spoke to the leaders of gaming companies. They believe that 2024 will be the year the studios close and suggest preparing for “two years of suffering.”

“If 2023 was the year of layoffs, 2024 will be the year of closures. Not just developers, but publishers, media, service companies… There are just too many unprofitable businesses in video games. We’re looking at up to two years of pain,” said the CEO of a public company.

Some investors spoke to expect interest rates to drop, which may stimulate more investment, but not before the end of 2024. Until then, there are “much safer ways to invest your money than video games. Although this is not the only industry facing this problem right now,” said one angel investor.

“Why take a gamble with a games company when you can just stick the money in the bank and earn 5%?” added the leading venture capitalist.

High interest rates are putting pressure on costs, not only for salaries but also for insurance, travel, rent, and other business expenses. Meanwhile, it is impossible to raise prices for video games any further. The same thing was said by Sergiy Galyonkin, former director of publishing strategy at Epic Games, in an interview with Mezha.

Besides, publishers are becoming increasingly concerned about the large number of games being released on all platforms.

“Too many games were green lit in 2020 and 2021,” one publisher boss said. “We need to get to pre-pandemic levels in terms of the release schedule, and that’s probably going to take two years. You can already see publishers signing fewer games. That’s happening everywhere. The stores are saturated, not just Steam, and the games just aren’t delivering the levels they were. “

“The expansion and investment over COVID has left engagement-based businesses, not just video games, spread too thin. We’re doing too many things that aren’t delivering,” says another publisher.

“Competition isn’t the biggest factor [in this current situation], but it is a challenge, especially when you consider how much disposable income people have at the moment. It’s also not just the number of new games you’re competing with, but all the old games and live service games that are there and doing huge numbers,” says one of the venture investors.

The solution for companies is as simple as ever: abandon or reduce those areas of business that are unprofitable or distract from their core products and focus on what they do best. This means further layoffs and studio closures.

One thing that everyone emphasized was that while video games face unique challenges, there are global issues that the gaming business cannot control. “Government overspending during the pandemic, and wars, and things like Brexit in the UK… it’s going to take years before that normalizes,” the investor said.

But not everything is so bad. The head of a large studio, who spoke to, emphasized that the gaming industry remains in good shape. “If you look at gamers, they are happy. They’re playing all these fantastic games, and they’re playing more than they were five years ago… and they’re buying more. The industry chart is on an upward trend. The gaming industry is in a strange position right now. But for those on the outside, it looks different.”

“Investment hasn’t stopped entirely. You’re still going to see money coming into games, you’re still going to see established people with a good business plan setting up new teams. There is opportunity. Lots of successful businesses are born during moments like this. And the situation is temporary. The games business is built on very solid foundations. And when things do start to grow again, we would hope to see a more sustainable and wiser games industry emerge on the other side,” says the CEO, who was interviewed by journalists.