Matthew BallCEO of Epyllion and author of The metaverse book, I dropped 220 slides in early access this week that explained what happened with the rise and fall of the modern gaming industry.
The slides are quite readable and I encourage everyone to view them, as it takes much less time to go through and understand them than if they had written a gigantic essay on the subject. Ball previewed of his opinions during our GamesBeat Insider Series: Hollywood and Gaming event on December 12 in Los Angeles. I’m already looking forward to discussing this new slideshow and the issues it raises at our next event. GamesBeat Summit 2025 May 19 and 20 in Los Angeles.
Just a few years ago, gaming reached its peak in 2021, as the pandemic forced everyone indoors and players found solace in online gaming. Drivers included the growth of mobile, live services, free-to-play, cross-platform, battle royales and battle passes, user-generated content, social gaming and social gaming services, and the coup of thumb of COVID itself.
Matthew Ball captured this confluence of events that allowed gaming to grow faster than other markets. But that has stagnated over the past two and a half years, leading to an unprecedented 34,000 layoffs and a shortage of investment capital to fuel the previously launched wave of video game studios.
In one sentence, Ball summed up what is happening. He wrote: “The exhaustion of the decade-plus growth engines that increased players, playtime and spending… has coincided with evolving users, behaviors, changing monetization models and increasing “lock-in” effects… which have exacerbated long-term competitive and budgetary escalations. …while growth focused on foreign markets that shifted to local production (and then took share abroad)…and occurred alongside acute macroeconomic financial events and epidemics…have been compounded by microeconomic platform policy changes… as well as the emergence of new and hyperviral substitutes… and foreign competition… alongside too many potential new growth engines that have yet to generate growth.
The promised drivers of cloud gaming regulation, betting, subscriptions, esports, XR, Web3, metaverse and app stores have all failed to deliver much-needed growth, leading led to a winter. Players have focused on older, existing live service games, stagnating the growth of new titles.
Apple’s decision to focus on user privacy rather than targeted ads has crippled the growth of mobile gaming, which had fueled the gaming boom for a decade.
The installed base of consoles has not increased. Foreign development has resumed. Social videos like TikTok have become more important and interesting to young people. Players have disappeared into black hole games. Game sampling has become a habit of the past. Production times have increased, as have development costs. App Stores had restrictive and closed policies. The price increases were rejected by players. Fear of failure has led to more conservative bets. The cost of user acquisition has increased. Discovering the game got worse.
Without new growth engines, games found themselves stuck in a vicious cycle. Revenues have stagnated. Profits fell, with bigger failures like Concord and Suicide Squad: Kill the Justice League. Large companies have taken fewer risks and reduced their investments. This leads to fewer big games and big studios, fewer new hits and innovations, and no growth in players or increased play time. That wheel just keeps turning.
But we are not without hope, Ball said. The Switch 2 offers some renewal opportunity. It will face competition from other new handhelds and devices such as Valve, Sony and Microsoft. Double-A and triple-A games are seeing success on mobile in the form of Genshin Impact. Non-essential markets are growing like the Middle East. User-generated content platforms and tools are popping up on Roblox, Minecraft, Fortnite, and Overwolf. Social gaming services are on the rise. App Store regulation is starting to happen and could eventually remove the 30% fee. New game genres are emerging, with titles like Helldivers 2 and Palworld. AI has the potential to improve game development, reduce costs, and find new types of gameplay. Advertising is growing and Grand Theft Auto VI is coming this year, possibly with higher prices.
The result, as always, will be winners and losers.
In the meantime, I would like to express my shock and horror at the toll of the Los Angeles fires. Please consider these resources here and donations to some of these organizations: 211 LA, California Community Foundation Fund, Direct Relief, Greater Los Angeles Education Foundation, Habitat For Humanity of Greater Los Angeles, Los Angeles Fire Department Foundation, Los Angeles Regional Food Bank, Los Angeles Unified School District. Education Foundation Emergency Relief Fund, MusiCares and Pasadena Educational Foundation Eaton Fire Response Fund.
As a side note, it’s interesting to hear the optimism from crypto folks as a new Trump administration takes power on Monday, obviously with top crypto advisors. I fear that such a gain for Web3 will lead to many other higher costs, such as tariffs on gaming machines.
I wish us all good luck and can only think of William Butler Yeats.
“And what a rough beast, its hour has finally come,
Are you heading to Bethlehem to be born?
