The State of Video Gaming in 2026

Global video game content spending had a strong 2025, hitting a new all-time high — roughly $10B above the prior 2021 COVID peak. All three segments (Mobile, PC, Console) hit new individual highs.

2025 also produced genuine hits: inZOI, Clair Obscur: Expedition 33, Blue Prince, Hollow Knight: Silksong, R.E.P.O., Kingshot, Infinity Nikki, Split Fiction, Arc Raiders, Kingdom Come Deliverance II, and more.

But underneath the topline, it's rough

• VC funding collapsed — deal count and capital are back to pre-2019 levels. The 2021 peak hit ~$1.3B/quarter; by late 2025 it's well under $300M.
• Major publishers kept slashing: EA cancelled Black Panther, Microsoft scrapped Perfect Dark, Sony cancelled multiple live-service titles (including God of War), Ubisoft cancelled 6 games, Warner Bros closed Monolith, Riot shut Hypixel after 7 years.
• Layoffs: 9,200 in 2025 (down 40% from 2024's record 15,650), bringing the 4-year total to ~44,000.
• Outsourcing is surging — an increasing share of investment goes to external dev partners. Outsourced share of YoY spending growth spiked to ~120% in 2023.
• Content dev spend as a share of net revenue hit a 7-year low. From 2019–2022 content spend grew $11B (+39%). From 2022–2025, only $2.3B (+6%).

Ball's core argument: the all-time-high topline obscures a shrinking pool of revenue for most developers. Seven reasons:

1. China Is Eating the Industry

If you want to match global growth, you must win in China — or grow 1.6× the market elsewhere. Most Western publishers can't easily do either.

2. Console Growth = Subscription Growth

119% of net console spending growth since 2020 went to platform subscriptions (PS Plus, Game Pass, Nintendo Switch Online). Actual spending on game sales, DLC, and microtransactions is down ~$3.7B/year (−11%) from the 2020 peak.

3. PC Is Bright but China-Dependent

PC content spending grew from $29B (2019) to $40.7B (2025). But China accounts for ~29% of that growth. Even excluding China, PC is still up ~$6.7B.

4. Roblox Is Stealing Share

Roblox continues capturing outsized attention and spend from younger demographics, operating as a self-contained economy that doesn't benefit the broader industry.

5. Decline in Home Markets

Mature markets (US, Japan, South Korea, UK, etc.) are stagnating or declining in player participation.

6. Competition Is Exploding

Revenue hasn't scaled proportionally. Far more games fighting for the same pie.

7. Price Increases Help, but Selectively

The $70 price point helps topline numbers, but only AAA blockbusters can command it. Everything below struggles with pricing power.

The "Major Market 8" (US, Japan, South Korea, UK, Germany, France, Canada, Italy) represent ~61% of global spend. They are losing the war for attention.

Time spent in games is falling across all major markets as alternative forms of interactive entertainment multiply and compete for the same hours.

The competition for interactive leisure isn't just other games — it's a whole new class of competitors: iGaming & iCasinos, social video, creator/adult content, AI assistants, crypto & memecoins, prediction markets, and online sports betting.

The Critical Insight (Slide 82)

Since 2019, Americans increased game spending by $12.9B. But in parallel:

Plus: crypto/memecoin trading, AI assistants, AI art, prediction markets — all adopted by the same 22–32 million high-value gamers who drive console and PC revenue (shooters, sports sims).

1. "Non-Core" Markets

Southeast Asia, MENA, LATAM, and India have gaming participation rates often leading the world (50–80%). China is the fastest-growing major market — and uniquely, 25%+ of its growth since 2022 is in PC/Console (not just mobile). China mobile alone hit $35.8B in 2025. As non-core markets mature, domestic production grows and local content captures more local spend.

2. Advertising

In-game advertising is growing as a revenue stream, enabled by exponential mobile hardware improvement. iPhone Metal GPU scores have hit ~37,000 on the base iPhone 17, enabling richer ad formats, concurrent on-screen activities, and better integration. The desire to "design up" to newer specs is enormous.

3. D2C & Alternative Payment Channels

Mobile publishers are rapidly shifting revenue to direct-to-consumer channels to avoid the 30% App Store / Play Store cut. This is a massive structural shift.

4. External Development

Outsourcing and co-dev are becoming the norm. Many of the most successful recent titles used external dev extensively:

• Hollow Knight: Silksong — 3 internal (Team Cherry), 94 external credits
• Palworld — 97 internal (Pocketpair), 93 external (80 from Keywords Studios)

The layoff geography is telling: 43% of 2022–2025 layoffs hit California, but job openings now match global revenue distribution — ~50% outside NA/Europe.

5. Roblox

Continues as its own growth engine, essentially a parallel gaming economy with its own creator ecosystem and monetization model.

Ball's capstone: different companies exist in completely different universes with fundamentally different growth prospects.