Impact of the COVID-19 pandemic on the video game industry

The video game industry has been substantially impacted by COVID-19 pandemic restrictions in various ways, most often due to concerns over travel to and from China or elsewhere, and delays in the manufacturing processes within China.
In contrast to many other economic sectors that are drastically affected by the pandemic restrictions, the video game industry has been more resilient. Most video game developers, publishers, and operators have been able to maintain operations with employees remote working to sustain game development and digital releases, though some productivity issues arose. With many people globally at home and unable to work, online gaming has observed record numbers of players during the pandemic as a popular activity to counter physical distancing for society, a practice recommended by the World Health Organization that helped boost revenues for many companies in the gaming industry.
There have still been negative impacts on the industry, notably with major trade events like E3 2020 cancelled or postponed which may have impacted relationships between the smaller developers and publishers. This has particularly impacted indie developers who typically use these events for face-to-face meetings with potential partners to gain funding and publishing support, and caused them to have to delay or cancel projects. Many esport leagues had to alter plans for their games, transitioning from live events to remote play or cancellation altogether. Portions of the sector that relied on physical products, such as retail stores and peripheral makers, as well as those dependent on in-person activities such as quality assurance through playtesting, ratings evaluation, and marketing, also struggled with global stay-at-home orders.
As the origin of the pandemic, China was expected to impact the supply chains for electronics, which may limit hardware availability once the pandemic begins to be resolved. However, it did not impact plans for Microsoft and Sony to release the Xbox Series X and PlayStation 5 respectively in fall 2020.
Many trade events and expositions for the industry were cancelled or postponed due to bans against public gatherings during the pandemic. The pandemic led to some longer term changes in the way the industry handled public outreach, such an increasing its reliance on digital marketing. The increasing importance of Nintendo Direct streams are an example of this.
Most esports events are based on online games, but are typically played in local arenas to reduce network latency between players as well as to provide an audience. The pandemic caused many of these events to either become cancelled or switch to a fully online format for 2020:
While many traditional physical sports games, seasons, and playoffs were cancelled due to the pandemic, the organizing leagues turned to video game equivalents as alternative entertainment, using the professional athletes from their leagues within the games. Some examples of this included:
Television networks which normally would have shown the sporting events that were cancelled have turned to both these replacement sports programs as well as other esport tournaments as replacement programming during the pandemic. On 14 June 2020, the BBC reported that about 22 million sports viewers turned to virtual races when lockdowns were implemented. Questions over the future of esports rose with Formula 1 returning in July 2020.
Generally, sales of video games have increased as a result of stay-at-home and lockdown orders from the pandemic, as people turned to video games as a pastime. The NPD Group reported that video game sales in North America in March 2020 were up 34% from those in March 2019, and video game hardware up by 63% – which included more than twice the number of units of the Nintendo Switch console. Net spending across the first quarter of 2020 in the United States reached US$10.9 billion, up 9% in 2020 compared to 2019 according to NPD. An increase at this point, near the planned end of the eighth generation of video game consoles, was unusual and was attributed to the pandemic. By July 2020, NPD Group reported that the total sales of video game hardware and software within the United States in the first six months of 2020 reached US$6.6 billion, the highest since 2010.
Some specific examples of game software and hardware sales affected by the pandemic include:
Game publishers and developers have expressed concerns that further extensions of the movement control orders from the pandemic may incur additional delays. One major factor that may cause delays is the ability to capture voice acting without access to studios during physical distancing for society, even though some of members have considered working from residence remotely to avoid troubling situations. An example of this happened with the Western release of Persona 5 Strikers whose voice acting in English was meant to start in April 2020 but was delayed due to the pandemic. The actors later received audio equipment from Atlus so that they could work at home.
As much of the world's population have been quarantined due to the pandemic, video game playing and other Internet use has increased significantly. Steam had over 23 million concurrent players during March 2020, surpassing all previous records while over three billion hours of content were watched on Twitch over the first quarter of 2020, a 20% increase from the previous year's. Microsoft reported a substantial increase in users of its Xbox Game Pass service in the months of March and April 2020, bringing it to over 10 million subscribers. GeForce Now capacity was temporarily exhausted in Europe before additional server capacity was added.
The additional bandwidth from video games and other Internet services created concerns that critical bandwidth would not be available for medical and other key infrastructure elements necessary to mitigate the spread of SARS-CoV-2. To help reduce demand during peak hours, the Akamai content delivery network for many video games and major digital storefronts such as Xbox Live, PlayStation Network, and Steam capped download speeds and encouraged the users to download at off-peak hours.
During quarantine and lockdown, Ubisoft announced an update for Just Dance 2020 to keep players active: customers who owned the game could access a month of the Just Dance Unlimited service. Ubisoft also announced in its official forum that the second event entitled "Power Gala", which was part of the second season "Feel the Power" in Just Dance 2020, had been postponed. The developer explained that the company wanted to protect its team due to the pandemic, and that "although [their] team still work[ed] hard to make our servers work as smoothly as possible at home", this needed to be resolved by postponing the content. Two tracks from Just Dance Unlimited were made free to make up for the delay.
The Japanese game ratings body Computer Entertainment Rating Organization was forced to close operations from early April through 7 May, and upon reopening, implemented appropriate controls that reduced work hours, which is expected to delay some releases in Japan as they await a rating for retail release.
With the need to stay inside one's home to avoid infection, many gamers flocked to online games as a substitute for social interactions they would otherwise miss. Animal Crossing: New Horizons was especially popular, with people around the world turning to the game's recreation of ordinary daily life activities and social networking features as a substitute for the normalcy disrupted by the pandemic. Another very popular game during the pandemic was Grand Theft Auto Online. The game reached one of its highest simultaneous player count of 267,000 players at the beginning of 2020.
Fall Guys and Among Us were particularly popular during this time, with the former being released during the pandemic and the latter receiving a surge of popularity. Some non-online games were also thematically compared to the pandemic, such as The Longing and Presentable Liberty. Microsoft Flight Simulator, first released in August 2020, has been considered popular during the pandemic, as many saw it as a safer alternative to travelling. Other games, such as The Last of Us Part II, Roblox and Project CARS 3, were also popular during the pandemic.
Towards the end of 2023 and continuing into 2024, the video game industry saw a large number of layoffs, with over 10,000 jobs lost in 2023 and at least 8,000 in 2024 by February 2024. While other factors contributed to the layoffs, such as previous acquisitions and mergers that came after 2021, the return to normalcy after COVID changed the profitability of video games, lowering market forecasts, which the inflated industry could not sustain.