Gaming revenue drops as consumers weigh spending

The gaming industry, long thought to be recession-proof, is seeing revenue drop as consumers weigh discretionary purchases because of the rising cost of living.

Nvidia, which makes graphics processing units GPUs, is one of the latest companies in this space to warn that a gaming slowdown is impacting its bottom line.

The company said that its second quarter revenue would be around $6.7 billion, down 19% from quarter one, due to weakness in its gaming business.

Analysts said gaming would contribute more than $3 billion to the chipmaker's revenue. Gaming unit revenue, which includes high-end graphic cards, fell 44% from Q 1 to $2.04 billion, down from 33% in the previous year.

In July, X-box maker Microsoft reported a slump in gaming revenue. Sony has recently trimmed its forecast and Sony has pointed to easing COVID restrictions and waning interest due to lack of new games available.

Research done by Ampere Analysis last month shows that global video game sales are projected to be between 1.2% and $188 billion by 2022, according to research done by the market research firm in London.

The idea that the gaming industry is recession-proof was a fallacy, according to the study. After two years of a huge expansion, the games market is poised to hand back a bit of that growth in 2022 as multiple factors combine to undermine performance, said Piers Harding Rolls, research director. The year will end well ahead of the pre-pandemic performance, and the outlook for the sector as a whole remains positive, with growth predicted to return in 2023.