“Final Fantasy VII Remake” from Square Enix. Square Enix

Video game consoles and games were in especially high demand starting in March, as the coronavirus pandemic forced millions of Americans to stay indoors.

Sales of “video game hardware, software, accessories, and game cards” topped $1.6 billion for the month of March — the biggest March for the game business in over a decade — and those gains have persisted in the months since, according to The NPD Group.

Since making a video game takes years, many of the big games that arrived in 2020 were already deep into production when the pandemic hit. Development of current games is at a dead stop, Square Enix CEO Yosuke Matsuda said when speaking to the Financial Times.

“What we are selling now may have provided some positive aspects,” Matsuda said, “but on the negative side time has stood still in terms of production. We couldn’t develop anything. That is where the impact will come.”

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Starting in March, millions of Americans were forced indoors by the coronavirus pandemic as shelter in place orders were issued and social distancing was encouraged.

Millions of people, many with young children, suddenly needed ways to occupy vast quantities of time at home.

Many turned to video games, which made the industry one of the few to see major financial gains as others dipped during the pandemic’s early days. Sales of “video game hardware, software, accessories, and game cards” topped $1.6 billion in March, according to The NPD Group — the biggest March for the game business in over a decade.

Those gains have persisted, but Yosuke Matsuda, CEO of Square Enix, maker of the “Final Fantasy” games, is sounding the alarm for 2021.

The pandemic has put video game production at a standstill, Matsuda told the Financial Times in a new interview published Sunday. He warned that any gains from video game sales would be washed away as the development cycle catches up.

“It will resonate in the future,” he said to the Financial Times. “What we are selling now may have provided some positive aspects, but on the negative side time has stood still in terms of production. We couldn’t develop anything. That is where the impact will come.”

Video game development, especially at the scale of a major video game publisher like Square Enix, takes years and costs tens of millions of dollars per game. Many of the games that have been successful in 2020 — from Nintendo’s “Animal Crossing: New Horizons” to Square Enix’s “Final Fantasy VII Remake” — were in production for several years prior to launch. COVID-19 shutdowns affect only the tail end of many of their production cycles, if at all.

But games that are expected to arrive in 2021 and beyond are struggling with the ongoing impact of the coronavirus pandemic on production. And Matsuda isn’t the only major video game executive sounding the alarm.

Xbox leader Phil Spencer warned about the pandemic’s impact on video game production all the way back in May. 

“Games that were targeting a year from now or beyond? There’ll be some impact,” he told Business Insider in an interview, “but they’ll be able to react.”

Many of those titles have yet to be revealed, but blockbuster games take years to make, with hundreds or thousands of people working in offices around the world — something that’s become nearly impossible during a global pandemic. Studios have had increased difficulty doing the motion capture (“mocap”) or audio work needed to put the finishing touches on a game remotely.

“Mocap is just something that’s basically stopped. We’re not going into mocap studios,” Spencer told Business Insider in May. “If you had all your animation captured and you’re doing touch up in more individual art production and in areas like textures and other things, you’re in a better position. If you’re waiting for a lot of either large audio work — when it’s with symphonies and other things — or mocap, you’re held up right now and you’re making progress in areas that you are.”

Both Microsoft’s Xbox and Sony’s PlayStation are on the verge of launching new next-gen video game consoles in mid-November, with Microsoft’s Xbox Series S and Series X scheduled for November 10 and Sony’s PlayStation 5 scheduled for November 12. 

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