29 votes

Why the video games industry is struggling to stay profitable

28 comments

  1. [3]
    crissequeira
    Link
    This is a well-researched essay about the many reasons why the video games industry is struggling to stay profitable, and how that affects everyone involved in it, including us consumers. The one...

    This is a well-researched essay about the many reasons why the video games industry is struggling to stay profitable, and how that affects everyone involved in it, including us consumers.

    The one point that I didn’t know about (which in hindsight, shouldn’t have surprised me) is that video games (and all other entertainment industries) are losing the attention wars to short-form video content from TikTok and the likes. Wild.

    20 votes
    1. [2]
      MimicSquid
      Link Parent
      I can understand why they're losing out. Unless a game's core gameplay loop is as satisfying as staring at a social media feed of pure adrenaline/dopamine that you can get for free, why would you...

      I can understand why they're losing out. Unless a game's core gameplay loop is as satisfying as staring at a social media feed of pure adrenaline/dopamine that you can get for free, why would you be playing that rather than mainlining the compelling brain chemicals?

      17 votes
      1. crissequeira
        Link Parent
        Indeed. That’s exactly the point she makes. I find this ironic, because two decades ago, when I was a teenager and very much “addicted” to video games, parents were being told that kids were...

        Indeed. That’s exactly the point she makes.

        I find this ironic, because two decades ago, when I was a teenager and very much “addicted” to video games, parents were being told that kids were getting “hyperactive” and losing their ability to focus on working towards any productive goal for longer than a few minutes, because they craved that easy dopamine hit that video games gave them.

        Since late 2023 however, I have deleted all of my social media, and intentionally invested time into actually “playing through” video games as a hobby, exactly because I feel like this helps me to reclaim my enjoyment of “slowly consuming” interesting media (I’ve also been reading through a lot of books lately).

        I can’t wait to tell you in 20 years how I have shifted to consuming “short-form content on TikTok” because it gives me less of a dopamine hit than whatever mind-numbing activity will have become popular by that point.

        That is, if we haven’t all been killed by the inevitably nuclear holocaust until then. One can only hope.

        30 votes
  2. [15]
    Tiraon
    Link
    So basically the covid growth projections didn't hold and it turns out that unconstrained growth will eventually hit some limitation that makes it slow down and speculative financial market does...

    So basically the covid growth projections didn't hold and it turns out that unconstrained growth will eventually hit some limitation that makes it slow down and speculative financial market does not like that. Effectively the economy at large.

    Games and other entertainment being overtaken by short form, low effort(to consume), deliberately addicting content is another point why smartphones should have been regulated. Society should have taken note decade and half ago and put some thought into them because culture and expectations about smartphone usage and the behavior of software available on them is largely what is making this possible.

    I don't know, I kind of think of gaming as one of the bigger hobbies I have and I struggle to care about this. There were some large budget titles I liked that came out in the last decade but there weren't all that many of them and all had flaws directly relating to being large budget titles.

    And yes, as she mentions, any kind of of funding shortfalls will have effects on smaller budget titles as well which I do actually care about. I just think that unless we have a radical society change there will always be someone who makes games(in this case) just because and there will always be people to fund them. For me the biggest problem was always to find something worthwhile to play among high volume pushed content.

    14 votes
    1. [10]
      Raistlin
      Link Parent
      Similarly, I'm not particularly worried. EA, Blizzard and Nintendo could collapse tonight, and between old emulated games and new indie ones, it wouldn't affect me at all anymore. I mean, it...

      Similarly, I'm not particularly worried. EA, Blizzard and Nintendo could collapse tonight, and between old emulated games and new indie ones, it wouldn't affect me at all anymore. I mean, it there's just enough funding to make games look like they're running on the PS2, great, that's my favourite graphics style!

      As long as there are people willing to pay for games, there'll be companies willing to make them. Selfishly, I'm looking forward to the market contracting and the budgets decreasing massively.

      14 votes
      1. [9]
        raze2012
        Link Parent
        It's nice to hear, but I also know from seeing the overall landscape that this is a niche opinion. People very much do want Hugh fidelity graphics and if the AAA's founder, that investor money...

        I mean, it there's just enough funding to make games look like they're running on the PS2, great, that's my favourite graphics style!

        It's nice to hear, but I also know from seeing the overall landscape that this is a niche opinion. People very much do want Hugh fidelity graphics and if the AAA's founder, that investor money hurts the more indie projects the most.

        EA will survive the contraction and come out the other end. Thousands of indies will collapse, and thousands still will be put off from entering the industry.

        2 votes
        1. [6]
          Raistlin
          Link Parent
          Oh, it's absolutely niche! But the good thing about cheap graphics is that the games are cheaper, so you don't need a big fanbase. Kind of like Tildes doesn't need to be bigger to be good. I'm...

          Oh, it's absolutely niche! But the good thing about cheap graphics is that the games are cheaper, so you don't need a big fanbase. Kind of like Tildes doesn't need to be bigger to be good. I'm sure some indies will collapse, but I'm also sure others will take their place.

          As for the people that want to play high fidelity, they'll be laying 80, 90, 100 dollars. Dunno where the breaking point is, presumably somewhere.

          1 vote
          1. [5]
            raze2012
            Link Parent
            Tildes is a good metaphor, actually. It's clear development slowed, because Deimos needs to eat too and can't put a full time's effort into all the ideas he has and suggestion he takes in. Not for...

            Tildes is a good metaphor, actually. It's clear development slowed, because Deimos needs to eat too and can't put a full time's effort into all the ideas he has and suggestion he takes in. Not for the very little donation income coming in. It feels kind of bad, but the core is nice.

            That's where the metaphor ends, sadly. A good core of a website can be made in some dozens of hours and covers enough to start growing. A video game needs a substantial up front cost in the from of hundreds of hours minimum (more likely, thousands) among multiple crafts and disciplines. One person can make a good website, but one dev probably doesn't have all the skills to make a good game.

            So in comes people with either a lot of time or money on their hands to do this, or simply opting out (something we lose more of by the year on this society). The best "advice" for someone that wants to do this is to spend their free time working on a game for years on end and hope it builds from there. Sacrificing their social lives and maybe even family time to pursue the art that may not even buy you back a decent dinner. It's rough.

            Games don't need to be bigger, but they aren't sustainable today on the small scale (and these scale of games aren't getting loans nor investors.). At least, not in America.

            2 votes
            1. [2]
              Raistlin
              Link Parent
              I realise that these are edge cases, but one person dev teams do exist. If the only games that were being made these days were Stardew Valley, Dust: An Elysian Tale and Undertale, I'd take the...

              I realise that these are edge cases, but one person dev teams do exist. If the only games that were being made these days were Stardew Valley, Dust: An Elysian Tale and Undertale, I'd take the win.

              This is is an extreme example, but I just want to illustrate what I mean. If every single AAA and indie company collapsed tonight, I firmly believe people would still make games and sell them for money, even if infinite money was no longer an option. Not with FF7R graphics, and maybe not even in the US (I'm not American so that doesn't really mean much to me), but some person on Earth will figure it out

              To be clear, this is not a prediction. I'm just explaining why even the worst case scenarios don't particularly frighten me.

              2 votes
              1. raze2012
                Link Parent
                That'd be a pretty bleak reality to me. I like variety in my games, especially on the indie side that should have more room to experiment. And the thing is lots of those games are made. A few are...

                If the only games that were being made these days were Stardew Valley, Dust: An Elysian Tale and Undertale, I'd take the win.

                That'd be a pretty bleak reality to me. I like variety in my games, especially on the indie side that should have more room to experiment.

                And the thing is lots of those games are made. A few are successful enough to keep the team fed. Most seem to barely break out at all and barely sell anything. I really do hate how utterly skewed that first - to - market (or rather, first - to - succeed) advantage can be.

                If every single AAA and indie company collapsed tonight, I firmly believe people would still make games and sell them for money, even if infinite money was no longer an option.

                Sure. People still make traditional oil paintings. Hobbies will never truly die down.

                Now, good games? That's what I'm doubtful of. You scare off all the talent and you're left with people already established. I don't think we get expedition 33's nor Blue Princes nor even Balartros in such an environment. That takes a lot of time and talent that is gone now.

                I'll also mention that my answer is America-centric. On top of all other factors, there's always been this aura of disrespect for all the arts. And that still persists today.

                2 votes
            2. [2]
              MimicSquid
              Link Parent
              Have you heard of Spiderweb Software? A (mostly) solo developer making niche RPGs since 1994. His business model doesn't require high sales, because it's just him, and he produces perfectly fine...

              Have you heard of Spiderweb Software? A (mostly) solo developer making niche RPGs since 1994. His business model doesn't require high sales, because it's just him, and he produces perfectly fine western RPGs I've enjoyed for 31 years. The graphics are simple, because they have to be to be managed by one guy who isn't an amazing artist. The story is interesting, because he knows how to write. Here's him talking about the economics of one of his games. That particular piece is from 16 years ago, but the same fact is true: he's produced games that sell enough for him to make a living as a developer for 31 years regardless of what has been going on in the larger industry.

              1 vote
              1. raze2012
                Link Parent
                I have indeed heard of him and read a bit about his development process. I'm also not too convinced that I can replicate his success today on 2025 compared to when he started in the late 90's. A...

                I have indeed heard of him and read a bit about his development process. I'm also not too convinced that I can replicate his success today on 2025 compared to when he started in the late 90's.

                A big part of his games is that he can't really afford to iterate in the way other games do. His graphics will still feel like they come out of the 00's because consistency is his focus. But if you are a new dev trying to deliver that you won't have a built-in audience.

                1 vote
        2. [2]
          FaceLoran
          Link Parent
          I mean, they do like high fidelity graphics, but Mario is one of the best selling games all the time. And it looks great! But it's not what you think of when you're talking about high fidelity...

          I mean, they do like high fidelity graphics, but Mario is one of the best selling games all the time. And it looks great! But it's not what you think of when you're talking about high fidelity graphics.

          1 vote
          1. raze2012
            Link Parent
            Nintendo definitely does live in its own world, that's for certain. They sowed those seeds for decades and tend to keep the quality high and talent retained, unlike almost every other AAA as of...

            Nintendo definitely does live in its own world, that's for certain. They sowed those seeds for decades and tend to keep the quality high and talent retained, unlike almost every other AAA as of late.

            Even then, Nintendo isn't "cutting edge" but does know how to push its hardware to the limit. It's certainly no slacker in that regards.

    2. [4]
      raze2012
      Link Parent
      Given that I work in this industry: it really sucks. I jut wanted to surround myself with some talented, passionate people, work towards a goal bigger than me, and take those lessons to craft...

      I don't know, I kind of think of gaming as one of the bigger hobbies I have and I struggle to care about this.

      Given that I work in this industry: it really sucks. I jut wanted to surround myself with some talented, passionate people, work towards a goal bigger than me, and take those lessons to craft something of my own one day. This whole investor hype craze thingy I never asked for swiftly kicked that 2nd part in the balls.

      Having even less investment options because everyone ran away when extractionShooters (nothing close to what I want to make) aren't trendy anymore doesnt help my last part either.

      . I just think that unless we have a radical society change there will always be someone who makes games(in this case)

      Well thars a bit an issue of the gamer perspective. There's so many types of gamers and the kinds that tend to comment about "indies" vastly underestimate the scope of the ones they tout around. Expedition 33 is the current darling, but that's meanwhole a "30 core team" that still has credits in the hundreds woth millions of dollars invested into it from investors and even government grants.

      That not the kind of "indie" I can hope to make, me as a single dev that will maybe partner with an artist and contract a musician. I don't have that kind of funding and manpower.

      5 votes
      1. [3]
        Tiraon
        Link Parent
        It is not that I particularly like the situation but some kind of crash in game industry was probably inevitable for one reason or another. Maybe the new landscape will be better for end users and...

        It is not that I particularly like the situation but some kind of crash in game industry was probably inevitable for one reason or another. Maybe the new landscape will be better for end users and developers but who knows.

        When I mentioned low budget games I meant more Titan Outpost, Golden Treasure, Zone: Stalker stories, Colony Ship, Symphony of War or CAT Interstellar. For these scale projects the issue is really discoverability but maybe I am in too much of a minority that cares about these types of games.

        Tools and resources have come a long way and while the commitment is extremely high, and not something I personally wanted to take on, it is completely possible for one person or very small team to do.

        1 vote
        1. [2]
          raze2012
          Link Parent
          Sure, making a game is "easy". And by "easy" I mean "a huge effort but not the worrying part". I've been in for a while and can whip up a game in a (very high effort) weekend. In a month I can...

          Tools and resources have come a long way and while the commitment is extremely high, and not something I personally wanted to take on, it is completely possible for one person or very small team to do.

          Sure, making a game is "easy". And by "easy" I mean "a huge effort but not the worrying part". I've been in for a while and can whip up a game in a (very high effort) weekend. In a month I can probably polish that weekend project up and ship it as a respectable game.

          Making a "good" game is extremely hard. And making it profitable is just as hard. Perhaps nigh impossible without going viral depending on where you live. "profitable" here means "can cover living expenses as a full time job". I'd probably make more money asking for donations making monthly "polished game jam" projects than from the projects themselves.

          3 votes
          1. zestier
            Link Parent
            Sadly I don't remember where I saw it, but I recall learning about a guy whose full time self-employed job was more-or-less making tons of themed bejeweled clones and just leveraging that the tiny...

            Sadly I don't remember where I saw it, but I recall learning about a guy whose full time self-employed job was more-or-less making tons of themed bejeweled clones and just leveraging that the tiny revenue from each did add up. I think they were just browser games destined for the browser game hub sites that would pay out part of ad revenue.

            I say this mostly because if you truly can pump out reasonably polished, though not great, games at a cadence of like 1/mo it may be possible to live on selling $1-2 games. Obviously that though just becomes a game of volume where your whole goal is just to put out stuff fast enough that you can survive on the group of people that throw a few bucks toward random bargain bin games. It also doesn't sound super fulfilling or what people that want to professionally make games dream about.

            2 votes
  3. trobertson
    Link
    It looks like she's drawing a lot from https://www.matthewball.co/all/stateofvideogaming2025 I highly recommend going through the slides yourself. I spent a few hours doing so a few days ago and...

    It looks like she's drawing a lot from https://www.matthewball.co/all/stateofvideogaming2025

    I highly recommend going through the slides yourself. I spent a few hours doing so a few days ago and learned a lot about the state of the industry.

    11 votes
  4. [9]
    stu2b50
    Link
    There'll probably be a big contraction in the near future, but it is what it is. There'll still be video game companies, and perhaps the death of some of the bigger studios will give more oxygen...

    There'll probably be a big contraction in the near future, but it is what it is. There'll still be video game companies, and perhaps the death of some of the bigger studios will give more oxygen for the smaller ones. There's no inherent reason gaming needs to be an industry at a certain size - it's entertainment, in the end, and if the market cannot sustain a gaming industry the size we had in 2020-2024, then maybe it should be smaller.

    11 votes
    1. [6]
      Tmbreen
      Link Parent
      I also think it's worth noting that one of the biggest breakout hits of the year (Expedition 33) comes from devs that used to be at bigger game companies. Maybe the bloat of these massive...

      I also think it's worth noting that one of the biggest breakout hits of the year (Expedition 33) comes from devs that used to be at bigger game companies. Maybe the bloat of these massive companies is getting in the way.

      8 votes
      1. [5]
        CannibalisticApple
        Link Parent
        This is honestly my take on most industries. With game dev, I notice the problematic releases from the bigger names usually aren't due to the developers but decisions by others. Just look at...

        This is honestly my take on most industries. With game dev, I notice the problematic releases from the bigger names usually aren't due to the developers but decisions by others. Just look at Cyberpunk 2077, whose devs learned the initial release date with the rest of the world. Then you get Prey 2017 which had no connection to the original Prey, Bethesda just slapped on the name. Not to mention all the games that are granted minimal staff and time to prepare for release, and the inevitable failure leads to the IP being essentially abandoned.

        It's frustrating because the people at the very top of the bigger companies, the ones who make the biggest decisions, care only about money. And the ways they try to maximize profit doesn't just stifle creativity and lead to bad or bland games, but actively turns away players (and thus potential customers) because the decisions are just that bad. Their greed causes them to lose more money, and kills off the IPs because they assume it's just not popular enough to be profitable.

        Most recently there's the Infinity Nikki drama, a free-to-play game which had a recent update that removed and changed the beginning (and thus changed the story of the game itself), and has many bugs and problems. Players are still waiting on any sort of official statement from the company, but the game went from over 4 stars on most stores to 1.5 in just two weeks, which has to be some sort of record. Seriously, I don't know if I've seen a fanbase turn this hard on a game over a single update before.

        The general theory is that the plans were to only introduce one particular new area that's well developed and finished, but management pushed to introduce another area and retcon the game's beginning to create a lore-justified reason to include multiplayer in anticipation of the Steam release. Along with other changes which are meant to just maximize profits and thus definitely the decision of management.

        Seriously, I recommend people interested in the game dev industry to look into this, because this is basically a case study in how to ruin an already successful game. I never played it, but I've been checking one of its subreddits every day because it's just fascinating to watch. The frustration and despair is growing every day with continued silence from management.

        5 votes
        1. [4]
          raze2012
          Link Parent
          An infinity Nikki mention, how unexpected. The situation is particularly interesting because IIRC the development studio is Korean. Wonder if they have a similar situation to the US described in...

          An infinity Nikki mention, how unexpected. The situation is particularly interesting because IIRC the development studio is Korean. Wonder if they have a similar situation to the US described in this video.

          If people think western games get controversy, Asian controversies take it to a whole other level. The blowback is intense and the culture of shame means this affects an entire portfolio, not just one game to dump for another. It's a part of why they tend to shower players with compensation of they catch a whiff of that fire.

          1. [3]
            CannibalisticApple
            Link Parent
            Infold seems to be Chinese, based on the comments I've seen and how the update coincided with the Chinese Labor Day. Which is apparently a whole week off? People were hoping to see a proper...

            Infold seems to be Chinese, based on the comments I've seen and how the update coincided with the Chinese Labor Day. Which is apparently a whole week off? People were hoping to see a proper response after the holiday ended, but it's yet to happen.

            So far not seeing any of that compensation or shame. Instead I'm seeing people quitting because they're logging on to see they suddenly lost in-game currency, including paid ones, with no explanation. They're getting raked over by fans in both hemispheres, but still no official response or statements. I'm curious to see if their eventual attempts at damage control will be enough to win back the players' trust... Or if they'll even do any damage control at this point. I feel like most companies would give some official acknowledgement by now.

            1 vote
            1. [2]
              raze2012
              Link Parent
              Oh I may have mixed it with another studio. China is a different entity entirely so I'm not sure if the same mechanisms are at play. It could go either way. If they are on break, I guess next week...

              Oh I may have mixed it with another studio. China is a different entity entirely so I'm not sure if the same mechanisms are at play. It could go either way.

              If they are on break, I guess next week they may announce something, one way or another. For a disaster this big, PR needs some time to figure a plan out and coordinate it with product, devs, and themselves.

              1 vote
              1. CannibalisticApple
                Link Parent
                I figured China might be a different story. The break was when the update dropped, so they've been back for about a week and a half. Still no statement, though not sure what they could do to...

                I figured China might be a different story. The break was when the update dropped, so they've been back for about a week and a half. Still no statement, though not sure what they could do to smooth things over at this point.

                Like I said, watching this unfold in real time is fascinating. They'd basically already "won" by having a high-quality game aimed at girls, a heavily neglected niche. People were invested in the fashion, the story and the characters, they were hooked. I saw occasional clips on YouTube and it was clear from the comments how much people loved the game. People were fully locked in.

                So they basically shot themselves in the foot with this update by removing that story, characters and maybe one dress people had been specifically anticipating? It was in the old intro, so no one knows whether it's a thing. There are at least has some good new features that people clearly enjoy, but they're gradually being overshadowed by frustration with the buggy state of the update and some frankly bad design decisions. Plenty have already quit, or just log in long enough to do dailies (which are also subject to lots of complaint, since they're apparently worse and more boring/infantilizing since the update?).

                I think the only other time I've seen such strong backlash from a userbase was the Unity debacle. There's an element of broken trust in both cases just from them deciding to release it in this state. Even if they fix it, the obvious lack of care for the players will always be on people's minds in the future.

                1 vote
    2. [2]
      raze2012
      Link Parent
      With cost of living, if you want indie talent you gotta other male it reasonable to survive on the income from game or have investors fund enough to let devs survive. That size nerds to gro simply...

      There's no inherent reason gaming needs to be an industry at a certain size

      With cost of living, if you want indie talent you gotta other male it reasonable to survive on the income from game or have investors fund enough to let devs survive. That size nerds to gro simply because it's more expensive to survive today than 20 years ago. The median indie game as is is barely making gig money as is. That's not an environment that can foster new, creative talent.

      I'm biased as someone on the inside, but I guess it's still a shame I see such a sentiment of "let it burn I have plenty of games anyway".

      2 votes
      1. stu2b50
        Link Parent
        To be honest the grammar and spelling kind of fell apart midway through so I'm not entirely sure what you're saying, but I'll try to parse it as best I can. The money will come when the...

        To be honest the grammar and spelling kind of fell apart midway through so I'm not entirely sure what you're saying, but I'll try to parse it as best I can.

        The money will come when the contraction is done. Part of the reason margins are so tight is that video games currently are an absurdly competitive market. There is sizable demand, even if shrunken from pandemic heights, and chipped away at by TikTok, so the supply will exist.

        Moreover, in the end there's no reason to have some kind of intervention for the video game market - it's normal for segments to have periods of contraction. Games have, apart from the Atari crash, only experienced meteoric growth, but that's more emblematic of the youth of the field more than anything.

        What would you want to be "done"?

        3 votes