The Future of the Game Industry

CfD Conversations Spring 2025–3 | April 17, 2025

Written by Julie Farkas

To close out the Spring 2025 semester and the academic year, CfD core faculty member Mark Sivak invited his brother, Seth Sivak, to join him for a discussion about the game industry. Where is it now, and where could it go in the future? They answer these questions by exploring some of the major topics and trends within the game industry: black hole games, XR, AI, mobile gaming, handhelds and consoles, eSports and more.

Good & Bad News

To prepare for this talk, Mark spent a few weeks researching data about the game industry to identify trends and other notable statistics.

To begin the discussion, he outlines the “bad” news that he discovered during his research:

Though the 2010s were lucrative years for the game industry, game spending and the game industry at large have shrunk since 2021. Overall funding dried up, and many game studios experienced some level of failure and closed, shrunk or froze. This makes the game industry an outlier — books, music and digital video all grew.

This is all due to lower engagement; players have basically stopped playing games. Not only is competition between games steep, but so is competition with other leisure activities.

Now for the good news:

While the game industry is declining in comparison to previous years, the games themselves are better than ever. There are more players overall, and more types of players.

So, knowing the state of the game industry now, what are the biggest trending topics that pop up? Mark identifies this list:

1. Black Hole Games
2. Extended Reality (XR)
3. Artificial Intelligence (AI)
4. Mobile Gaming
5. Handhelds & Consoles
6. eSports

Black Hole Games

A black hole game is what a gamer chooses as their main game. They may stray to other games for a short period of time, but they always end up returning to the black hole game. The name refers to the way these games metaphorically suck players in.

Examples of black hole games: Fortnite, Roblox, Grand Theft Auto, Counter Strike 2, Gorilla Tag, League of Legends, Minecraft, Call of Duty Mobile

Mark identifies a handful of factors that help make a game a black hole game:

1. The price of the game.
2. The number of device types on which the game can be played.
3. How vast the in-game world is.

On this topic, Mark asks Seth what he thinks about the trend of black hole games and its impact on the industry. This trend has emerged seemingly from the 2010s; the industry was not always like this.

Seth compares traditional, premium gaming to the film industry. He says traditional games are viewed as entertainment products, like movies, where half of the revenue is made in the first six weeks. This model lacks predictability. Black hole games, in contrast, monetize consistent and regular engagement. The games themselves are constantly updated in order to ensure that users keep coming back, and it works! These games have effectively become third spaces for large groups of people.

So what is worth noting about the future of black hole games? Seth thinks the most interesting thing is the cost of the games. He explains that there has been a barbell effect in the industry over the last decade. Smaller, single-player, indie games are charging less than $20, while games with big names are charging up to $100. There is no middle ground.

Seth points out that, on the one hand, the increase in price is not entirely unwarranted. While other media, such as books and movie tickets, were steadily increasing in price due to inflation, games stayed at their pre-existing price level of $60 to $70. However, the challenge of this price hike is that it makes it harder for completely new games — games made from new and original intellectual property — to break into the market.

Existing games will still flourish, especially the black hole games that are free or have globally recognizable names, but new games will struggle.

“I was talking with a friend three or four weeks ago, where he was like, “Hey, if we’re heading into a recession, isn’t that great for games? Like, will we see more investment into game companies?” He was like, games are traditionally seen as recession-proof. But I think that’s games as a whole, not new investment into games, because I actually think it’s just going to flow into these existing games.” — Seth Sivak

Extended Reality

Extended Reality (XR) is an umbrella term that includes Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR). Mark’s findings show a low adoption rate of VR games. The market is still too small to support a wide range of games. VR headsets, for example, are still very expensive, and therefore, the audience for VR games is not a large one.

On the other hand, there seems to be a race for AR, with major companies talking about it and creating technology around it. But Pokémon Go, created by Niantic, is really the only example of a successful game that uses augmented reality. Other games, even ones with highly recognizable IPs, have tried and failed.

Seth and Mark both agree that, while AR technology is inevitable, it currently does not seem to be the best platform for games.

“[Niantic’s] focus for a while has been on trying to establish this location-based AR-type platform that could then lots of games be built on, but they haven’t proven it’s repeatable at all.” — Seth Sivak

For augmented reality to get to that point of being an “ideal” gaming platform, they believe the necessary accessories, such as AR glasses, will need to be cheap and pervasive enough to create a wider audience for the games. The same can be said for XR games as well.

Artificial Intelligence

AI in the game industry is a hefty topic.

Current data shows that game developers do not see a big advantage in using AI. Some developers are using generative AI in the brainstorming stage, and others might use AI to help them code, but for the most part, the AI that is available is not yet good enough to truly help game developers.

But despite the low degree of implementation currently, Mark projects that AI usage will increase significantly in the near future. Its main goal will be to decrease the amount of money and time spent on developing a game. The cost to make games has gone up significantly over the years. If AI could help lower that cost, more companies might be interested in developing and publishing games.

Seth explains that game development in North America is simply too expensive. He compared ballpark estimates to prove the point.

To make a blockbuster game in the past, it would take:

• 80 people
• 3 years
• $60,000,000

To make the same game now, it takes:

• 2,000 people
• 7 years
• $300,000,000

Historically, companies outsourced to other countries because the costs were lower. Now, studios are beginning to turn to AI.

Mark and Seth discuss some applications of AI in game development that can help save time and money: 2-D asset generation, animation, voiceover, bug fixing, quality assurance testing and customization of narrative.

Some other elements — visual effects, 3-D asset generation, the design of a level within the game — are not high enough in quality yet, but could be in the future.

But there is also something to be said about not replacing everything with AI. For example, when using a voiceover feature, having a real actor or even a big-ticket celebrity voicing over the key character of a game is worth the cost. But for randomized Non-Player Characters (NPCs), AI could be the cost-saving solution.

Altogether, AI can help game studios produce games more quickly, at a lower cost, and with less manpower. If budget and team size are not barriers, this could level the playing field and encourage smaller studios to develop more games.

Mobile Games

Mobile games are games on handheld devices, but for this portion of the discussion, Mark focuses only on phones. Other handheld devices come up later.

Unlike the rest of the game industry’s general decline in recent years, mobile gaming was growing. Why was this? Everyone has a smartphone, so the sheer size of the potential audience for mobile games has been the root of its success.

In the near future, however, things will change. Mark notes a few factors that will impact mobile gaming:

• Competition with other ways to spend leisure time
• The scale and profit of a mobile game company

If you had a spare twenty minutes in a doctor’s waiting room or on public transportation, what would you do with it? This is Mark’s point about competition for leisure time. Other platforms like YouTube and TikTok are eating up the time that a person might have spent playing a mobile game. In turn, this negatively affects a mobile game’s value.

“Essentially what seems to be happening with some of these trends is that some of your low-salience gamers who play a random Facebook game or whatever, or could be brought in via network effects to play more games, have essentially just dropped off, and instead of having network effects in games, they now share YouTube memes and Tik Tok videos amongst their friends as a network effect for that platform instead. So, they’re kind of getting more sticky to those uses of their leisure time versus playing games.” — Mark Sivak

Despite the increase in audience, the environment surrounding mobile games does not allow for much growth in the games themselves. The top games and game companies are pretty set in stone because of their IPs and the sizes of their budgets.

Games with recognizable IPs do not need to spend as much money on marketing to acquire users. They have a guaranteed audience to some extent. Unfortunately for other game developers, their budget for marketing and user acquisition needs to be very high.

Consider Apple’s App Store. First of all, it costs money to make a game available on their App Store. Secondly, Apple recently made changes to their privacy, targeting and tracking permissions for advertisers. Ad revenue has dropped and ads have become less effective at reaching the ideal audience. While this may afford more privacy for the individual user, it hurts the game companies. The mobile game industry is driven by user acquisition, but finding those users has become more difficult and costly. Every cent made goes back into the cycle — you have to spend money to make money. So, how do you cross the threshold into making a margin of profit? This is what Mark and Seth think is the real challenge with mobile gaming.

Handhelds & Consoles

Mark’s research shows that game console sales are flat, or have remained steady with no noticeable growth or decline. However, if you count handhelds as consoles, sales have actually grown.

Here are some of the trending devices that Mark and Seth discuss:

• Handhelds: Nintendo Switch, Valve Steam Deck, Lenovo Legion Go
• Consoles: Sony PlayStation, Microsoft Xbox
• Personal Computers (PCs): Valve Steam Machine

Some games are exclusive to their specific console or handheld device, but these days, games are becoming available on many or all platforms. Xbox games are available on PlayStation, or both are available on PC.

The Nintendo Switch is an interesting case because it can be used as a handheld and as a console with controllers. Additionally, people generally just use the Switch to play games with Nintendo-owned IPs. Very few third-party games perform well on the Switch. Because of this, people tend to have a Switch and something else, whether that is another handheld, a console or a PC.

Interestingly, though PC gaming has been dying off, it recently started trending upward again. Why? Streamers.

Desktop PCs are not portable, and laptops are heavy and cumbersome. No matter the form, PCs are missing an element of convenience and ease of use. But now, they are growing in popularity with the younger generation. Kids watch streamers play PC games on platforms such as Twitch and YouTube and decide they want that setup for themselves.

“That’s like a reversal of a trend…For as long as I’ve been in the industry, which is a very long time at this point, PC gaming was dying, right? And now we see very clearly it’s actually growing and I think it’s actually driven off of that content creator side.” — Seth Sivak

The last point of note about handhelds and consoles relates to game distribution. Mark found that game distribution has sped up significantly. For example, Steam released as many games in one month as were released in the whole year of 2016.

Not only has the distribution rate increased, but distribution itself is changing. Traditional retail distribution and sales of games does not lend itself to selling old games; stores do not have the shelf space to hold games for that long, so they focus on the hot new items. But digital distribution has done what retail cannot: old games remain available for purchase and even offer discounts time and time again.

In fact, Seth and Mark find that it is a best practice to put a digital game on sale as much as possible. When a game goes on sale, the digital marketplace is more likely to notify gamers of its existence, which then means it is more likely to be downloaded and played.

Mark thinks this environment is particularly advantageous for contained games, which are games with experiences that last between 10 and 20 hours and have a set ending. People who are loyal to their black hole game might be willing to leave for a short span of time to play a contained game. In fact, Seth and Mark know of examples where members of black hole game communities agree to all take a pause, try out a different game for a while, and return when they have finished. Mark calls this “diversifying their gaming diet.”

Mark and Seth recommend that game companies take advantage of this cycle. The window between updates of popular black hole games is the perfect time to launch an independent game.

“It is pretty known when the major black hole games do their season updates — it’s like every, you know, every 10 to 18 weeks. And so you can try to shoot the curve and go right in the middle and try to be at a time where there is a lull, where there aren’t other games coming out, to see if you can pry some of that audience out.” — Seth Sivak

eSports

Mark identifies gambling as an underlying issue in eSports. eSports is not a very lucrative subsection of gaming, so one of the ways it is staying afloat is by accepting sponsorships from sports betting companies. Not only are people gambling on real-life sports, but now also on eSports. Though this marketing money helps game companies, it is not as beneficial to gamers. Gambling is not something to take lightly.

Another interesting note about eSports is what Mark dubs “the eSportification of sports.” Similar to how streaming has revitalized PC gaming, it is shaping the sports industry as well. Livestreaming a sporting event now includes digital creators or retired players giving their commentary, so younger audiences are experiencing sports in a way that resembles eSports. Thursday Night Football was streamed on Twitch. Nickelodeon aired the Super Bowl LVIII in 2024 with live commentary from animated SpongeBob characters. And after this discussion, Disney+ also began airing animated alternate feeds of sporting events, featuring characters from their owned IPs.

The throughline of these points about eSports seems to be corporate marketing. Though eSports is not growing on its own, it provides a great marketing opportunity for other companies.

Piracy

The subject of video game piracy comes up at the end of the discussion, prompted by a question from the audience. Though not a section that Mark had planned in his outline, he did do some research about it beforehand. Data shows that piracy is not very widespread in the United States, but it is rampant globally. Things like phone and internet security are different in different parts of the world, and therefore so is the frequency of piracy.

The main factor these days is hardware versus software. With many popular games now being run on servers instead of hardware such as discs and cartridges, piracy is more difficult. Even with single-player games, most major companies require an internet connection and a login to launch the game. These types of digital access can prevent piracy more easily. Furthermore, AI can be a helpful tool in preventing piracy. This does not mean that piracy does not still exist, but at least in the United States, it is way less common.

Mark wraps up the discussion on a positive note — though there is a lot of uncertainty ahead in the game industry, he believes there is plenty to look forward to over the next few years. Technology continues to evolve and improve, so the game industry will follow right along with it.

Interested in learning more? Watch the event recording:

[embed]

CAMD Moderator

Mark Sivak: Teaching Professor, CAMD and the College of Engineering

Guest Speaker:

Seth Sivak: Founder, Entrepreneur and Game Developer

Join us! #CenterForDesign

️📩 centerfordesign@northeastern.edu 🔗LinkedIn 🔗Twitter 🔗Instagram 🔗Facebook 🔗Website 🔗Newsletter