For years, the gaming industry appeared to be an unstoppable juggernaut, with revenues skyrocketing because of increasingly intense titles and the explosion in mobile gaming.
However, as we enter the mid-2020s, there are increasing signs that the industry is reaching a plateau.
After the pandemic-induced boom in 2020 and 2021, global gaming revenue fell in 2022. This decline gave approach to weak growth of just 0.5% in 2023, growing the worldwide gaming market to around $184 billion Data from Newzoo.
While still a powerful number, it's a far cry from the double-digit percentage growth the industry had come to expect.
This slowdown is much more pronounced in mature markets comparable to North America and Europe, where key sectors comparable to console and mobile gaming are nearing saturation.
Mobile gaming revenue, which once fueled the industry's continued growth, has actually declined in 2022 and is barely now starting to stabilize.
However, sales stagnation is barely a part of the story. Even as growth slows, the price of developing top-notch AAA games continues to rise.
Budgets for top franchises like Call of Duty and Grand Theft Auto now routinely exceed $300 million. For some titles, combined development and marketing costs approach $660 million, a staggering sum that will have been unthinkable a decade ago.
These skyrocketing budgets are forcing studios to play it secure and rely heavily on established franchises and tried-and-tested formulas somewhat than take risks. Innovation takes a back seat to iteration.
There's also evidence that individuals aren't having fun with games as much as they used to, and sentiment towards releases has fallen 3.4/5 in 2014 to 2.9/5 in 2021.
Even enthusiasm for the most recent CoD and FIFA games appears to be waning. Although we witnessed groundbreaking releases comparable to Elden Ring, development took around five years. It's more of a one-off title than the most effective release of the yr.
The human toll of those financial constraints can be becoming increasingly clear. The variety of layoffs is increasing, with over 10,500 game developers In 2023 alone, over 30 studios will lose their jobs.
At the identical time, the industry is grappling with a growing wave of union activism as staff ward off against the infamous “crunch culture” that has long plagued game development.
The indie idea
Amid tensions at AAA studios, indie developers are making a greater impact on the industry – a stark counterpoint to mainstream game development.
In 2024, it's indie games and secured five of the highest ten places on Steam's highest grossing list. Titles like Palworld (budget $6.75 million, 25 million units sold) and Enshrouded are well received by gamers and display the potential for indie games to attain industrial success comparable to AAA releases.
This indie surge is a component of a bigger trend: Indie game market share on Steam is growing from 25% in 2018 to 43% in 2024.
Even in years with highly anticipated AAA releases like Baldur's Gate 3 and Spider-Man 2 in 2023, indie revenue has remained stable, indicating a robust and growing audience for these titles.
The rise of indie games reflects some gamers' growing appetite for novel experiences and inventive risks.
While AAA development often focuses on established franchises and tried-and-tested formulas, indie developers push boundaries and experiment with latest ideas.
Meanwhile, tools like Unity and Unreal Engine have made quality game development more accessible, while digital marketplaces like Steam provide a platform for indie games to search out an audience.
That brings us to AI. By automating and streamlining virtually every aspect of game development, AI could further level the playing field, allowing small teams to create experiences that rival those of huge studios.
The AI paradigm shift
The potential for AI to revolutionize gaming has been discussed for a long time, however the prospect isn’t any longer just theoretical.
Current breakthroughslike Google's GameNGen and DeepMind's genius, Provide a glimpse right into a future where AI drives game design.
GameNGen can generate fully playable levels of classic games like DOOM in real time, while Genie can conjure up interactive 2D environments from easy images or text prompts.
These breakthroughs are a part of an extended trend of AI-driven innovation in gaming, regardless that the industry remains to be very young.
The journey began with early milestones like IBM's Deep Blue, which defeated famous world chess champion Garry Kasparov in 1997. Deep Blue's victory was a milestone that demonstrated AI's potential to excel in rules-based, strategic challenges.
Fast forward to 2016, and we've seen one other significant leap with Google DeepMind's AlphaGo. This AI system mastered the traditional Chinese game of Go, known for its immense complexity and reliance on intuition. By defeating world champion Lee Sedol 4-1, AlphaGo demonstrated that AI is able to tackling areas once considered the exclusive domain of human intelligence.
In 2018, researchers David Ha and Jürgen Schmidhuber published World modelsIt demonstrates how an AI can learn to play video games by creating an internal model of the sport world.
A yr later, DeepMindThis is AlphaStar demonstrated the ability of reinforcement learning by mastering the complex strategy game StarCraft II and even competing against top human players.
GameNGen represents the leading edge of the sector today and was trained on real DOOM gameplay footage, allowing him to internalize the sport's mechanics, level design and aesthetics.
This knowledge is then used to quickly create novel levels with a coherent layout and gameplay flow.
Conversely, Genie uses a foundation model to generate interactive environments from more free-form input comparable to sketches or descriptions. Training in quite a lot of game genres and visual styles allows Genie to adapt to create content with a wide selection of aesthetics.
Under the hood, these AI systems are powered by deep neural networks, which themselves turn out to be miniature game engines able to generating complete, playable experiences from the bottom up.
Essentially, the sport world is created throughout the neural network itself, not through traditional programming techniques, but through a deep neural network that has learned rules, patterns and structures for game design.
Additionally, since the game world is generated by a neural network, it has the potential to be much more dynamic and responsive than traditional gaming environments.
The same network that generates the world itself may be used to simulate NPC behavior, adjust difficulty on the fly, and even reshape the environment in real time based on player actions.
With AI doing the heavy lifting of world-building and level design, the optimistic narrative is that developers will give you the option to give attention to higher-level creative decisions, comparable to developing graphics, concepts and storylines.
While jobs can be in danger, AI will definitely be the important thing advancement that the gaming industry is on the lookout for.
Empower players, turn business models on their head
The true revolution will only begin when these AI tools are put directly into the hands of players.
Imagine a world where players can conjure up their dream titles with just a few easy prompts, then jump in and begin playing immediately.
Want to mix the neon-drenched cityscape of Cyberpunk 2077 with the frantic combat of DOOM Eternal? Just describe it to the AI and watch your vision come to life.
The line between developer and player is blurring. Games turn out to be living, respiratory entities that evolve in response to the collective creativity of their communities.
This democratization of game development could create entirely latest genres and upend traditional ideas of what a game may be.
We could see a shift toward platforms that provide AI tools for creation and curation, cut sales of user-generated content, or charge fees for access to premium features.
For established studios, it might undoubtedly be each an existential threat and an unprecedented opportunity. Anyone who sticks to old habits risks being left behind. Those who embrace the brand new paradigm will profit.
Of course, achieving this vision is not going to be without challenges. Issues of content moderation, mental property rights, job displacement and revenue sharing all have to be addressed.
However, the wheels are in motion. As technology continues to evolve, we are able to expect to see increasingly more examples of how AI not only supports game development, but fundamentally reshapes what games may be.
