We have had the pleasure or attending Gamescom 2023 over the past couple of days, and it is no exaggeration to say it surpassed all our expectations. We have met a huge range of people during our time here, and this diversity has given us extra insight into the gaming market as a whole, and how the UK fits into that.
We met a plethora of individuals and companies across our time here and each one provided valuable, and insightful, commentary on the games industry. The common theme, and one that resonated with us, is that the creativity within gaming continues to go from strength to strength, and we believe this should drive the industry back from its recent slump with a vengeance. On a creative front, we couldn’t avoid mentioning the Magicave-sponsored Maraoke, which was great fun, and featured classic karaoke tunes with a gaming twist!
News of the week & key takeaways from Gamescom 2023
Takeaway 1: Asia leads the way
It comes as no surprise that Asia has a significant influence on the gaming market given its 46% market share (per the latest NewZoo report), and the fact China and Japan represent 2/3 of the world’s largest gaming economies. However, what did pique our interest was the increasing popularity of these in Western markets. To our eye, the game with the longest queue at Gamescom 2023 was Black Myth: Wukong, a Game Science creation which brings to life ancient Chinese myths with unbelievable graphics and smooth gameplay. Several other Asian companies' had similar sized hordes surrounding them. Once thought to operate in a slightly different niche to the West, we believe that with releases such as the one mentioned above, we may see a growing trend of Asian firms taking more of the European and American market. We would recommend searching for mention of global successes in Asian companies reporting to evidence this, such as NetEase's mention of global success with Harry Potter: Magic Awakened.
Takeaway 2: Gaming’s not going anywhere, but competition is stiff
Much has been made of the gaming industry's slowdown through 2022, with game sales often disappointing due to a weaker end market (Focus Entertainment gave us a timely example of the challenges faced). However, from what we saw this week there is still plenty of desire and willingness for the industry to grow, with ever growing demand and productivity tools increasing the number of games available to players. Whilst AAA games can distinguish themselves with large marketing campaigns (Xbox has half of one of the enormous, plane-hangar sized spaces entirely to itself), we felt sympathy for the indie games trying to stand out amongst hundreds of similarly innovative and well-presented rivals.
Ubisoft deal should allow Microsoft’s acquisition to succeed
Described to us at Gamescom as a “handbreak on the entire industry”, we believe Microsoft's recent compromises will be sufficient for the CMA to reverse its stance and allow the takeover of Activision Blizzard to proceed. Microsoft's US$69bn acquisition of Activision Blizzard was initially blocked by Britain's competition regulator due to concerns over control of the cloud gaming market. To win approval, Microsoft has agreed to sell Activision's streaming rights to Ubisoft Entertainment. This means Microsoft cannot exclusively release Activision games on its Xbox Cloud Gaming service or control licensing terms for rival services. Ubisoft is to acquire the cloud streaming rights for Activision's existing and new games for the next 15 years, except in Europe, where the original deal was accepted. The deal is expected to be reviewed by the Competition and Markets Authority by 18 October. On the day the compromise was announced Microsoft's shares rose by 0.7%, while Activision's shares increased by 1.1%. Ubisoft's shares, listed in Paris, closed 9% higher, making the biggest gains in the STOXX 600 Europe.
In other news...
- Sony to acquire Audeze
- Scriptic raises US$6m of additional seed funding
- BioWare to lay off 50 employees as Keywords contract nears its end
- Grand Turismo film rakes in $23m at the box office
- Two Horizons Unit has signed an investment deal with Phenomen Games
- Assassins Creed pulled forward and Alan Wake 2 delayed to avoid clashing with each other and Spider Man