From 2019 to 2021, the global video game market surged from $170 billion to $244 billion, largely due to stay-at-home mandates and the absence of live events. But growth since then has been minimal, with the market expected to reach only $259 billion in 2024.
Altman Solon's research found that, post-COVID, player spend declined at a 2% CAGR, monthly active users stagnated, and smartphone subscription growth fell to 3%. Time spent on mobile gaming increased slightly, but console and PC remained flat. Meanwhile, other entertainment formats gained a share of attention, creating more competition for user engagement.
This stagnation led to layoffs that impacted approximately 10% to 15% of the workforce and significantly reduced deal activity, with M&A volume cut in half compared to its 2022 peak. The video games industry, once defined by exponential growth, is now entering a phase where efficiency, innovation, and consumer alignment will determine who thrives.
With player engagement holding steady and emerging technologies reshaping what’s possible, there are clear opportunities to capture value—both within the traditional gamer base and through new use cases and platforms.
Looking ahead
To succeed in this new environment, industry players must adapt. That includes finding ways to increase ARPUs for legacy games and using AI to reduce the cost and complexity of game development. Beyond short-term efficiency gains, companies also need to explore how changing consumer behavior—particularly among Gen Z and Gen Alpha—will shape the next wave of demand.
These younger audiences view games less as standalone entertainment and more as a space for connection and social interaction. Their platform of choice is mobile, not console. And they are increasingly drawn to genres and formats that support creativity, collaboration, and shared experience.
Emerging platforms like connected TVs and cloud streaming present new opportunities to reach these users. So do user-generated content ecosystems, party games, and e-commerce integrations that bridge the virtual and physical worlds.
The video game industry is at an inflection point. While the explosive growth of the pandemic era has subsided, a new era is emerging with promising new game experiences and an emerging cohort of engaged players. Industry participants across the ecosystem should take advantage of this transformation by adapting their strategy and go-to-market plan today.
To learn more about the tactics that stakeholders in the video game industry can implement to spur short-term growth as well as long-term strategies involving emerging game genres and technology to connect with a younger generation of gamers, download the full insight.
