Have we reached ‘peak video game’? Top analyst sees industry slumping in 2019

The rise of video games has turned Fortnite into a social phenomenon, made esports a rival to the NFL for viewers, and grown button-mashing into a bigger money-maker than Hollywood. Now one veteran analyst is calling for the first industry downturn in a quarter century.

Video game revenue is headed for the first decline since 1995, with sales expected to fall by 1 percent to $136.5 billion this year, according to Pelham Smithers, owner of an eponymous London-based research firm. He blames China’s stricter approach to game approvals, a shortage of big console hits, and fatigue among players for battle-royale titles like Fortnite.

Smithers, who began covering the industry in the late 1980s, points to the recent sharp drop in stocks like Tencent Holdings Ltd. and Electronics Arts Inc. as proof that he’s right. He sees the drag lasting until at least 2020.

“The various bits of the jigsaw puzzle just don’t add up, so we’re looking for the market to shrink in 2019,” said Smithers. “The sell-off in video game stocks is primarily down to a growing realization of the risk that this view is right.”