State of Gaming 2025 - Matthew Ball

Matthew Ball put out a large presentation on where the Games industry is headed in 2025. If you're into gaming, it's definitely worth checking out, as it not only covers 2024 data and trends but also looks ahead to the rest of this year.

The report highlights a bit of a slump in the gaming industry's life cycle. This comes after a big boom over the past decades, which was even sped up by COVID. Here is a summary of points we've taken from the presentation:

Key Challenges

• Market Contraction: Industry revenues plateaued after rapid growth from 2011–2021. A 3-year stagnation since 2022, despite a strong content slate, highlights market oversaturation.

• Cost Escalation: AAA development budgets have ballooned to $200M+, squeezing profits even for top franchises. Competition is intense, with “black hole” games dominating time and spend (Roblox, Fortnite etc).

• Discoverability: Steam alone saw 19,000 new games in 2024; most earned under $5K. Breaking through the noise remains a daunting challenge.

Positive Growth Engines

1. User-Generated Content (UGC): Platforms like Roblox and Minecraft drive engagement. Modding offers new avenues for community-driven innovation.

2. Emerging Markets: Regional studios in Asia and Latin America are growing rapidly. Localization and cultural specificity are key strategies for success.

3. Social Play and Discovery: Discord integration is reshaping how players find games. Developers leveraging social dynamics can boost visibility.

4. Generative AI: New tools may cut production costs, enable dynamic content, and create fresh gameplay experiences.

   
   

Monetization Shifts

• Increased Role of Advertising: Despite high engagement, ad revenue remains underutilized. Shifting to ad-supported models could create new revenue streams.

• Premium Pricing Experiments: GTA VI’s launch may test higher price points. Success could normalize premium pricing, affecting market expectations.

Opportunities for Indie Developers

• Focus on Niche Innovation: Exploring underserved genres or unique narratives can differentiate new titles.

• UGC Partnerships: Creating moddable frameworks or leveraging platforms like Mod.io enhances reach.

• Local Market Engagement: Developing culturally resonant content for growing markets provides a competitive edge.

• Lean Production with AI: Adopting AI-driven tools reduces cost and complexity in content generation.

Besides the threat of layoffs, something important for developers- especially indies- is the big drop in venture capitalists investing in the industry. They've shifted to other tech areas like AI. This means getting funding for startups or securing funds from publishers will be tougher in the near future.

But it's not all bad news. A lot of the data mainly impacts the PC/Console market, especially AAA/AA games. With game development becoming more accessible and cheaper, indie game development is still going pretty strong and is likely to keep growing.

This decline could prompt the industry to shift its approach, with studios concentrating on developing games that are truly enjoyable, targeted, and distinctive. Rather than simply recycling existing games under new titles or producing countless sequels without taking genuine risks. At present, games aim to appeal to everyone, to reduce risk and justify it to shareholders, yet the true magic occurs when they focus on particular audiences and take daring risks to create something novel and creative.

Check out the report here:

https://www.matthewball.co/all/stateofvideogaming2025