Gaming Updates: Matthew Ball's State of Video Gaming in 2026: "China is eating the video games industry"

Source:

https://www.pocketgamer.biz/matthew-balls-state-of-video-gaming-in-2026-china-is-eating-the-video-games-industry/

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Matthew Ball’s State of Video Gaming in 2026 report paints a paradoxical picture: record revenues alongside shrinking investment and industry restructuring. Global games content sales rose 5% year-on-year to an all-time high of US$195.6 billion in 2025, with new peaks across mobile, PC and console. However, private funding plunged another 55%, far below pandemic-era highs. Pre-seed and early-stage investments dropped dramatically, and deal volume in late 2025 was roughly one-fifth of Q4 2021 levels.

Development spending remained elevated at over US$40 billion for the second straight year, yet operating margins (excluding China and platform-owning developers) fell well below pre-pandemic levels. Despite 40% growth in consumer spending since 2019, total operating profits are lower than in 2019, reflecting rising costs and tougher competition.

Mobile spending has been flat for five years, with new titles capturing a decade-low share of player spending and downloads. User acquisition costs are crowding out discovery, strengthening established franchises. Console gaming rebounded strongly, surpassing 2020 records, while PC has grown steadily, up 30% since 2020.

China emerged as a dominant force, accounting for 20% of global player spending and 38% of growth. Chinese publishers have captured about half of global spending growth since 2019 and increased their overseas revenue share from 11% to 14%. Meanwhile, Roblox has expanded aggressively, setting records with over 45 million concurrent users.

Revenue gains increasingly stem from price hikes rather than player growth. U.S. player numbers have fallen below pre-pandemic levels, and mobile playtime has declined.

Layoffs continued but fell 40% year-on-year to 9,200 in 2025, signaling slower contraction. Overall, Ball concludes the industry is restructuring, fragmented, and increasingly shaped by China and platform ecosystems.

Comments:

Interesting news.

Some Hoyolab and NetEase games are quite good.

China games are worth a review in the game of the year awards.