Gaming industry faces slowdown as post-pandemic boom stalls

The global gaming industry is shifting from an expansionist phase to a reset phase, as post-pandemic growth stalls and costs rise. In recent months, major publishers have announced studio closures and job cuts. Electronic Arts closed a $55 billion deal to go private, Microsoft cut 3,200 jobs at Xbox, and Ubisoft shut studios while pushing major productions to 2028, 29.

During the pandemic, global video game revenues surged from $131.7 billion in 2019 to $214.2 billion in 2021. Low interest rates fuelled a mergers-and-acquisitions frenzy, with over 1,300 deals worth $127 billion in 2022 alone. But as restrictions eased, player engagement declined and revenue growth slowed. Companies now face investor pressure for predictable revenues and stronger operational discipline.

Rising memory prices, driven by AI data centre demand, are also squeezing gaming companies. Console makers, already operating on thin margins, have raised prices. Microsoft, Nintendo, and Sony have all increased console prices. Analysts see EA's move to go private as a bet on flexibility, giving it more room to invest in long development cycles.