How video game developers are changing amid global crises. Analysis

Video games proved to be the most profitable sector of the entertainment industry in 2025. But the growth rate of the market gained during the pandemic is gradually decreasing, the number of new games is growing, and it is becoming increasingly difficult for developers to keep the user inside the product. How the gaming industry is changing under the influence of the crisis — in the material of Izvestia.

The causes of the crisis in the gaming industry

• During the rising incidence of COVID-19, people became addicted to video games — the number of users grew by more than a third per year, and developers expected this trend to continue. But after the pandemic, demand turned out to be lower than expected: the adjusted forecast promises an increase of 4.4% of players per year during 2025-2028. As the number of games launched has increased, user behavior has changed — they have begun to change game platforms more often, and publishers have to spend more on attracting and retaining players within the service.

• Due to the high competition in the market, the cost of development is increasing. The cost of big-budget blockbuster games (AAA games) starts at an average of $300 million, and their development takes about six years, so the price of game releases is also increasing for consumers. Such costs do not always pay off: the blockbuster The Lord of the Rings: Gollum for Xbox, released in 2023, has become one of the most disastrous for the platform, while the three-in-a-row mobile game Candy Crush Saga has earned $7.9 billion in 14 years and continues to bring in millions every month.

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• The RAM crisis has hit the industry: due to the rise in the cost of microchips, Microsoft Xbox is losing hundreds of dollars on every Series X/S console sold (we wrote more about how the memory crisis affected the consumer electronics market here). The company's revenue fell to 3%, and unsuccessful launches of big-budget games worsened the situation: in early July, Xbox cut 1.6 thousand employees, the same number are planned to be laid off in the coming year, and some studios were sent to free float. PlayStation also intends to reduce costs — the company refused to release games on discs, which caused user dissatisfaction (we talked about how this decision will change the industry here).

• The gaming industry market remains attractive: the video game audience already accounts for 61.5% of Internet users and continues to grow. Even shareware games can bring huge profits: for example, the total revenue from in-game purchases in the Honor of Kings mobile game, launched in 2015, exceeded $17.5 billion by July 2026.

How the industry is changing

• Gaming giants continue to expand. But if they used to show interest in the most expensive publishers, now mergers and acquisitions are being conducted in relation to medium—sized companies (worth more than $100 million) - the number of such transactions in the second quarter of 2026 reached its maximum since the pandemic. Developers of games for computers and smartphones turned out to be the most in demand.

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• Companies are cutting costs, which primarily means reducing staff. In the United States and Canada, which account for most of the major game developers, salaries, pensions and social benefits account for the lion's share of expenses. Therefore, companies are abandoning indefinite employment contracts in favor of contracts for a specific project. Small teams consisting of programmers and designers are prioritized, while artists, writers, and composers are being replaced with AI. This leads to the leaching of professionals from the industry.

• Specialists are moving into the low-budget indie segment (from English independent — independent), games are launched at their own expense or voluntary donations from users. In case of failure, the losses of independent game publishers are much lower than those of industry giants, and therefore it is indie developers who can afford to launch innovative projects.

• Due to the huge number of new games, the App Store and Google Play are overflowing and standard algorithms no longer ensure their visibility in search results. Previously, developers could optimize a product to meet the requirements of the platform and thereby secure a place at the top of the list of offers for the user, but now companies have to spend more money on promoting games. Ads are more often placed on social networks and among bloggers with a small audience — they have a significantly higher engagement rate.

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• Due to the financial attractiveness of the segment, third-party players, traditionally unrelated to it, are also involved in this industry, which increases competition. In particular, Nike, MTS and Rostelecom have launched gaming divisions. These projects not only increase brand awareness and loyalty, but also become a new source of income. Games have become the most profitable segment of the entertainment industry: in 2025, global game publishers generated $188.8 billion in revenue, more than the music industry and the movie industry combined.

The consequences of restructuring gaming businesses

• The giants of the gaming industry will choose more cautious strategies and implement AI tools to reduce the cost of the production process. Nevertheless, games will become more expensive for consumers themselves — Microsoft Xbox has already warned about this, Sony PlayStation also intends to increase revenue from each subscriber.

• If the gaming business previously had a goal to increase its reach, now the priority is on keeping the user inside the product. The industry is heading towards cloud gaming and cross—platform: the game should be run from any device - computers, consoles, smartphones, and the user should not depend on the power of their hardware.

• As older games continue to be popular with consumers, game manufacturers are changing their strategy: less experimentation, more franchises. Even single-player games with limited resources tend to catch up with online services in terms of post—release content - offshoots of plots, in-game items, new modes and mechanics that force you to return to the game. Within a year of release, such add-ons generate 20-25% of revenue, and over the next four years, revenue grows by another 37%.

• The introduction of AI tools and cross-platform support the development of esports. Coaches and athletes will be able to track fatigue indicators and analyze opponent behavior in real time, and interactive broadcasts will ensure the attraction of more viewers.