Video Games Predictions 2018

The console and PC games markets had quite an amazing 2017. A lineup of games that rivals the lineups of some of the best years in industry history, the launch of the Switch along with the continued resurgence of Nintendo, as well as the breakout emergence of the service model all combined to ensure 2017 will have a significant, long-term impact on the industry.

The coming year will be more evolutionary than revolutionary as the industry continues to shift from a product model to a live service one. Here is a look at what to watch for in 2018:

Growth in subscription services  Exponential revenue growth in this area is in the cards for 2018. We expect EA Access to make its way to the PlayStation 4, the launch of Nintendo’s online service to be warmly received, services like Xbox Game Pass to expand and be promoted heavily, and the launch of new subscription services throughout the year. Combined with other existing services like PlayStation+ and Xbox Gold, subscription services will be a significant growth area this year.

Switch to lead the console market  In both quality and quantity of released content as well as sales in 2017, Nintendo Switch exceeded the expectations of many in the industry. This momentum should carry over into 2018 with Switch both selling the most hardware units and generating the most software revenues at retail over the coming year. Pokémon RPG for Switch is the true wild card. If it releases in 2018, we could start seeing multiple Switch per household, raising the potential ceiling on traditional console benchmarks. Even if it doesn’t release this year, however, Switch is poised to take market leadership as PlayStation 4 and Xbox One enter their sixth years in market.

Immersive gaming VR will continue to struggle  The barriers to entry for mass market consumers to enter the high-end, immersive gaming VR space continue to be excessively high. From play pattern to price point to having necessary space available, immersive gaming VR will fail to exit its canyon of despair in 2018. Hardware prices will continue to fall, but sales lifts will fail to follow. Game sales will continue to lag, and goalposts for success will continue to shift. VR has an exciting present in mobile and a bright future in many other use cases. Perhaps one day it will find success in immersive gaming. 2018, however, will not be that year.

Switch gold rush leads to discovery challenges  Nintendo Switch was a fantastic success story in 2017, but with that success come new challenges. One is the games storefront. Games are coming to Switch at a furious pace that will only increase over time. The Switch will be challenged to make discovering those games easier for consumers and ensure quality content doesn’t get buried in the avalanche of releases. While it’s a long way from facing the same scale of challenges STEAM is in this regard, Switch must connect consumers to the eShop content they’d enjoy buying and playing.

2018 as a bridge year —
Finally, expect 2018 to be a bridge year for PlayStation 4 and Xbox One
as a lead-in to 2019 new console announcements for launch in 2020.

After struggling for some time in the early part of the decade, and after facing significant declines in release and publisher count over that time, the console industry has since rebounded. I expect 2018 to follow the path set by a successful 2017.

Mat Piscatella
Video Games Industry Analyst
The NPD Group 

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