From Nintendo Switch to Donald Trump: What Will Shape the Gaming Industry in 2017

January 20, 2017, 4:52 PM UTC
Photograph by Nicholas Kamm—AFP/Getty Images

Every year I make wildly inaccurate predictions about the future of games, and that time has come again. I go through this exercise not only to suffer great embarrassment, but but also to sharpen my thinking by looking back over the years in an attempt to find the future.

I have written more than 13,000 stories for VentureBeat over the past nine years, and many of those are about games. I’ve heard so many predictions, and it’s easy to make fun of them. I figure it is only fair to go out on a limb myself with my own augmented reality view of the future.

It’s also a good way to look at the past year and get a dose of reality for what I thought I hoped would happen in the $91 billion industry.

My scorecard for 2016 predictions

Before last year, I predicted that virtual reality would take off, but not as fast as the hype would suggest. This was an easy one, as no nascent industry could live up to such expectations. VR generated $2.7 billion, a respectable number but far less than originally expected. I also said that VR and AR would command the lion’s share of new investments in gaming. I don’t have full numbers yet, but it rings true.

I said that esports viewership would be on a path to rival the Super Bowl. I lack the numbers on this one as well, but I was vague enough to be at least partially accurate. I thought Sony would widen its lead in consoles, and it certainly did as the PlayStation 4 crossed 50 million units, the Xbox One came in second at 25.5 million units sold to date, and Nintendo trailed behind with the Wii U at 13 million units.

I said that game companies would explore the possibilities of augmented reality, but wouldn’t cash on it yet. Boy, was I wrong. Pokémon Go cashed in big time with $950 million in revenues in 2016. I was right that Nintendo would show its cards for its turnaround strategy, and it did so with the announcement of the Nintendo Switch. I predicted hardcore gaming would gain ground mobile devices. To some degree, that was true, with hardcore (me thinks) titles like Clash Royale doing well, and big revenues for titles like Monster Strike, Madden NFL Football, and other hardcore mobile titles.

I said consolidation would continue as foreign companies and media conglomerates acquired more game publishers. That was true, as Tencent bought Supercell at a $10 billion valuation. I predicted markets such as India and Brazil would become more interesting. That was true, but they haven’t set the world on fire yet. And I predicted the traditional media would lose ground to new ways of reaching consumers. There’s no argument on that one, as influencers like PewDiePie on YouTube crossed 50 million users.

For the usual fun and embarrassment, here are my predictions for 2015, 2014, 2013 and 2012. Please vote for your favorite prediction in the poll at the bottom.

Predictions for 2017

1. Red Dead Redemption 2 will be a smashing success.

Few companies are betting as big as Take-Two Interactive’s Rockstar Games label. They disappear for five years and come up with Grand Theft Auto V, which became one of the best-selling games of all time. Rockstar has trained us to only expect the best, and they delivered that with the original Red Dead Redemption, which had memorable characters like John Marston and chronicled the death of the American frontier.

Rockstar takes a long time to deliver, but the quality never wavers. Seven years later, Red Dead Redemption 2 is scheduled to launch in the fall of 2017. This is a pretty safe prediction. The game will dominate sales for whatever month it is released and probably a lot longer than that. Competitors would be well advised to steer clear of its launch date.

2. Nintendo Switch will outsell the Wii U but fall short of the Wii

Nintendo has a good design for the Switch, targeting people who want to use the same console at home and on the run. The system also has a smart controller design that will inspire new types of social and exercise games. This hybrid home console and portable idea is one whose time has come, and no one else has executed it well yet. This console will do better than the Wii U, which sold 13 million units.

But it will fall far short of the 100 million units sold for the previous generation Wii. The Wii was a rare confluence of a novel technology that was priced low and appealed to the masses. The Switch will likely cannibalize sales of the 3DS handheld, but it isn’t such a spectacular breakthrough that everyone is going to buy it. The device is underpowered, and it isn’t likely to beat the performance of the aging PlayStation 4. The line-up looks thin so far, and hardcore fans may hold back because of that.

3. Virtual reality will struggle to gain traction

Analysts are busy shaving back on their optimistic estimates for AR and VR. Tim Merel of tech advisor Digi-Capital announced last week that AR and VR could hit $108 billion by 2021. But his previous prediction was that the combined industries would hit $120 billion by 2020, and before that, he predicted it would be $150 billion by 2020. We don’t mean to pick on Tim, but it’s clear there’s a trough of disillusionment for VR, which has done respectable numbers on mobile but still lacks traction on the PC, where the price of entry is still too high.

The good news is that AR and VR technologies are moving fast, and tetherless VR systems (which have no wires or no need to connect to a PC) are under way at Intel, Facebook, and many other companies. The companies will continue to use Moore’s Law gains and other engineering innovations to make smaller, thinner, and less expensive headsets. And that will pay off, but probably not in 2017. It will be a better year in 2017 than 2016, but not good enough to justify the hype and optimism. The fundamental problem is that I haven’t seen the killer app (like Pokémon Go was for AR) in VR.

4. Apple will enter the AR/VR fray

Apple is never the first to the party. But when it enters a market, it blesses it. That happened with the iPhone, and Apple tried to make that happen with the Apple Watch. The company has sat out the VR party, allowing Samsung’s Gear VR to take the early lead and learn from mistakes. Tim Cook, CEO of Apple, has expressed a lot of belief in augmented reality.

The components for doing it right are coming down in cost, but even bulky 6-ounce headsets from Osterhaut Design Group cost $1,800. Apple will likely move into the market with a technology rich solution, but even it may have hard time early on. Whatever it does, it can’t afford rivals like Samsung and Google to get the edge in mobile VR and AR. I guess this more of a hope than a prediction, as something needs to give this market a kick in the pants.

5. The U.S. will continue to lose jobs to overseas game companies came up with a sobering report: U.S. game developer job postings have dropped 65 percent since 2014. That’s a sign that the U.S. job base for games could be on a downhill slope, as mobile games level the playing field and other regions produce more new jobs. Regions such as China and Europe have claimed their stakes in games, and Canada’s company-friendly subsidies have sucked a lot of jobs to the north.

But there’s hope. If the aforementioned boom in VR/AR investment and overall sales materializes, the U.S. should see more than its unfair share of VR/AR jobs.

On top of that, many of the game-related jobs in the U.S. are being created at platform companies, which are still mostly based in the U.S. If you consider the game-related jobs at Apple, Google, Amazon, Facebook, Microsoft, Intel, Qualcomm, and many others, then we don’t have to sweat as much. And for sure, Donald Trump will drop the hammer on anyone who dares to move a lot of U.S. jobs overseas.

6. The industry will have a chance to build an open platform for the Metaverse, but it will fail to do so

Tim Sweeney of Epic Games painted a beautiful vision of how to create the Metaverse, the virtual world envisioned by Neal Stephenson in the novel Snow Crash in 1992. That novel’s vision of a pervasive cyberspace where we live, work, and play has inspired many a startup including Second Life maker Linden Lab. Linden Lab itself has its own Sansar virtual world spaces coming this year as one of the opening bids to create such a Metaverse.

Sweeney argued how this platform should be open for everyone to build upon, but I don’t see the industry coming together to do so. It’s the “tragedy of the commons” playing out all over again. Each company will pursue its own self-interest, but it won’t sacrifice anything for the greater cause of an open platform Metaverse, which could foster a much bigger market for everyone.

7. The number of traditional Triple-A console games will continue to slip

Electronic Arts published 60 games in 2008, and it published eight in 2016. It still makes a lot of money, but it has fallen back on the fewer, better, bigger strategy. So have many of its rivals such as Ubisoft, Activision Blizzard, and Take-Two Interactive. Many Triple-A game studios are closing, and a lot of game veterans are moving over to mobile games or virtual reality. Many of the companies who are still standing are taking more time to do their titles. It doesn’t take a genius to do the math.

8. The next generation of consoles will surface at E3

The console cycles are just about over. Nintendo cut short the five-year cycle, dumping the Wii U early in favor of its upcoming Nintendo Switch. Microsoft will introduce Project Scorpio at the close of 2017, just four after introducing the Xbox One. And Sony introduced its PlayStation 4 Pro and PlayStation VR mid-life upgrades in 2016.

I will guess that Microsoft will describe a lot more about its new system at E3, and Sony will likely respond by dropping a hint about what is coming next for its platform. The Switch will debut on March 3, and that will put pressure on the others to talk. But it’s not clear to me that the Microsoft and Sony systems will materialize in 2017.

9. The walls between science fiction, real world tech, and video games will come down

This is the theme of our GamesBeat Summit 2017, which will take place on May 1 and 2. We’ll delve into this a lot more, but I love how the ideas that were once science fiction — self-driving cars, voice controls, and 760-mile-per-hour trains — are becoming real. What was once science fiction will be tomorrow’s science fact. We see the creative visions of plausible science fiction becoming the inspiration for real-life technology and video games.

I expect that science fiction worlds like those in Blade Runner, The Matrix, Minority Report, Inception, Black Mirror, Ex Machina, and HBO’s remake of Westworld will inspire new visions for technology companies and new plots for video game stories. This will play out over time, but we’re already seeing it with Square Enix’s Deus Ex: Mankind Divided. The company Open Bionics is creating 3D-printed artificial limbs inspired by the arm of Adam Jensen, the hero in Deus Ex, where “natural humans” and “augmented humans” come into conflict.

10. Donald Trump will inspire game developers to be more creative

If angst can spur creativity, then Donald Trump’s inauguration will likely have a positive effect on games. Troubled artists can be productive. They can produce everything from comic satires to apocalyptic visions. I don’t detect a lot of enthusiasm for Trump among the core game design circles, and a number of game developers are actively urging their colleagues to resist any really threatening changes that Trump has promised to make, like dumping the Affordable Care Act.

Trump Dump did surprisingly well in 2016 on mobile, even though it didn’t have much gameplay. Perhaps the new President will strike back with his own mobile game based on a reality show in the White House. But you can expect that the struggle for the hearts and minds of the American consumer will play out in gaming as much as in other forms of entertainment.

I think that there are plenty of other projections to make, like the rise of China in mergers and acquisitions, the growing momentum for esports, and big gains for game streaming. But I’ll stop at 10.

What are your favorites among the predictions above? Please take our poll and vote for one.

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