GDC Highlights Domination of Mobile and Live Services Amid Tough Year for AAA Space

Set to wrap today, the 2024 Game Developers Conference encapsulated another year of intense enthusiasm for the video game industry’s successes and prospects — even during a time of significant uncertainty.

While the weeklong event was jampacked with people from all facets of the gaming business and other interested sectors seeking to connect over panels, show-floor expositions and other parts of the event, the surge of layoffs that defined 2023 and worsened this year was still front of mind for many attendees.

“People in this room have lost their jobs,” said Alanah Pearce, a writer at PlayStation’s Santa Monica Studio, while hosting GDC’s awards show Wednesday. “People who normally attend GDC every year have had to cancel because coming here is sort of an extravagant luxury when you don't know when your next paycheck is coming.”

Per gaming analytics and market research company Newzoo, the growth of AAA gaming across consoles and PC is struggling to match pre-pandemic levels after a surge of engagement caused by and isolated to the early pandemic. While PC and console revenue saw a 7.2% compounded annual growth rate from 2015 to 2021, Newzoo’s forecast for 2023 to 2026 predicts the same rate will be below 3%.

On top of that, Newzoo’s tracking of average quarter-to-quarter playtime in the AAA space shows engagement has decreased by 26% since the start of 2021.

“Getting a $500 gaming console or an even more expensive gaming PC ... that’s harder than like this multipurpose phone that sits in your pocket and can also play games,” Newzoo’s consulting director Ben Porter told VIP+. “The way that those games monetize is completely different.”

While mobile games make some money from ad revenue, in-game spending, or microtransactions, are the bread and butter that have enabled mobile games to comprise half of the gaming industry’s global revenue for years. Per Newzoo, mobile games were worth $90 billion in 2023.

But unlike AAA games, the success of the mobile sector relies more on casual games that are easy for most people to pick up and play.

“It's very snackable, bite-size, little moments of entertainment,” Jan Wedekind, vice president and head of central insights at King, told VIP+. King specializes in mobile games including “Candy Crush” and was acquired by Activision Blizzard in 2016 for $5.9 billion, a deal that boosted the “Call of Duty” publisher’s player network to more than 500 million users before its own sale to Microsoft last year.

Still, the AAA space isn’t ignoring mobile. First launched in 2020, “Call of Duty: Warzone” made its mobile debut Thursday, bringing the topline first-person-shooter live service to phones everywhere.

“This is a big effort that’s taken a considerable amount of time and resources,” Activision’s SVP and co-head of mobile Chris Plummer said. To him, re-creating the biggest AAA franchise’s signature battle-royale experience, a fully internal operation, was worth the effort for the inherently social element and proliferation of smartphones. “Everyone engages in lots of different platforms for different things, utility and whatnot, but when it comes to your social lives, it’s pretty much your phone. We’re ready for another breakthrough.”

Mobile is also where Mattel is kicking off its own self-publishing push for its games.

“The idea is greenlighting one game per year,” said Mike DeLaet, Mattel’s global head of digital gaming, to VIP+. “Anything that’s kind of standard PC-console will automatically be a licensing opportunity. But we are looking at it from a slate perspective of what’s the right IP, the right company, the right opportunity.

That means Mattel will still rely on bigger companies in the gaming space for most of its output, while mobile is best suited to test fully branded Mattel games.

“Mobile [development]’s in this bucket of 18 to 24 months, PC-console could be two to five years,” DeLaet continued. “It’s more expensive, it’s bigger bets, and so we want to make sure we find the right partner to work with on PC-console especially.”

That puts Mattel more in line with other Hollywood players in the gaming space, all of which have flocked to huge platforms like Fortnite and Roblox to boost visibility for big releases.

As Mattel did with “Barbie DreamHouse Tycoon” on Roblox in the wake of the film’s success, Warner Bros. has sought out the platform to make a big promotional push for “Godzilla x Kong: The New Empire,” which releases March 31.

“We’re calling it a playable trailer,” said Todd Lichten, head of entertainment partnerships at Roblox, as he described to VIP+ how the movie’s trailer switches from 2D to 3D when Kong’s hand reaches out and pulls players into the interactive experience within the platform. “It’s an extension of kind of otherwise passive content. That’s kind of been the trend across a lot of the theatrical marketing work.”

Such experiences are typically a use case for adding digital merch to Roblox’s store that players can carry over throughout the rest of the platform, granting Roblox and its partners lucrative microtransactional revenue alongside promotional benefits.

That Roblox and Fortnite have become the de facto homes for a constant barrage of film and music events are a big part of why the rest of the industry struggles for a share of their attention.

Per Newzoo, Fortnite, Roblox, League of Legends, Minecraft and Grand Theft Auto represented the top five live services on PCs and consoles in 2023, collectively accounting for over a quarter of all playtime.

“The question is, and this is a bit of an unanswered question still, is the free-to-play model just too difficult to launch into right now?” Porter posed. “Or has there just not been a significant number of very good free-to-play games that have been capturing people’s attention?”

As passionate and diverse as the breadth of gaming experiences covered at GDC is, it’s impossible to ignore the biggest elephants in the room.