(Reuters) - A recovery in the global video-game market is expected to pick up pace this year on the back of strong sales of Microsoft (NASDAQ:MSFT)'s Xbox and Sony's PlayStation 5 consoles, according to research firm NewZoo.
The market is set to grow 2.8% to $189.3 billion in 2024, after it rose around 0.6% last year and ended a post-COVID decline that had led to layoffs at several video-game firms, NewZoo said.
After two years of pandemic-fueled growth, the gaming market fell 4.3% in 2022, according to an earlier NewZoo report, as gamers grappled with high interest rates, stubborn inflation and a lack of big titles.
The recovery in 2023 was driven by the release of several big titles, including Electronic Arts (NASDAQ:EA)' "Star Wars Jedi: Survivor" and "FC 24" soccer title, as well as "Hogwarts Legacy" from Warner Bros Discovery.
"Even though this year's release catalog is expected to be less impressive than 2023's absolutely packed schedule of much-anticipated hits, live-service games and back catalog sales will drive growth" in console sales in 2024, NewZoo said in a report.
The prediction mirrors the view at Sony, which expects to sell 25 million units of its PlayStation 5 in the 12 months ending March thanks to a new, slimmer version of the device.
Live-service games, such as Epic Games' "Fortnite", have become a major driver of gaming revenue in recent years as their free-to-play model and content updates attract a large number of users and keep them engaged.
But there are signs the model was under pressure. NewZoo said user engagement data from 2023 showed people are moving away from live-service games and opting for premium games.
It also noted that growth of gaming subscription services like PlayStation Plus and Xbox Game Pass - where users pay a fee to access to a bevy of titles - was expected to slow this year.
"2024 should not be marked by as many major disruptions and should instead remain in a form of continuity with what has already been observed recently," Ubisoft Entertainment Market Strategy Manager Romain Bingler said in the report.