The gaming industry is entering 2025 at a crossroads. After a turbulent 2024, marked by layoffs and economic pressure, the sector is gearing up for a year of transformation. With major game releases, regulatory shifts, and emerging technologies, investors are watching closely to see how the industry adapts.
The post-pandemic adjustment has not been easy. After the explosive growth seen during lockdowns, gaming companies have struggled to maintain momentum. Rising interest rates and inflation squeezed the market, leading to global layoffs of 13,000 and high-profile studio closures at companies like Ubisoft, Tencent, and Take-Two.
“The hype that carried gaming through the pandemic has faded,” says George Osborn, founder of Half-Space Consulting. “Studios are facing a much tougher market, where even well-funded projects struggle to compete.”
Adding to the challenge is the dominance of established live-service games like Fortnite, Roblox, and Minecraft. According to Newzoo, five titles over six years old accounted for 27% of total console and PC playtime between 2021 and 2023.
“These games are more than just hits – they’ve become platforms in their own right,” Osborn explains. “Roblox and Fortnite are evolving into ecosystems powered by user-generated content, making them competitors not only to game developers but also to the storefronts that host them.”
For developers, success is no longer just about creating a great game – it’s about convincing players to invest time in an industry dominated by a few massive titles.
Despite the setbacks of 2024, 2025 is shaping up to be a year of resurgence. Major releases, including Grand Theft Auto VI, Borderlands 4, and Civilization VII, are set to reinvigorate the market. The anticipated launch of the next Nintendo console is also expected to generate significant excitement.
“These releases will drive consumer enthusiasm and business confidence, helping to shake off the gloom of the previous year,” says Osborn.
At the same time, regulatory shifts are creating both challenges and opportunities. The UK’s Online Safety Act introduces strict new rules for games with user-generated content, carrying potential penalties of up to 10% of global turnover. Meanwhile, digital competition laws are pushing Big Tech platforms to open their ecosystems, paving the way for alternative app stores and direct billing solutions.
Another unexpected consequence of last year’s layoffs is the rise of new independent studios. Osborn sees parallels to the post-2008 financial crisis, when many talented developers struck out on their own.
“This is an exciting time for investors who are willing to back these startups,” he says. “With proper due diligence, there’s significant value to be found in newly established businesses led by experienced teams.”
Internationally, gaming hubs are competing for dominance. Saudi Arabia is aggressively investing in gaming as part of its Vision 2030 strategy, while Australia’s State of Victoria and the EU are crafting long-term strategies for industry growth. However, most governments still rely on piecemeal support through tax reliefs and limited funding.
While the future looks promising, challenges remain. The grip of live-service giants means that even well-funded studios will need to rethink their approach. Regulatory scrutiny is another hurdle, with concerns about child safety, extremism, and misinformation placing gaming under the microscope.
One of the most significant technological shifts on the horizon is the rise of generative AI. While AI has long played a role in gaming, generative AI could revolutionise development.
“Generative AI has the potential to fundamentally reshape how games are made,” Osborn says. “Some tools can already generate simple games from prompts, but the industry is approaching this cautiously.”
For now, companies are focusing on AI’s ability to streamline production pipelines rather than replacing traditional development methods. Intellectual property concerns and technical limitations still need to be addressed before widespread adoption.
So, what’s the overall outlook for gaming in 2025? Osborn describes it as “shaky but hopeful.”
“2024 was a tough year, but the groundwork is being laid for recovery. With major releases and new technologies on the horizon, 2025 could be a turning point. That said, the industry will only regain confidence once we start seeing tangible successes – and that might take most of the year.”
The gaming industry stands on the edge of transformation, with investors, developers, and players alike waiting to see how the next chapter unfolds.
Arbuthnot Banking Group PLC (LON:ARBB), trading as Arbuthnot Latham, provides private and commercial banking products and services in the United Kingdom. Founded in 1833, Arbuthnot Banking is based in London, United Kingdom.
