Matthew Ball explains what happened to the gaming boom and our chances of recovery | The Dean Beat

Matthew BallCEO of Epyllion and author of The Metaverse Book, 220 slides dropped this week in an Early Access deck that explained what happened to the rise and fall of the modern gaming industry.

The slides are easy to read and I recommend everyone to watch them as it takes much less time to go through and understand them than if they had written a huge essay on the topic. Ball did a preview of his views with us GamesBeat Insider Series: Hollywood and Games Event on December 12th in Los Angeles. I look forward to discussing this new slide deck and the issues surrounding it at our upcoming event GamesBeat Summit 2025 on May 19th and 20th in Los Angeles.

Just a few years ago, gaming reached its peak in 2021 as the pandemic forced everyone to stay indoors and gamers found solace in online gaming. Drivers included mobile device growth, live services, free-to-play, cross-platform gaming, battle royales and battle passes, user-generated content, social play and social game services, and the COVID boom itself.

Matthew Ball captured this confluence of events that allowed gaming to grow faster than other markets. But over the past 2.5 years things have stalled, leading to an unprecedented 34,000 layoffs and a lack of investment capital to fuel the wave of game studios that had previously begun.

In one sentence, Ball summed up what was going on. He wrote: “The exhaustion of over a decade of growth drivers that increased players, playtime and spending…coincided with evolving users, behavior, changing monetization models and increasing lock-in effects…representing long-standing competitive and budget escalations intensified … while growth was concentrated in foreign markets that shifted to local production (and then took share abroad) … and in parallel with acute macroeconomic financial events and Epidemics occurred…were exacerbated by microeconomic platform policy shifts…as well as the emergence of new and hyperviral substitutes…and foreign competition…among too many potential new growth drivers that are not yet delivering growth.”

The promised drivers of cloud gaming, betting, subscriptions, esports, XR, Web3, Metaverse and app store regulation all failed to deliver much-needed growth, leading to a winter instead. Players have focused on older existing live service games, while growth in new titles has stagnated.

Apple’s shift to focus more on user privacy than targeted advertising crippled the growth of mobile gaming that had fueled the decades-long gaming boom.

The installed base of the console has not grown. Development abroad picked up speed. Social videos like TikTok have become increasingly popular and interesting for young people. Players disappeared in black hole games. Sampling wildlife was a thing of the past. Production deadlines increased, 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 costs increased. Game detection got worse.

Without new growth engines, games remained stuck in a vicious circle. Revenue stagnated. Profits declined and there were other major failures such as “Concord” and “Suicide Squad: Kill the Justice League”. Large companies took fewer risks and reduced their investments. This leads to fewer big games and big studios, fewer new hits and innovations, and no player or playtime growth. The wheel keeps turning.

But we are not without hope, said Ball. The Switch 2 offers some opportunities for innovation. There will be competition from other new handhelds and devices from manufacturers like Valve, Sony and Microsoft. Double-A and Triple-A gaming is thriving with Genshin Impact on mobile. Non-core markets are growing, such as the Middle East. User-generated content platforms and tools are emerging on Roblox, Minecraft, Fortnite and Overwolf. Social game services are on the rise. App Store regulation is starting to potentially eliminate 30% of fees. New game genres are emerging, titles like Helldivers 2 and Palworld are on the rise. AI has the potential to improve game development, reduce costs and find new types of gameplay. Advertising is increasing and Grand Theft Auto VI is coming out this year, possibly with higher prices.

The result, as always, will be winners and losers.

In the meantime, I would like to express my shock and horror at the aftermath of the Los Angeles fires. Please take these into account Resources here and donations to some of these organizations: 211 LA, California Community Foundation Fund, Direct Relief, Greater Los Angeles Education Foundation, Habitat For Humanity of Greater Los Angeles, Los Angeles Fire Department Foundation, Los Angeles Regional Food Bank, Los Angeles Unified School District Emergency Relief Fund the Education Foundation, MusiCares and Pasadena Educational Foundation Eaton Fire Response Fund.

That being said, it is interesting to hear the optimism of crypto people as a new Trump administration is set to take power on Monday, obviously with senior crypto advisors. I fear that such a win will come with many other higher costs for Web3, such as slot machine tariffs.

I wish us all all the best and can only think of William Butler Yeats.

“And what a rough beast, his hour has finally come,
Does he stroll into Bethlehem to be born?”