Gaming Market Forecast: 3 Top Trends That Will Affect Gaming in 2023

1. Can gaming investments level up in 2023?

Raj Lala, president and CEO of Evolve Funds, told INN the outlook for gaming stocks remains high in his view.

His positive outlook is based on the way consumers categorize their spending when it comes to gaming.

“A large number of gamers don’t see gaming and esports as discretionary spending. It’s a staple for their social lives,” he said.

Evolve offers exposure to gaming stocks through the Evolve E-Gaming Index ETF (TSX:HERO). The fund's top holdings include NetEase (NASDAQ:NTES), Activision Blizzard (NASDAQ:ATVI), Electronic Arts (NASDAQ:EA) and Nintendo (TSE:7974).

“Gaming is a cheaper form of entertainment, which makes the sector relatively recessionary resilient compared to some others,” the exchange-traded fund executive said.

Lala added that he is encouraged by the transition toward subscription-based revenue models, which is a change from the standard one-time purchase of a game or a piece of hardware.

Mat Piscatella, executive director and video game industry analyst at the NPD Group, also has a bright outlook for gaming.

As part of his 2022 mid-year review, he said that in the short term the gaming market would face difficulties caused by ongoing console scarcity and a lighter title release window. “But in the long term, the growth prospects in the video game industry remain as strong as they’ve ever been,” he wrote.

2. Microsoft’s Activision acquisition to face more scrutiny

The biggest deal in the history of gaming is currently in limbo due to regulatory reviews in both Europe and the US.

In early 2022, Microsoft (NASDAQ:MSFT) announced plans to acquire gaming giant Activision Blizzard (NASDAQ:ATVI), whose catalogue of games encompasses popular titles like Call of Duty, World of Warcraft, Starcraft and Diablo.

The deal has faced significant scrutiny from antitrust voices, as well as from Sony (NYSE:SONY), Microsoft’s top competitor in the console landscape. The Call of Duty franchise in particular is a gaming console mainstay, and the deal would make it exclusive to PC and Microsoft's Xbox console, leaving Sony's Playstation in the cold.

At the onset of 2023, it's clear the pending purchase will continue to dominate the headlines as Microsoft gears up for a legal battle with the Federal Trade Commission in the US.

If Microsoft is able to clear regulatory hurdles to acquire Activision Blizzard, it will add a significant library of games to its catalog, strengthening its gaming subscription service Xbox Game Pass.

Sharing his view for 2023 with GamesIndustry.Biz, Piers Harding-Rolls, an analyst with Ampere Analysis, said he expects to see the deal go through, but with more concessions than anticipated.

The analyst thinks Microsoft will have to make a few adjustments in order to complete the acquisition.

“Those could be focused on Game Pass inclusion of games and title availability on other services,” Harding-Rolls said. “I think there is a higher chance of the deal closing with concessions than of it being halted.”

In terms of when the deal could close, the analyst said it could happen in the first half of 2023 if Microsoft caves in sooner than later. But if the two parties go to court, the deal could “drag on into the second half of 2023.”

Investor takeaway

Video game investments struggled in 2022, and while an immediate recovery seems tricky, it's clear the fundamentals of the market remain strong. Analysts and experts are bullish on both spending trends and industry conditions in 2023.