates; Apple and Google applying substantial platform fees even for app payments made off-platform; zero movement from Apple on opening up the App Store to competing storefronts.
● Blockchain gaming cools down in H2
All major games companies are evaluating the commercial potential of using blockchain technology to support in-game cryptocurrency, tokens, NFTs and new business models such as play-to-earn. Clearly, there will be a lot of new games using blockchain in 2022 and increasing amounts from traditional games companies, which will expose more consumers to cryptocurrency and NFTs. But questions remain over the sustainability of play-to-earn games and the ongoing value of in-game NFTs against a backdrop of zero or minimal interoperability. With lots of titles flooding the market it's inevitable that many will underperform commercially. While funding for blockchain gaming companies is currently hot and valuations are high, with many existing companies pivoting into this space, I expect the situation to cool down in the second half of 2022.
There are other headwinds impacting this space. One is regulation, which I expect to become more prominent in 2022. NFTs and play-to-earn games have already fallen foul of existing gaming laws in South Korea. Another is gamer perception. I expect continued backlash from more traditional enthusiast gamers that are distrustful about major changes to the gaming experiences that they connect with. As such, premium game publishers will be more cautious about how they experiment with blockchain use in games leaving the door open for mobile, crypto and free-to-play-focused players to make most headway in 2022.
● Games IP becomes entertainment IP
One of the areas we are tracking is the convergence of entertainment franchises and IP across games, video, music, and merchandising. Major games franchises are now hugely important wider entertainment IPs that are driving original video content, spin-off music acts and successful merchandising businesses. I expect games IP adaptations in the video space to increase once again in 2022 and for games publishers to increasingly lay out their strategic visions as they broaden into entertainment companies.
● Demand for development talent and games IP
Demand for development talent and original content has helped fuel higher valuations of dev studios and publishers which in turn has driven investment and M&A activity. Not only is there continued high games industry demand due to the proliferation of companies, storefronts, and services active in the market but there is also increasing demand from adjacent sectors, such as film and TV, that have a growing need for games dev skills. These factors will continue to drive strong investment and M&A deals in 2022, although some areas of the market -- blockchain games for example -- might burn bright and short before cooling down.
● The metaverse will not arrive this year
The metaverse will not arrive in 2022 or anytime soon. However, the hype surrounding the concept will drive a substantial increase in brand activations across games platforms in 2022. That's good news for platforms set up to enable these integrations as well as in-game advertising networks that are becoming more established. With many consumer brands piling in, the drive to differentiate will result in deeper integration with platforms and more elaborate activations. That means that games platforms with the tools to easily build sophisticated custom experiences -- Roblox, Core etc. -- will be best placed to benefit.
Stephanie Llamas, VoxPop
Last Year's Predictions
● Standards for minimum qualities will be based on the Quest 2 - Yes! Many of the major games that had launched on the PC-first platforms have been ported to Quest (RecRoom, Beat Saber, Sword and Sorcery's pared down VR experience). Publishers are realizing the biggest audiences are on the Quest and are ensuring compatibility. Also, as I mentioned, AAAs are understanding VR is essential to their strategy, so we've seen the likes of Resident Evil, Star Wars Squadron and Hitman all come out with VR modes. Up next is for other hardware companies to follow up with standalone devices.
● VR-as-a-service will begin to transform the monetization landscape - Yes! This kind of thinking is what has allowed older games to stay relevant (Beat Saber and Rec Room are still the most played and highest earning games years after release.) We are also seeing donation-based monetization, like with Gorilla Tag.
● We will start to see AR glasses experiment in the space, but they won't be ready for mass consumption - Yes! We saw great innovations this year with new Snap Glasses and Nreal Light AR glasses moving into Verizon stores. But at the end of the day, no one is really wearing them outside of enterprise and ultra tech enthusiasts. The innovation is there but there just isn't enough value for mass consumers.
● VR gatherings will bring higher profile concerts and events onto the platform - Yes-ish… Some XR- and games-focused conferences, like the Tokyo Games Show Expo, have moved onto the platform, although I have seen first-hand how technical difficulties can disrupt these kinds of events. Fortnite continues to be the most exciting platform, with the likes of Arianna Grande taking the virtual stage, but CES attracted Billie Eilish to their virtual event. So all in all, I don't think there was an uptick but I think there's still a lot of potential.
● WebAR will bring AR experiences to more mobile users - Yes, it's happening. 8th Wall is the best example of a company creating great WebAR tools. However, people don't want to use AR on their phone so even though the experiences are there, it's still a challenge to get users.
● Location-based XR won't hit pre-COVID predictions, but it will start coming back - Yes. Despite COVID, Universal Orlando had its best quarter ever in Q3 2021. This shows a hefty appetite for location-based entertainment (LBE) regardless of the pandemic. Yes, COVID was likely responsible for Spaces' pivot to video-conferencing (after which it was bought by Apple) and the closure of hundreds, if not thousands of VR arcades. But with vaccinations and a summer lull with the pandemic, we saw smaller shops open up again (like Sandbox VR, which declared bankruptcy in 2020) and that will extend to theme park experiences and larger investment in the LBE space.
● NFTs will get louder before they get quieter
NFTs quickly became the buzzword of 2021. At the beginning of the year people barely knew what they were and now it seems like everyone is buying (or grinding for) one. As with anything speculative that is receiving a lot of hype, it will rise quickly before falling slowly. I don't think the NFT bubble will pop in 2022. Clinique, Nike, Adidas, and Universal Music, to name a very small few, are getting in on the ground floor so as not to get left behind. And games like Axie Infinity valuate in the billions, while AAAs like Ubisoft are (perhaps unsuccessfully) giving NFTs a shot. The issue is that once the dust settles and brands see this as more than a PR stunt, they will leave NFTs behind in favor of another impression-fueled strategy.
But underneath the gold rush there are really interesting developments being made in applications that are much more useful than speculative. In 2022, you'll see a lot of that. Things like identification, memberships and anti-cheating mechanisms will begin to push ahead and these NFTs will still survive through their utility, long after speculation declines.
● More VR IN the workplace
While Bill Gates says that meetings will happen in XR in the next 2-3 years, I disagree. The hardware is nowhere near seamless or adopted enough to facilitate large-scale usage that will dominate the way we meet in the near future. Video conferencing gets the job done, is free, and works on devices everyone already has. Even if VR feels like a better experience -- right now it is too glitchy to the point of distracting -- it will need to reach critical mass to challenge that.
However, there is real value INSIDE the workplace. I do believe there will be opportunities for collaboration across different office locations, but that will be for specialized applications that require interactivity and not just chatter. Companies will continue to leverage VR and AR to carry out enterprise applications more effectively, like with design and architecture. There are also innovative ways in which companies have been using VR to interact with employees such as training and onboarding. MGM, for instance, has collaborated with Strivr to give potential employees a chance to try out their jobs before accepting an offer. This is an example of taking advantage of VR as an empathy machine and making a positive impression in a way other media cannot.
● Crypto will be regulated one way or another
The Indian parliament announced an attempt to ban all private cryptocurrencies, the Chinese government banned all crypto transactions and mining and the Russian central bank has said they want to ban investments in cryptocurrencies in Russia. Centralized institutions are fighting back against cryptocurrencies and we are going to see a lot more of that in the coming year. Right now the US is the leader in Bitcoin mining and as long as that doesn't affect the wealth of billionaires and banks, it will likely not see any consequences. However, the minute crypto devalues cash wealth in some way, the US will find a way to crack down. I believe at the very least we will see those with wealth embrace it and fuel positive regulation, or they won't and they will pressure the government to act.
● We will reach a consensus on what the Metaverse actually is
VR, games, virtual destinations… they are all being referenced as the Metaverse. But those things are the things they are called. The Metaverse needs all those things, and more, to be the Metaverse but those things are not mini-Metaverses. In 2022, the nomenclature will finally get ironed out as more people learn what it is. The same thing happened with XR: mixed reality, virtual reality and augmented reality were interchangeable. Also, for many years non-gamers attached proprietary eponyms to games, like calling everything Nintendo. Whenever something new and expansive comes out we see a generalization of terminology that causes a lot of confusion and, thus, a barrier to entry. So in order to continue to develop the Metaverse among non-pros, we need to be mindful of the vocabulary we proselytize.
● Real-world companies will aggressively stake their claim to the Metaverse
Many, many people are trying to get an early piece of the pie as the Metaverse makes its way up to the peak of inflated expectations (per Gartner's Hype Cycle). And companies are seeing the enormous impact that the Metaverse could have on their bank accounts. Whether this is the right move or not, A) many of these companies have enough cash to burn or are limiting their investment to the point where, if it doesn't work out, they'll barely notice the money they lost; B) at least it makes for a good story for the press that shows how innovative they are; or C) their efforts today will actually give them a leg up in the Metaverse tomorrow. Either way it's a win/win.
● Creator tools will make 3D modeling easier than ever, setting the stage for more user-generated content
Unreal's unveiling of The Matrix Resurrections was absolutely mindblowing. And with Unity's acquisition of Weta, these tools are evolving in a way that will open the gates for more and more less-than-tech-savvy creators to build amazing things. The tools will no longer be a barrier to creativity and we will see more innovative user-generated content that couldn't be created up until now. This will also fuel more representation and diversity in content since these tools will be accessible to all types of people.
Dr. Serkan Toto, Kantan Games
Last Year's Predictions
● Switch Pro launches - Incorrect, the OLED model is not "pro" enough.
● Nintendo marches on - Correct, no signs of Nintendo slowing down significantly.
● PS5 pulls ahead - Correct, even though Microsoft stopped disclosing Xbox hardware sales several years ago, Sony is very likely ahead in the race with the PS5.
● More M&A to come - Correct, there actually was a whole flood of deals happening in the industry worldwide in 2021.
● Game stock price retreat - Largely correct (Activision, Nintendo, Zynga, Capcom, Tencent etc.), even though some stocks ended 2021 flat (Take-Two, for example) or even grew over last year (Sony).
● App stores see structural changes - Correct, especially in Asia, with more changes in other regions probably coming soon.
● Crypto gaming becomes even bigger
2021 was just the beginning for crypto gaming, and we are very likely to see more and more established studios getting into the space in 2022. A sizable chunk of the start-ups in the space have sprung up from South East Asia so far, but it can be expected that some of the listed players (especially in Japan and South Korea) will at least start to experiment with NFTs, metaverse and/or blockchain this year. We will also continue to see one VC deal in crypto gaming after another.
● Nintendo announces Mario Kart 9 and a new mobile game
I am aware Mario Kart 8 Deluxe is still selling very well on the Nintendo Switch, but Mario Kart 9 is in active development (and comes with a new twist) and Nintendo could tease it this year. On mobile, Nintendo has been very silent since Mario Kart Tour's launch in 2019, but I think 2022 is when we will see an established IP arriving on smart devices again.
● The industry sees fewer delays
In 2020 and 2021, dating the launch of blockbusters in particular was so hard that every new game actually arriving on time was a surprise. Even ultra-conservative Nintendo was affected. I am hearing now that studios everywhere are getting a lot more cautious when it comes to communicating release dates for the big titles and are getting better at gauging the effects of the pandemic on their production. As such, I think we will see more robust pipelines and fewer delays from the bigger studios in 2022.
● Microsoft continues its charm offensive in Japan
Microsoft has been trying a lot of things to make the Xbox work in Japan for two decades now, but the Sega partnership announcement from late last year was one of the biggest steps. I think in 2022, we will see more such deals from big M, including (finally) an investment in a local studio. A prime candidate is Kojima Productions, also because of the ongoing rumors about a co-development deal for a new game.
Mat Piscatella, NPD Group
Last Year's Predictions
The video game market weathered 2021 well, as sales of gaming related products continued to climb despite the many challenges and surprises the year delivered.
My predictions for the past year ended up working out, even if some did not do so in exactly the ways I'd imagined. In any case, the Switch did stay on top of the console market, cloud gaming remained nascent, and flexibility was a determinant factor of success for developers and publishers. Social gaming boomed, and publishers did look to optimize select IP across multiple platform types.
● PlayStation 5 and Xbox Series become a bit easier to find, help push console market higher
Nintendo Switch will likely remain the best-selling hardware platform of 2022 in units sold, but I am expecting a year-on-year decline as Switch comes off its cyclical peak. Fortunately, supply of PlayStation 5 and Xbox Series consoles should improve (although not enough to completely meet demand), helping the overall console market to single-digit percentage growth in the year. This, combined with continued growth in subscription, mobile and VR content spending, should help the video game industry continue its long-term growth trend.
● The year of the delay, part II
The challenges the ongoing pandemic have dealt will continue to impact content development, as well as hardware and accessory production. I expect release date announcements to become even more rare and shifting dates post announce more common. Making games has always been hard. Given the complexity and increased stakes involved in today's market things have become even more difficult. Flexibility remains key.
● VR finally gains mass market momentum
I thought this was going to start happening in 2020, with the release of Half-Life: Alyx. It didn't. However, coming off a very strong holiday sales quarter for Quest 2, and the potential release of PlayStation VR 2, 2022 looks to finally be the year that VR gaming takes the leap from enthusiast niche to early mass market adoption.
● The NFT push accelerates
Initial NFT endeavors from publishers and developers have received strong social media pushback and little sign of consumer enthusiasm. Despite these early struggles, NFT-related initiatives will continue to be developed, announced, and released throughout 2022. The cost to create and release NFTs is so low that many companies will enter the space for (if nothing else) fear of potentially missing out on a lucrative market. In addition, the idea of getting a cut of secondary market sales will prove too sweet a siren song. Sure, everything NFTs do in gaming can already be done using existing technologies, but that won't matter.