MMO Money: Analyst Predicts First Video Game Decline in 24 Years

It looks as though Runescape creator Jagex may be for sale in the near future. Facebook released documents that are VERY anti-consumer. We also got a look at the December 2018 revenue chart for games, but the biggest news this week was an analyst who predicts the game industry will actually decline in 2019, the first time since the 90s. Find all of this below in this week’s MMO Money.

 

Jagex Possibly For Sale

Just a few years after acquiring Jagex, Fukong Interactive may be getting ready to put it up for sale. This comes at a time when Jagex is posting its best financial results ever, so the problem isn’t Jagex. In fact, it is Fukong Interactive that is the focus as they’ll be undergoing some restructuring. In a statement issued to GamesIndustry.biz Jagex Director of Communications, Rich Eddy, had the following to say.

“Fukong Interactive has issued a regulatory statement to advise the Chinese financial market that it is planning a major reorganisation and is considering sale of assets, with the partial or full sale of Jagex as a potential option. A sale of assets is one of multiple routes Fukong Interactive has available as it restructures and, by making this initial statement to the market, Fukong can now begin exploring such options.

“Whatever the outcome of Fukong’s restructure, Jagex continues to execute on our short-term and long-term strategies for the RuneScape franchise, which has seen five years of consistent growth, delivered lifetime revenues of $1 billion, and now has player membership at an all-time high driven by our living games approach and a successful first move to mobile with Old School RuneScape.

“Jagex has never been in better shape and the year ahead will see further investment in the organisation as we expand our talent base to create and deliver significant new content for our players, build on our Jagex Partners third-party publishing initiative, in addition to increasing our presence in mobile sector with RuneScape itself.”

Source: GamesIndustry

 

December Charts

SuperData is back with the final monthly game chart report for 2018, and it looks like December was a good month for Blizzard as they once again entered the charts. However, worldwide digital spending dropped 2% to $9 billion. In the mobile chart Pokemon Go continues to hold strong, now second only to the massive Eastern hit Honour of Kings. World of Tanks makes it on the charts for PC. Grand Theft Auto V continues its slow decline on console in the number six position on the chart. While PUBG and Fortnite had massive successes that can’t be ignored CS:GO is worth talking about. It’s now in its second month as a free-to-play game and has hit a new high for monthly active users. SuperData also estimates that the game, as a free to play title, made $49 million between November and December.

Source: SuperData Report

 

Analyst Predicts First Video Game Decline in 24 Years

Notable analyst Pelham Smithers has predicted that the video games industry will see its revenue decline in 2019. While speaking to Bloomberg he stated that his firm has predicted the games industry would decline 1% this year. That may not seem like a lot, but it is certainly noteworthy because it is the first time there has been any decline in the industry since 1995.

While a number of factors will contribute to this decline, Smithers specifically mentioned the ongoing effects of the 9-month freeze on new game approvals in China, which only recently ended. While approvals have started again the pace is slow which will continue the financial woes for the industry.

The mobile games industry is also being impacted by its inability to expand quickly and easily into China. This comes at a time when the industry has plateaued in Japan and the United States. Stagnation in one area means that declines hit even harder.

Declines like those being seen in Fortnite and PUBG. Both games saw the number of active users decline year-over-year as players grow tired of the format. Smithers predicts that this will trigger a slump in PC game revenue in 2019.

Talking about consoles, Smithers predicts that they will be unable to improve on the record-breaking year they had in 2018. Part due to it not being clear what games will be released this year but also that we’re near the end of the current console generation. Smithers observed that if the Playstation 5 doesn’t launch until the end of 2020 the console sector will continue to feel the effects until 2021.

Finally, Smithers warns that this decline could stretch into 2020. However, Bloomberg points out that rival analysts at Goldman Sachs, Nomura Holdings and Morgan Stanley disagree with Smithers and maintain that the video games industry will continue to grow.

Source: Bloomberg

 

Facebook Friendly Fraud Tactics

Farmville Screenshot Epic

Thanks to a recent class-action lawsuit, internal Facebook documents have come out that show Facebook encouraged what they called “friendly fraud” at the height of Facebook gaming’s popularity. Friendly fraud was what they called it when a child would overspend on games using their parent’s bank details. During this time they often refused refund requests and even ignored their own ideas on how to curb the behavior. Their internal documents even show that most often kids didn’t even know they were being charged real money. Facebook did change their stance…in 2016 when the era of Facebook games was all but dead.

Source: MMOGames

 

Keep an eye out later in the week for a special edition of MMO Money that looks back at 2018 with reports from across the games industry.

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About Shannon Doyle

Shannon first discovered MMOs in 1999 when she picked up the newly launched Everquest. This started a lifelong love affair with online gaming that has taken her around the world and brought her to MMOGames.com. While she still pines for the streets of Paragon, the City of Heroes, today she spends most of her gaming time walking across Tyria in Guild Wars 2, roleplaying with anyone who says hello.