Well, it might be a bit late. Yet it’s finally time to look ahead.
So what’s in store during 2021 for the games industry? A whole lot, plus some surprises. It should be another big one for Nintendo, with Zelda’s 35th anniversary plus the potential for a new Switch model on the horizon. In what I’m dubbing the Year of the Delay, better or worse I expect a number of dates to be pushed back amidst the usual challenges of game development compounded by the ongoing impact of a pandemic and remote work scenarios. After Microsoft snagged merger and acquisition headlines last year, my guess is that Sony ramps up its purchasing. Meanwhile, Tencent will continue its takeover.
What about size and spending in the market? I’m calling for double-digit growth both globally and domestically, driven by new consoles, a continued high digital share across the board and steady mobile performance. In a bit of a risk, I’m guessing we see a major collaboration between Marvel and Capcom to rejuvenate the latter’s fighting game history, then I bet we see what Rockstar has been working on besides the online versions of its biggest titles. And it might surprise you!
Finally, we can’t talk modern games without cloud streaming. After making the easiest prediction on the list, I’ll up the stakes by picking which of the major providers could be the winner this year. As long as it executes on a smart business model and expands to new territories.
Where will 2021 take us? For now, it has taken you here. Reading about the future. And a few minutes from now, you’ll know.
Pro Model & Zelda’s 35th Power Switch to Best-Selling Console of 2021
While we’ll get new figures next week, as of right now Nintendo has shipped over 68 million Switch hybrid consoles since its debut in 2017. This year, I not only expect this excellent momentum and the company’s best financial results in a decade to continue, both will actually accelerate with the introduction of a new, higher-powered model. How it manifests, what features it will have and what it will be called is anyone’s guess. (I say go all out. The New Nintendo Switch Pro Plus.) Four years after the original feels like the right time, especially now that other platform holders Microsoft and Sony launched their respective consoles last year.
To go along with a fancy new Switch iteration, I anticipate Nintendo will lean heavily into the 35th anniversary of its The Legend of Zelda franchise. This means I’m calling the launch of the sequel to Breath of the Wild simultaneous with its new Switch, periodic re-releases of classic games in the series throughout the year including Ocarina of Time and Majora’s Mask plus at least one off-the-wall, patently Nintendo idea. Like a toy Master Sword that somehow interacts with the Switch. It won’t be a surprise when Nintendo dominates headlines and its fiscal guidance again in 2021.
No Game Can Escape The Year of the Delay
While the games industry undoubtedly felt the impact of a global pandemic last year, 2021 will be even trickier when it comes to development challenges and hitting deadlines. It’s going to be like that in many businesses, especially as new projects start during a post-COVID era. We’ve already seen multiple games moved, Outriders and Returnal among them. Additionally, CD Projekt Red’s botched launch of the industry’s biggest game last year in Cyberpunk 2077 shows publishers that it’s better to move a title than risk all built up goodwill with a launch that’s lackluster at best, broken at worst.
What it means here is no game is safe from a delay, and I fully expect almost every single major title to have some sort of release date push, with some even slipping to 2022. And many of those without dates being next year or beyond. Think of a game, and I’m skeptical it meets its initial timeline. Ratchet & Clank: Rift Apart. Horizon Forbidden West. God of War Ragnarok. Resident Evil Village. Far Cry 6. Gotham Knights. Dying Light 2. Hollow Knight: Silksong. Overwatch 2. Elden Ring. Starfield. Bayonetta 3. Metroid Prime 4. Shoot, even something that’s slated for the Fall like Halo Infinite isn’t immune. The only guarantee in 2021 is that teams are going to take their time, and I really can’t blame them.
Sony & Tencent Highlight Another Year of Acquisitions
Mergers, acquisitions, investments and public offerings across the games industry totaled $20.5 billion thru the first three quarters of 2020. Deals like Microsoft’s $7.5 billion acquisition of ZeniMax, Tencent’s purchase of Leyou Technologies for $1.4 billion plus Embracer Group’s buy of Saber Interactive among many others headlined a busy year of consolidation. 2021 will be no different, as I believe we’ll see more purchases. Especially at the top-end. And I’m foreseeing a couple major moves from Sony and Tencent, in particular.
I bet Sony invests in at least two development studios to bolster its portfolio, one of them being long time collaborator Bluepoint Games who was responsible for PlayStation 5 launch game Demon’s Souls. When it comes to Tencent, the recent rumor is it may be targeting a major Western or South Korean gaming company. Unlike some, I don’t think publishers like Electronic Arts or even Take-Two Interactive are on the table. I’m putting my money on the latter, like a Pearl Abyss or Smilegate based in Asia. Either of which would still be major news. Otherwise, I think Microsoft solidifies a deal for Moon Studios, the team behind the Ori series, and of course Embracer Group expands its subsidiaries considerably again in 2021 as it continues the path of quantity over anything else.
Double-Digital Consumer Spending Increase Led By 90% Digital
During a time when people stayed at home and played a ton of games together virtually, the games industry expanded nearly 20% to a total $175 billion in consumer spending according to Newzoo. Within the U.S. alone, sales expanded 27% to almost $57 billion per NPD Group as I wrote recently. Not only that, digital accounted for 91% of worldwide spending and 72% of the console market. Sony even reported that more than half of software sales on PlayStation 4 were digital each of the past four fiscal quarters, averaging nearly two-thirds from downloads. In reality, stay-at-home guidelines accelerated a trend that’s been building for years.
With supply issues easing in 2021 for new generation hardware, the potential introduction of a Switch Pro, the continued appeal of mobile even at home on devices like tablets plus the almost guaranteed surprise of another break-out hit like Among Us, I’m betting that both of these figures rise at least double-digits. That would bring global spending to at least $192 billion, with the U.S. generating $63 billion. And digital will account for roughly 90% again. Similar to all the games companies benefiting from this increased spending: take it to the bank.
Capcom Announces Blockbuster Marvel Universe Fighting Game
This is admittedly pure and utter speculation. Let’s have some fun! Marvel Games has already displayed a renewed appetite for video game collaborations. Sony with Spider-Man, Epic Games and Fortnite, Square Enix and Avengers among others. Capcom hasn’t released a fighting game in five years, since the underwhelming Street Fighter V. The brands have assembled in the past for Marvel vs Capcom projects. See where I’m going?
This time, I’m thinking both companies reveal a brand new fighting game this year set in the Marvel universe. One where it starts with a base of characters and villains from the cinematic universe then works over time to include almost everyone it can on its varied roster. It’s the type of game that could rival Capcom’s Monster Hunter series in terms of live offering, establishing an ongoing platform that can evolve, expand and, importantly, earn a steady stream of revenue through cosmetics and micro-transactions. If implemented correctly, a blend of great mechanics and a famous character roster, Capcom could revive its fighting game legacy. With the help of the world’s most recognizable entertainment brand, of course.
Rockstar Reveals Its Next Project, And It Isn’t Grand Theft Auto VI
Ready for another wild one? During 2021, I think we’ll finally know what Rockstar has been working on in between new content drops for the everlasting Grand Theft Auto Online and Red Dead Online. For that reason plus the fact it’s still shipping upwards of 5 million copies per quarter of Grand Theft Auto V nearly eight years after its initial release, not to mention how there’s a next gen version of the open world crime game slated for 2021 already, I don’t know if this next one is another Grand Theft Auto game.
If not, then what could it be? A sequel to Bully? L.A. Noire 2? Agent? More Table Tennis?! How about none of the above, and instead a new IP from one of the most talented and detail-oriented studios in the business. That’s not to say its older franchises aren’t valuable, it’s just I’d love to see them flex their muscles on something else. Imagine what Rockstar could accomplish with its near unlimited budget and time allowance from parent company Take-Two Interactive. The downside is, knowing its culture, staff could be in for even more crunch trying to create something from scratch as opposed to leveraging the familiarity of established brands. If its management could find a balance and ensure the mental and physical health of its employees, I’d always prefer to witness something we’ve never seen before.
Amazon Luna Flies High Above The Clouds
In terms of a general prediction, saying that cloud streaming and related services within the games industry will grow in 2021 is a cop out. That’s a given. It’s currently a small portion of the overall market, there are seemingly new services every other quarter and no one has found the right business model to make a substantial dent when it comes to spending or active players. We know nothing about engagement stats for Google Stadia. Microsoft’s Cloud Gaming is still in beta and leans on its bundling with Xbox Game Pass Ultimate. NVIDIA’s GeForce Now is a genius idea, yet faces pressure from publishers that don’t want to participate. Sony’s PlayStation Now had 2.2 million subscribers at last count, a decent start yet nowhere near the market’s potential.
A bolder call is trying to guess which player will win. And I love Amazon Luna’s business model, even if it’s from a company that has yet to successfully break into the behemoth that is the games industry. Announced back in September, Luna uses in-house Amazon Web Services, immediately reducing costs. It boasts over a hundred titles, plus starts at an affordable 6 bucks a month. Not only that, Luna has the easiest path to integration with the most popular game streaming platform Twitch. Because Amazon owns that too. And my favorite feature is publisher “channels,” which is similar to buying HBO for a cable package. Ubisoft Entertainment is already on board, where Luna will boast a channel on which Ubisoft games will release simultaneously as other platforms for an additional per-month fee. It has a long way to go, it’s still in early access and only available in the States, yet I see Luna with the best upside and the most practical of models.
Thus concludes my major predictions for the upcoming year. Am I out of my mind? What about you? Have any predictions of your own? Feel free to drop a line here or Twitter, and we’ll look back a year from now to know just how well we did. Thanks for reading.
Sources: Company Investor Relations/Media Sites, InvestGame, Newzoo, NPD Group.