Matthew Ball, CEO of Epyllion and author of Metaverse book, Dropped 220 slides In this week’s Early Access collection that explained what happened with the rise and fall of the modern gaming industry.
The slides are completely easy to read and I encourage everyone to watch them, as they take much less time to go through and understand than if they had written a huge article on the topic. The ball inspected From his perspectives in the GamesBeat Insider Series: Hollywood & Gaming event on December 12 in Los Angeles. I’m already excited to discuss this new chipset and the issues it raises at our upcoming GamesBeat Summit 2025 event May 19-20 in Los Angeles.
Just a few years ago, gaming reached its peak in 2021 as the pandemic forced everyone to stay inside and players found solace in online gaming. Driving factors included mobile growth, live services, free-to-play, cross-platform, battle royale and battle pass games, user-generated content, social play and social gaming services, and the boost from the coronavirus itself.
Matthew Ball captured this confluence of events that enabled gaming to grow faster than other markets. But they have stalled in the past two-and-a-half years, leading to an unprecedented 34,000 layoffs and a shortage of investment capital to fuel the previously emerging wave of game studios.
In one sentence, Paul summed up what was going on. He wrote: “The exhaustion of the decade-plus growth engines that drove increased player counts, playtime and spending… has coincided with evolving user and behaviours, changing monetization models and increasing ‘lock-in’ effects… that have exacerbated long-term escalation.” In competition and budget… while growth was concentrated in foreign markets that shifted to domestic production (and then took their share abroad)… and it occurred in conjunction with severe financial events and epidemics at the macroeconomic level… exacerbated by shifts in microeconomic policies. …as well as the emergence of new alternatives Spread… and foreign competition… along with many potential new growth drivers that have not yet achieved growth.”
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Promised drivers of cloud gaming, betting, subscriptions, esports, XR, Web3, metaverse and app store curation failed to deliver much-needed growth, leading to a winter season instead. Players focused on existing legacy live service games, resulting in stagnant growth in new games.
Apple’s shift to focus on user privacy rather than targeted advertising has crippled the growth of mobile gaming, which led to a decade-long gaming boom.
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The installed console base has not grown. Picked up external development. Social video like TikTok is becoming more prominent and interesting to young people. Players have disappeared in black hole games. Game sampling has become a habit of the past. Production timelines have grown as have development costs. App stores had restrictive and locked down policies. Price increases were rejected by players. Fear of failure led to more conservative bets. The cost of user acquisition has increased. Game detection just got worse.
Without new growth engines, gaming remained stuck in a vicious cycle. Revenues are stagnant. Profits declined, with more big flops like Concord and Suicide Squad: Kill the Justice League. Larger companies took less risks and reduced investment. This leads to fewer big games and big studios, fewer new successes and innovations, and no player growth or playtime growth. That wheel keeps turning.
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“But we are not without hope,” Paul said. The Switch 2 offers some opportunities for renewal. It will have competition from mobile devices and other new devices from the likes of Valve, Sony and Microsoft. Double-A and Triple-A games have found success on mobile in the form of Genshin Impact. Non-core markets such as the Middle East are growing. User-generated content platforms and tools appear on Roblox, Minecraft, Fortnite, and Overwolf. Social gaming services are on the rise. App Store regulation has begun eliminating the 30% fee. New types of games began to emerge, with titles like Helldivers 2 and Palworld emerging. Artificial intelligence has the potential to improve game development, reduce costs, and create new types of gameplay. Advertisements are growing, and Grand Theft Auto VI is coming this year, possibly at higher prices.
The result, as always, will be winners and losers.
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At the same time, I would like to express my shock and dismay when I saw 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 Angeles, Los Angeles Unified School District Education Foundation Emergency Relief Fund, MusiCares Foundation, Pasadena Education Foundation, and Eaton Fire Response Fund.
Regardless, it’s interesting to hear optimism from those in the crypto space as the new Trump administration takes office on Monday, and it’s clear that it will be with high-level crypto advisors. I fear that such a gain for Web3 would come with much greater costs, such as tariffs on gaming hardware.
I wish us all well, and I can’t help but think of William Butler Yeats.
“What a cruel monster he is, his hour has come at last.
Slouching towards Bethlehem to be born?