Matthew Ball, CEO of Epyllion and author of The Metaverse book, dropped 220 slides in an early access deck this week that explained what happened with the rise and fall of the modern game industry.
The slides are quite readable and I encourage everyone to view them, as it takes a lot less time to go through them and grasp them than if he had dropped a gigantic essay on the topic. Ball did a preview of his views at our GamesBeat Insider Series: Hollywood and Games event on December 12 in Los Angeles. I’m already excited to discuss this new slide deck at our upcoming event GamesBeat Summit 2025
Just a few years ago, gaming hit its peak in 2021 as the pandemic forced everyone inside and gamers found solace in online play. The drivers included mobile’s growth, live services, free-to-play, cross-platform, battle royales and battle passes, user-generated content, social play and social game services and the COVID boost itself.
Matthew Ball captured this confluence of events that enabled gaming to grow faster than other markets. But it stalled in the past 2.5 years, resulting in an unprecedented 34,000 layoffs and a shortage of investment capital to fuel the previously started wave of game studios.
Game industry drivers over a decade.
In a sentence, Ball summarized what is going on. He wrote, “The exhaustion of decade-plus growth drivers that grew players, playtime, and spend … coincided with evolving user, behaviors, changing monetization models, and growing “lock-in” effects … that exacerbated long-running competitive and budgetary escalations … while growth concentrated in foreign markets that shifted to local productions (and then took share abroad) … and occurred alongside acute macroeconomic financial events and epidemics … were worsened by microeconomic platform policy shifts … as well as the emergence of new and hyper-viral substitutes … and foreign-based competition … alongside too many would-be new growth drivers that have yet to deliver growth.”
Promised game drivers that failed?
The promised drivers of cloud gaming, betting, subscriptions, esports,XR, Web3, metaverse and app store regulation all failed to deliver the much-needed growth, resulting in a winter instead. Players have focused on older existing live service games, stagnating growth in new titles.
Apple’s shift to focus on user privacy over targeted ads crippled mobile gaming growth, which had fueled the decade-long boom in gaming.
Game industry challenges that recently emerged.
The console installed base didn’t grow. Foreign development picked up. Social video like TikTok became more prominent and interesting to youth. Players disappeared into black hole games. Game sampling became a habit of the past. Production timelines grew as did development costs. App Stores had restrictive, closed policies. Price increases were rejected by players. Fear of failure led to more conservative bets. User acquisition cost rose. Game discovery got worse.
Without new growth engines, games got stuck in a vicious cycle. Revenues stagnated. Profits fell, with more large failures like Concord and Suicide Squad: Kill the Justice League. Big companies took fewer risks and curtailed investment. That’s leading to fewer big games and …