Destructoid Checkpoint - This is why the games industry is about to get a lot worse.

I grew up poor. This is not a “woe is me” type of thing, it’s just the reality for the vast majority of people in Ireland in the 80s. Poor was common and came in all different flavors. Rich was a rarity and limited to just a handful of types. 

Being a gamer was also a rarity. I managed to do it because my uncle was kind enough to give us a ZX Spectrum that his family no longer needed after they switched out to an Amiga 500. We would also inherit that system when they were done with it. Other than a handful of folks, I simply didn’t know a lot of people who gamed. 

A few people would pick up things like the NES or a Megadrive over the years, but it was mostly the late 90s before gaming really started to take off among my peers. I would, from time to time, scrape together the cash to pay for a new game, but mostly, I existed in a world of X-Copy-powered piracy. 

We were heathens and thieves, no doubt about it, but when we paid for a game, we paid for the best. By the time PlayStation rolled around, our piracy days were behind us. We had jobs, we had cash, and we had a growing economy. Paying full price for things felt like a point of pride. 

Now, in 2025, gaming is ubiquitous. You can do it on your PC, your console, or your phone. You can buy devices designed to mimic the console of old, and they can come preloaded with every game you could think of. Phil Spencer tells us everything is now an Xbox, but my toaster has yet to render a single polygon. Gaming is, we are endlessly informed, a real money maker, dwarfing all other forms of entertainment.

Where it gets a little odd is that by and large, I have been paying the same amount for games this entire time. Yes, I know I made fun of Randy Pitchford for making this exact point last week, but he made it like an idiot, and I shall make it like a wordsmith.

The disconnect for game pricing between customer and publisher is complicated but mostly boils down to how price increases that have occurred have not been in line with inflation. The cost of video games goes up when there’s something big happening in the market. This could mean a new technological threshold has been reached, such as a new generation of consoles. It could also, but more rarely, occur during moments of extreme outside pressure that might not normally exist. But more on that in a minute.

Generally speaking, if you go back in time and take the cost of a full-priced game and adjust for inflation in today’s dollar, you will find that it would cost much more to buy that game than a new game now. A brand new title for the Atari 2600, purchased in 1977, would cost you the equivalent of about $200 in today’s money.

This is because inflation has been going up at a greater rate than the cost of video games has been increasing. And yes, despite arguments from some quarters, they really have been increasing. It’s usually by a few bucks on average, with generational jumps when you compare across the higher tier of hardware and the upper tier of games, which is to say, Triple A.

So, if game prices, despite going up, have not matched inflation, and publishers and developers have effectively been selling games for less money over time, where did all the industry growth come from? How did gaming get so big?

The perfect storm

Analyst Matthew Ball put out a huge report at the start of this year about the games industry and what is happening, and let me tell you, it’s quite the read. About twenty pages in, he talks about the growth levers that the games industry has enjoyed for the last decade or so.

The rise of mobile games, broad acceptance of new pricing models like free-to-play games that proved to be hyper profitable, liveservice games allowing further investment to generate additional value from base-game budgets, battle passes, microtransactions, social media, and of course, a huge COVID boost. 

There were a lot of things happening that really helped to grow how many people were playing games, for how long, and how much money they were spending. 

Prior to this, simple user-level growth has always been enough to keep the industry ticking over. The overall number of people playing games has been growing for years and, for a long time, was the foundational method of growth the industry enjoyed.

There was no need to dramatically increase prices because there were going to be more people playing next year. More money was coming in the form of the average expected spend of an additional customer. Profits would go up despite increased development costs, and that is what most companies really need to see, especially those with shareholders who want to see returns. 

Shareholder pressure is not unique to the gaming space, of course, but it has been unusually amplified by the last decade of unsustainable growth.

There’s no point in leaving money invested in Company A if Company B can give better returns. The problem now is all the game companies have been taking advantage of all the growth levers, and those companies are running face-first into a wall. 

The main problem is that the 10-year growth of the gaming industry was insane. Per Ball’s report, gaming from 2011 to 2021 “didn’t just beat its historical average, it significantly outpaced global growth benchmarks.” Gaming was quite literally growing like no other industry. Post-COVID, some people thought things would slow down, but many expected the trend to continue.  

Instead, player numbers dropped, spend dropped, and time in game dropped. Consoles were available, as were GPUs, both of which had been bottlenecked pretty hard by COVID, but this decline happened anyway. There were plenty of games to buy, including big hitters like Diablo IV, Starfield, Cyberpunk Phantom Liberty, Hogwarts Legacy, Spider-Man 2, and lots more. 

Worse, consumer spending on books, music, and video are all trending up while video games are trending down. It’s one thing to have money leaving due to market contraction; it is entirely another to have that happen while everything else is growing. A lot of the low-engagement players that jumped in over the pandemic are gone, and the share of the U.S. population that plays video games is lower than it was pre-COVID, but they play a little longer. 

So, the people who were using games as a new distraction from COVID are gone, and the people who were always into gaming developed a more unbalanced relationship with the medium. 

Super.

Venture Crapitalists

It will come as no surprise that venture capitalists like to invest in things that make money, but they love to invest in things that make them the most money. A dollar earning 15 cents over here is not as good as a dollar earning 25 cents over there. If both values stay the same, those dollars will migrate over to the option that gives the best returns. 

Ball’s report also shows how game company stocks are just not performing as well as the rest of the market, and a string of failed releases has the VC Bros nervous. It’s partially post-COVID correction and partly the race to find a profitable AI venture, but the VC money coming into gaming is dropping, with smaller, and fewer, investment rounds coming from fewer investors.

Gaming companies are desperately trying to course correct, and that means letting some staff go to instantly reduce overheads. When it comes to helping profits, it’s a short-term salve while longer-term decisions are made. You will notice that a lot of games are being canceled. Just this week, we had EA drop the Black Panther game development and shed staff, for example. Sony has been shutting the coffin lid on more than a few live service projects that they clearly lost faith in. Microsoft dropped Tango Gameworks the moment they got it, despite the success of Hi-Fi Rush. They did the same to Arkane Austin.

Why? The expected returns were not worth keeping the studios functioning. 

So, we can think about all the above and figure out that what companies need to do is consider growth areas. What are the new levers they are likely to use to show they are taking further growth seriously? Mobile, user-generated content, and other markets are all attractive options right now, but also not without their problems. Folding in artificial intelligence in a meaningful way that reduces costs is obviously of huge interest to them, and Ball also points out advertising as a major area with growth potential.

Mobile gaming value continues to trend up, being one of the few genuine growth areas in the industry right now, making up 52% of the total market, but the number of successful games is also dropping, with a few huge titles emerging in much the same way they did on console and PC. Smartphone adoption is also starting to max out.

This brings us to new markets, with places like India and China offering huge potential, and not just for mobile. According to the report, the largest share of Steam users now use Chinese as their default client language, and we witnessed the incredible success of Black Myth: Wukong. Since 2011, spend in China is up by about $39B, which is a third of global growth, but not much of that is to foreign titles. The Chinese market supports Chinese products. 

China is also showing success at cracking the foreign market, with the aforementioned Black Myth: Wukong, Marvel Rivals, Genshin Impact, and other Hoyoverse games all earning big money outside of their home market. Figuring out how to crack the Chinese market, as well as other foreign markets, and competing with culturally relevant, home-grown products and talent is vital for U.S. and European companies.

The point

Until they manage to figure out where their next growth areas are, and how viable they will be long-term, gaming companies need to ensure better returns now, and that means raising prices. Yes, we are back to that again.

It’s the instant lever they can pull, and while we might not be seeing a true generational change, the Switch 2 will likely give people a catalyst to do it. It is highly likely that many companies were eager for GTA 6 to be the instigator of this on a broad level, but now they’ll just need to put on their big company pants and do it themselves. But that’s not all they need to do.

We’ve talked about how they have maxed their growth potential, but that doesn’t mean that the world is suddenly going to change the rules. Shareholders and venture capitalists need their returns, and that is where the real pressure comes from. It’s why companies will spend this year announcing profits but killing projects and doing layoffs anyway because, at the end of the day, they forecasted bigger numbers and won’t hit them. 

As consumers, there has never been a more important time for conscious consumption, for understanding that supporting companies and the decisions they make over the coming three years will shape the gaming landscape for the next decade and beyond. 

The main thing that jumps out when you read Ball’s report, and I do suggest that you read all 231 pages of it, is that change requires inertia. It’s about maintaining effort. That is what the games industry did, and it’s what consumers need to do. 

If you thought that DLCs, horse armor, microtransactions, and season passes were all bad, then the sad news is that they are here to stay. The bad news is that what is coming is gonna be much, much worse. 

I hope you are ready to see adverts for banking services, cars, and soft drinks in your games. Not when you turn on the console but in the actual game itself. I hope you are ready for everyone and their dog to try and develop their own Roblox. I hope you are ready to see more effort and money invested in things you don’t like and less into things you do.

It’s all on the horizon, and if you don’t start pushing back now, and hard, you’ll never build up enough force to stop the inertia of greed that is eating the games industry alive.