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From 2018 to 2021, the global video-gaming market exploded, with a blistering 11.8% compound annual growth rate (CAGR). A proliferation of new players, fueled by expanding smartphone ownership and pandemic-era lifestyle changes, drove the boom.
But now, the market is settling into a steadier pace, with a forecasted annual growth rate of 4.4% through 2027. Leaders must pivot from pursuing sheer volume to sharpening their execution, automating processes, and streamlining development costs. Growth will increasingly depend on the deeper integration of generative AI technologies and the globalization and localization of content.
Mobile gaming remains the revenue heavyweight, while consoles and PCs are expected to grow at a similar rate of ~13% from 2024 to 2027. With no clear winner across platforms, companies will need to carefully strategize their platform choices. Console unit sales may be slowing down, but they still provide strong value due to rising prices and premium content offerings. The challenge for platform owners is to reignite player enthusiasm without overspending.
Below, we lay out the industry trends and player preferences that will define the gaming industry in the years to come—as well as four strategic imperatives companies must enact for sustainable growth.
Four global industry trends shaping the future of gaming
1. Consolidation
The gaming industry has significantly concentrated, as the top companies now control more than half of the total market value (up from 43% in 2019). The consolidation trend is reshaping competitive dynamics, as fewer, larger operators dominate the landscape. Major acquisitions, such as Microsoft's takeover of Activision and ZeniMax and Take-Two's purchase of Zynga, highlight the critical role of M&A in achieving scale, stable revenues, and growth. 
2. Independent distribution
The mobile gaming landscape is shifting particularly fast, driven by antitrust rulings and a wave of M&A activity. In December 2023, a U.S. jury ruled that Google’s Play Store practices violated antitrust law, forcing it to allow third-party payment options and competing app stores. Meanwhile, Apple is adapting to the EU’s Digital Markets Act, which mandates sideloading and alternative payment systems on iOS.
These changes directly threaten the 30% commission model that has defined the mobile app economy. PC gaming already offers an alternative roadmap: Epic Games broke from Steam’s dominance by launching its own store with a 12% cut, prompting others like EA and Ubisoft to follow suit.
Mobile publishers may now do the same. With Microsoft and Take-Two’s acquisitions, both could launch their own direct-to-consumer app stores—bypassing Apple and Google entirely. This would not only give consumers more choice and potentially lower prices, but also allow game companies to capture a greater share of the value they create, rather than surrendering a significant portion to platform holders.
3. Global expansion
As traditional markets mature, emerging markets like India, Brazil, and the Middle East—with largely untapped player pools and rising smartphone adoption—are now driving user growth. Asian operators that are experiencing slower growth due to their local player and revenue footprint will need to rethink their globalization plans to more effectively acquire new players, especially in the U.S. where they historically struggle. While North America is a highly mature market, it is still steadily growing, at far greater rates than similarly saturated markets like Europe.
Companies that diversify geographically see a positive correlation with profitability and revenue stability. As we lay out below, the more international the revenue footprint, the greater the reward. This holds true for companies across sizes and sub-categories (mobile, PC, and console). 
4. Rising costs
While margins remain healthy, the gaming industry is becoming increasingly capital intensive. Live service titles now dominate PC and mobile platforms, extending IP longevity but significantly inflating development budgets as the games continuously change with new updates. Coupled with the rising revenue share taken by high-budget “AAA” games, companies face major challenges to efficiently balance investments, IP innovation, and long-term profitability.
Strategic clarity on scale, disciplined global expansion, and targeted M&A execution will separate industry leaders from those left behind.
Player preferences: Free-to-play, cloud gaming, and emerging tech redefine engagement
Free-to-play gamers now represent more than 50% of the U.S. market and more than two-thirds of the Chinese market. Given the success of free-to-play models at the expense of full-game sales, in-game purchases dominate player spending patterns on PC and mobile platforms. Younger gamers demonstrate a willingness to spend in-game at three times the rate of older demographics, reinforcing the trend toward “freemium” monetization models.
Cloud gaming is emerging as a top segment, expanding player bases by lowering barriers to entry. Improvements in global internet speeds are making cloud gaming more appealing by reducing the need for costly gaming hardware. This aligns with consumers' preference for multi-platform and connected experiences, enabling seamless gameplay across multiple devices.
AI development use cases are particularly impactful for reducing time and cost to market. From accelerated production timelines to more interactive and sophisticated non-player characters (NPCs), AI holds enormous potential to redefine player expectations. Game developers must integrate advanced AI solutions to meet rising consumer demands, especially from tech-savvy gamers who anticipate continuously richer, more immersive experiences.
Emphasizing live-service and cross-platform formats will be crucial for companies to maintain engagement and efficiently manage development costs. 33% of major “AAA” developers are working on live-service games to mirror the success of titles like Fortnite and Genshin Impact. However, free and live-service content requires long development cycles and continuous updates, significantly raising costs. This necessitates new development and operating models that allow companies to manage these costs efficiently while pursuing growth.
Four strategic imperatives for sustainable growth
In today’s highly dynamic gaming market, companies across the value chain must decisively reposition themselves for growth while safeguarding against agile competitors and rapid technological advances.
To future-proof their business and ensure sustained success, industry leaders must anchor their strategy around four key pillars:
1. Secure scale and stable growth through strategic global expansion and selective IP acquisition.
Companies must rapidly broaden their gaming lineups and target the right international markets to create more resilient business models while reducing reliance on mature regions. Diversifying geographically and expanding portfolios through IP acquisition, while also utilizing new distribution channels, will help mitigate the risks associated with a saturated market.
2. Continuously adapt to evolving player preferences through localized content and live-service gaming models.
Operators should capitalize on players’ in-game spending (particularly from younger demographics) and leverage the growth potential of emerging markets by culturally tailoring gaming experiences. The trend toward “freemium” monetization models, combined with the increased importance of live-service offerings and cross-platform delivery, requires companies to refine their strategies to maintain engagement and drive sustained revenue growth.
3. Embrace new technologies throughout the value chain, especially AI and cloud-gaming capabilities.
AI development use cases are particularly impactful for reducing time and cost to market, from accelerated production timelines to more interactive and sophisticated in-game non-player characters and faster-paced downloadable content updates. On the consumer-facing side, cloud-gaming adoption should be prioritized, as it lowers the barrier to entry and allows for seamless cross-platform experiences.
4. Rigorously manage operating models and development expenses to handle higher costs and moderate growth rates.
Companies need to proactively control SG&A (selling, general, and administrative) expenses, align globalization efforts with clearly defined ROI frameworks, and prioritize investments strategically to preserve margins and profitability. This includes streamlining production processes, leveraging AI-driven efficiency enhancements, and maintaining a disciplined approach to project management to ensure that resources are allocated effectively and cost overruns are minimized.
Sustainable market leadership will belong to those who strategically scale, quickly adapt to consumer shifts, rigorously manage costs, and effectively harness emerging technologies.
By focusing on these four strategic imperatives, companies can navigate the complex, evolving gaming industry and secure long-term success.
