Games industry predictions for 2024 part two: Layoffs to continue, generative AI in production, and a year of innovation

Once again it’s that time of year where we all start feeling reflective and look back on the year just gone.

So to that end, we thought we’d ask our Mobile Mavens – a collection of games industry experts – a few questions about the year gone by, and what lies ahead in 2024.

Here we ask:

What are your predictions for the games industry in 2024?

You can read part one of this article here.

Games as a service will be even more important in 2024 as publishers double down on retention. As user acquisition costs continue to grow and mobile game studios confront the challenges of building a new game, such as attracting and retaining users to make it profitable, companies will need to differentiate their player strategies.

In 2024, we’ll see publishers increase personalisation, segmentation and player servicing. In order to drive user growth, players need increased engagements on a daily, weekly and monthly basis.

AI should be leveraged to develop code, create art and conduct Q&As, all which can contribute to higher quality products. Player segmentation and targeting content, live ops, features, and other offers will help to retain players and grow their in-game experience, engagement and spend.

Tightening third-party data usage and privacy policies will spur innovation. Mobile games developers and publishers have always prioritised innovation, and will continue to build tools, technologies and models to adapt to any new privacy changes.

As permissible third-party data tightens and privacy policies become more strict, developers and publishers will explore new marketing channels, such as offline, OOH, TV, influencers, and new partnerships.

In 2024, we’ll see a rise in in-app advertising in mobile gaming. From a consumer feedback perspective, multiple studies now show players expect advertisements in games and/or prefer watching ads for in-game rewards rather than making in-app purchases.

I expect 2024 to be a year of innovation, with many new and original games emerging. While some will fail, others will create brand-new experiences.

Additionally, the trend of building IPs and brands through strong narratives, distinct characters, and rich universes will only grow stronger. In the crowded digital entertainment world, this approach is a must-have and is a challenge we at AppAgent are eager to tackle.

Lastly, AI will evolve from individual experimentation to a strategic, company-wide initiative. A cohesive understanding of AI at the team level will lead to its integration into processes, ultimately bringing positive ROI for businesses that embrace AI as a vital tool to master.

Firstly, I believe that competition for audience attention will not only continue but also intensify in the coming year. Consequently, we can expect to see an array of new methods for attracting users, innovative game solutions, modernisation within entire niches, and a rise in genre hybridisation featuring various and previously unexpected combinations.

Market consolidation is set to persist into the new year and will likely remain a long-term trend. This shift may lead to a decrease in the number of ‘independent’ projects on the market, but we can anticipate an overall increase in average quality, along with more teams branching out from large companies.

In 2024, player expectations are expected to rise even further. Audiences are becoming increasingly discerning about project quality, engagement levels, and gameplay mechanics. This trend will become more pronounced each year, rendering hastily crafted games ineffective. Success will hinge on developers meeting these heightened demands, with publishers playing a crucial role in supporting them.

Furthermore, I anticipate a continued influx of Asian projects into the Western market. While there are already numerous successful examples, such as Genshin Impact and AFK Arena, their presence is expected to expand in the future.

And, finally, I wish that the new year will bring more fun and joy to all of us. Happy New Year, everyone!

I think AppLovin will become the No. 1 UA channel surpassing Google, Meta and Tiktok.

Consumer spending in 2024 will continue to slow in developed markets (ongoing high inflation / high interest rate environment).

As a result:

• I believe layoffs continue with rounds two (and probably three) as businesses continue to align cost base to reduced revenue growth expectations.
• M&A activity will increase as the strong get stronger and take advantage of those businesses that will struggle, but also that bankruptcies will increase due to these economic pressures (and not every business/game is worth buying).
• As a result of all this, I believe the number of new game launches will reduce due to the investment required and the probability of success, and there will be more investment into existing franchises or updates to existing games vs creating new ones.
• On a more positive note, we should see higher growth in emerging markets than previous years due to improved technology (devices, network speeds) and new players.

It will be even more intense, with more of the same dynamics but at a new level. 2024 will not be an easy year for games companies – we expect more pressure from the macroeconomy, competitors, and players’ expectations.

But pressure creates diamonds, so we also expect even more record-breaking success stories and black swans. More independent developers will rise, and more capital will be poured into gaming startups. But we expect and hope for meaningful investments, capable of returning capital, creating sustainable companies, and not spoiling the whole ecosystem.

In 2024, the mobile games sector is set to hit a major stride with an expected 4% increase in revenue, reaching about $111.4 billion. This growth is impressive, especially considering it’s bouncing back from a recent spending dip after the pandemic boom.

This shows the mobile games market’s strong ability to adapt and grow even in uncertain times. The year is also likely to see a mix of games grabbing players’ attention. We’re talking RPGs, match-three games, and party titles gaining popularity, with these genres significantly driving revenue growth. This shift shows players are looking for a wider variety of gaming experiences.

On the tech front, 2024 is gearing up for some big changes. The rollout of 5G is expected to make gameplay smoother and more responsive. Then there’s AR and VR, set to offer more immersive gaming experiences.

Plus, cloud gaming is looking to change the game, allowing high-quality gaming on various devices, moving past traditional hardware limits. All in all, 2024 is shaping up to be a year where mobile gaming not only grows in revenue, but also diversifies its offerings and embraces cutting-edge technology, enhancing the overall gaming experience for players worldwide.

In 2024, I expect the games industry to post moderate growth, rather than the explosive growth of the past. As the industry matures overall, I think players will grow more hesitant towards games that have overly aggressive monetisation models and instead will focus on quality games.

In the coming year, as prices for other service providers continue to increase, developers will start looking for an all-in-one platform to provide them with the tools they need to grow.

In tandem with switching to cost effective solutions to combat shrinking margins, we predict seeing studios explore alternative platforms for their games, like web browsers, as an additional revenue source.

Launching new titles will remain challenging and require highly experienced, creative teams, regardless of genre and style. We’ll see more games embrace genuine diversity and authenticity like Assassin’s Creed Mirage.

The rise in Generative AI will help smaller development teams to create better games faster, providing a new canvas for new entrants in the industry to surprise and challenge us.

Emerging technologies like AI will significantly influence game creation and growth in 2024. Recent advancements in AI are helping app developers create games much faster and at a lower cost than ever before. The lower cost of creation allows developers to experiment more early on, create easier content, and market test that content and incorporate feedback quicker into their production.

For example, if you build a runner game, you can use AI to generate different running environments like a sports stadium, a field, or a wooded trail. This is an easy, cost-effective way to create more levels and add longevity to a game that I suspect we’ll see implemented more widely in the year ahead.

AI-driven personalization will help gaming developers create more engaging player experiences. The best way for game developers to increase long-term retention is to make their game or app feel like it’s designed especially for their players.

AI helps by enabling the developer to segment users and customise game progression so it feels as if the game’s level of difficulty has been uniquely calibrated to a user.

Segmentation can create custom experiences that feel unique to each user, which leads to more engagement – and that leads to more retention.

We’re likely to see more of this application of AI – in gaming and beyond – to personalise app experiences and successfully retain users.”