The Audit of Our 2024 Predictions

Written by Michail Katkoff , founder of Deconstructor of Fun and a games industry veteran with 15 years of experience in building, operating, and scaling games and game companies. Throwing out predictions is easy. Tapping yourself on the back for a correct prediction is rewarding.

But being open about your track record is essential. We certainly don’t always get it right. Our last year’s record was (7/8) .

But you can count on us to be the first to call ourselves out when that happens. Our track record for 2024 predictions: 4 correct 1 partly correct 1 wrong     See what we missed and why below. Most importantly, make sure to sign up for our newsletter to be the first to read our predictions for 2025 .

Prediction 1: Lean Times Drag On CORRECT The market didn’t bounce back to the 20% year-over-year growth we’ve been used to. Asian markets declined while the rest of the world stagnated. Number of games in the stores continued to decline while new game launches found yet again a record low.

All of the above meant that the jobs lost didn’t come back. Gone are the days when the market grew 20% annually on overage. Three years of stagnated IAP revenue with Asian markets steadily declining.

  The number of new games entering the market reached another record low while the number of games in the stores continued to decline. Lockdowns massively boosted demand for games. When people were once again free, consumer habits changed significantly.

But it wasn’t just the rekindling of outdoor activities that impacted gaming.    Not to mention the economic challenges, which on individual household level decreased the disposable income.   To top it all, the geopolitical environment only got worse in 2024.

  Due to the five factors above, the mobile market continued to stagnate. Here’s an early prediction: as long as the 5 fundamental factors above don’t drastically change, the stagnation will continue . Sign up to our newsletter and be the first one to get our 2025 predictions .

Prediction 2: User Acquisition Stabilizes  CORRECT In late 2023, the user acquisition (UA) market started showing signs of stabilization post the privacy the Apple’s privacy enforcments.   The overall IAP revenues shot up after the decline in 2023. Partly this is due to companies adjusting to the new UA landscape.

Partly due to the newfound focus on live ops, which is driven by the difficulties of launching new games in the post-IDFA market. We also predicted that over the next few years, core games are expected to face ongoing struggles, while casual games continue to rise in popularity. As you can see below, we were correct.

Core games that have focused audiences and high monetizations faced ongoing struggles, while casual games with wide audiences continued to rise in popularity. This is why the IPs came back in full force. Prediction 3: Apps Will Overtake Games CORRECT Here’s what’s going on: A significant challenge for mobile games is the increasing competition from non-gaming apps, which are capturing more user attention and spending.

As consumers’ disposable income decreases, they prioritize essential utility services like Spotify, Tinder, and Netflix over gaming purchases.   How Mobile Gaming Could Come to an End has been the most divisive prediction I’ve made (the title might have been too much. Yet the platforms and investors agreed with me.

  At the same time, gamemakers looked at me as a hyperbolic traitor. They said my data was flawed as I was missing the webshop revenue and the ad revenue data. Which is a valid point.

But this graph is how Google and Apple see their revenues. And that matters the most as they are the platform holders.   I’m an old dog.

I’ve gone through the 2012 Facebook Ice Age.   Prediction 4: Investment Crunch Continues Partly-CORRECT We didn’t get this fully right. Venture capitalists continued to pull back funding despite sitting on record-sized funds they collected during the lockdowns.

What we failed to see is private equity and corporate venture funds (aka.   Despite raising massive funds during lockdowns, venture capital is not flowing into gaming. The problem is the massive slowdown of growth combined with the drop in valuation.

Both are essential for outsized returns. As venture capitalists take the backseat, private equity, and corporate venture arms become more active. The drop in valuation is one of the drivers for these investors.

The M&A market in gaming is expected to see a gradual increase as companies facing funding challenges seek alternatives. However, large-scale acquisitions, such as EA or Take-Two, are unlikely in the near term due to significant regulatory hurdles from the FTC, EU, and UK. S.

FTC’s resistance to big tech deals further complicates the landscape, making such moves improbable at least until after the next election. One potential exception could be Ubisoft, which might be acquired in 2025 if leadership decides to end its prolonged struggles. The pool of major acquirers has shrunk, with Zynga off the market, EA recovering from its Glu acquisition, and Scopely likely pausing activity.

Additionally, collapses at Embracer and Stillfront have further constrained consolidation opportunities. This dynamic could drive lower valuations and more selective deals. Emerging players like Fortis and Tilting Point may step in to become new consolidators, shaping the next phase of industry mergers over the coming years.

Prediction 5: AI Will Empower Adapter and Challenge Resisters INCORRECT 'I would love to say that it’s going to make things cheaper, quicker, better, or easier to make hits. ' Strauss Zelnick, CEO of Take-Two Interactive Mr. Strauss Zelnick is the CEO of a company that is making the most expensive game ever, GTA VI.

I’m sure he’d be the first in line to take advantage of AI in production. And if the CEO of GTA makers doesn’t find much value in AI, (yet), then we might have a bubble at our hands… AI draws in the investment Dollars in gaming but has little to show for it. Are we entering bubble territory or will the promises of AI revolution in gaming come true?

At the beginning of 2024, I got onto the AI bandwagon.   I believe that compact teams, often constrained by limited resources, can now leverage AI tools to amplify their creativity and productivity.   I stated that AI will reward those companies and individuals who evolve and integrate these tools into their workflows while challenging those who resist change.

And I believe that the adoption of AI will lead to job losses in our industry in 2024. When it comes to job losses due to AI in gaming, there was no evidence of that. But I believe in time, the same trends that the broader tech faces will also influence gaming.

  Prediction 6: Digital Markets Act Will Make Apple Bleed CORRECT Fines, alternative app stores, and the rise of webshops are all thanks to DMA making Apple bled. The European Union’s Digital Markets Act (DMA) has significantly impacted Apple by designating it as a “gatekeeper,” particularly concerning its App Store policies.   In response to the DMA, Apple has faced legal challenges and potential fines .

The European Commission has accused Apple of unfair competition due to its restrictive App Store rules, which allegedly hinder rival app developers.   Additionally, the DMA has prompted competitors like Epic Games to launch their app stores within the EU, directly challenging Apple’s market dominance. For instance, Epic’s introduction of its iOS game store, featuring popular titles like Fortnite, exemplifies the increased competition Apple now faces.