Former Blizzard president says the "gaming downturn" is "a little bit overstated" and companies just wanted to "cut back" after the pandemic

Former Blizzard president and CEO Mike Morhaime says the gaming industry's "downturn" in recent years has been "overstated," likening the situation to a correction in a post-pandemic world.

Morhaime left Blizzard in 2019 and started his own game company, Dreamhaven, in 2020. Its debut project, the tabletop-inspired fantasy RPG Sunderfolk, was just revealed.

In an interview with Bloomberg Live (timestamped here), Morhaime was asked to comment on the gaming industry's "tough climate," particularly from the perspective of a new studio with a debut project.

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"We don't have any games on the market, we don't have any customers yet, so we haven't experienced a downturn ourselves," he said. "I would say the gaming downturn even is a little bit overstated, because when you look at the gaming industry in general, it actually is still growing. More people are playing games than ever before. 

"What you had is, going through the pandemic, people didn't have a lot to do, and so they turned to the streaming platforms and they turned to games," said Morhaime. "And it was a huge increase in usage. And a lot of companies saw that and they thought that was the new trend and that was just going to continue, and so there was a lot of investment. And when that didn't continue, I think probably the finance department said 'Oh, wait a minute, margins and everything.' And so they wanted to sort of cut back to the trend line."

The downturn being referenced here is of course the relentless downsizing of the gaming industry, manifesting in thousands of redundancies across Microsoft, Sony, Riot, EA, Take-Two, Bungie, Twitch, Humble Games, and many more. Morhaime's idea that we're seeing a post-Covid correction isn't new, and likely is accurate to a degree, but it also may not tell the whole story. Bloomberg pointed out that the "oversaturation" of the market as another factor, and Morhaime agreed that "the amount of competition is higher" and referenced a stat he'd seen that "15,000 games are released each year on Steam." If anything, that number will likely go up next year. 

Some sub-markets may also be especially oversaturated and therefore dicey, notably the live service space that routinely chews up and spits out games, including Redfall, whose creator Arkane Austin was shut down by Xbox, and Concord, which Sony outright yanked offline it launched so poorly. 

The complete picture is probably too broad and nuanced for me to adequately paint in a news bite, but in addition to post-pandemic correction and market saturation, industry experts would likely also point to increasing game development costs and large-scale acquisitions leading to restructuring as additional factors in the industry's current volatility.

At least we have these upcoming indie games to look forward to.