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You can’t beat what you did last time all of the time. And so while yesterday’s Summer Game Fest showed us a lot of good games, it couldn’t beat last year’s closing session with gameplay of Elden Ring.

It was a great show with dozens of announcements of upcoming games, and it was our best replacement for the Electronic Entertainment Expo (E3), which canceled both its 65,000-person physical event normally held in Los Angeles as well as its digital show held last year. It is the best celebration of gaming this summer, at least until Gamescom comes in Europe in late August.

But organizer Geoff Keighley warned us ahead of the show to manage our expectations, and that was probably wise to do so. Sadly for Keighley, Sony itself accidentally leaked the surprise of the show, the unveiling of the remake of Sony and Naughty Dog’s The Last of Us as well as a multiplayer mode for The Last of Us Part II, and the completion of filming for HBO’s The Last of Us television show. That’s my favorite series of all time, and so I was happy to see it all. But the leak of the remake — the final part of Keighley’s show — inevitably led to a letdown.

Elden Ring
Elden Ring brought light to gaming this year.

After all, my colleague Mike Minotti is right in observing that Naughty Dog’s scarce development talent could be put to better use than having them work on a remake. And on a grand scale, this kind of game isn’t anywhere near as massive as Elden Ring was when it stole the show last year.

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Elden Ring was certainly good for gamers. I’m well on my way to playing it for scores or hundreds of hours. But you could argue that Elden Ring was good only for a couple of companies: the developer FromSoftware and the platform companies that hosted it, Sony and Microsoft. Selling 12 million copies in its first month alone, Elden Ring probably took a lot of the dollars that might have been spent on other games.

This year, with no absolutely clear winner so far for a game release in 2022, the money from gamers will probably be spread around the industry more evenly. And that’s good for the game industry, which is always hit driven, because a storm is coming.

The tech industry, stock market, and the cryptocurrency markets have already seen the storm as the weakening worldwide economy, the war in Ukraine, high inflation, and other ills are taking a toll on valuations and wealth. That could lead to a downturn in the global economy, the tech economy, and venture capital investment that keeps everything humming.

The big blockchain deals of Q1 2022 in games.
The big blockchain deals of Q1 2022 in games.

Games have been a beacon during the pandemic. They saved our minds and our happiness. They brought us together, and saw tremendous growth. Investors noticed, and they poured money into games. That enabled a lot of game companies like Unity and Roblox to go public, and that in turn triggered a virtuous cycle. More money went into game investments, leading to real game venture capital funds. That has kept money flowing into game startups as people left big companies during the Great Resignation.

This has triggered a virtuous cycle for games that is still on the upswing. While Q1 numbers for tech venture capital in the U.S. (according to the National Venture Capital Association) stalled and valuations fell, game venture capital was up in Q1, according to Drake Star Partners. Those blockchain games that a lot of folks love to criticize raised a third of all game funding in Q1, hitting $1.2 billion out of the $3.4 billion raised. That led to more jobs for game developers at a time when tech started shrinking. To repeat, the money raised for blockchain gaming has created a lot of high-paying jobs for game devs.

I don’t have the crystal ball to tell me when games will start to slide as well. In some ways, economic gravity can pull everything down. The storm is going to hit and valuations of game companies in the stock market have already fallen. That’s why we’re seeing consolidation. And valuations for game startups will fall too.

Games have been recession-resistant, but not recession-proof. But the dozens of games that we’ve seen introduced at Sony’s State of Play event and the Summer Game Fest show that a lot of amazing products are coming in the not-so-distant future. While we haven’t seen an absolute killer app showing its face yet, we’ve seen enough to know the virtuous cycle is in full swing.

We certainly know a glut of gritty and bloody science fiction titles is coming, as the beginning of the Summer Game Fest showed games like The Callisto Protocol, Aliens: Dark Descent, and Planet Solis. This kind of group think in the core of the triple-A gaming market is not going to produce an upswing. We need something more. Blockchain gaming has been a salve during the choppy market, but I don’t think it will be enough. I think we need some home runs in the AI space in gaming to really get some market and technological disruption.

The Callisto Protocol

Microsoft still has a chance to show us an amazing title at its Sunday event, and companies like Electronic Arts and Nintendo haven’t shown much of their cards yet. Indies also have plenty of chances to make some noise in the market, the way that titles like Fall Guys did in the past. We can all hold out hope that the game that will beat Elden Ring is somewhere out there.

If I had to guess from what I’ve seen so far, the most promising games are The Callisto Protocol and Call of Duty: Modern Warfare.

But if gamers feel the squeeze in their pocketbooks, they will pull back just as other people do. They will spend less, and that will lead to some pain in the game industry.

I think that this won’t happen for a while. That’s the good news for games, as it’s already happening in the wider economy, causing pain in the trading markets and at tech companies. But game companies should think about battening down the hatches before the storm. And they should all realize that the way to get through the storm will be to come up with the next Elden Ring.

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