Summary
FormerSony Santa Monicadeveloper and IGN journalist Alanah Pearce has shared her findings on the current state of the gaming industry after speaking to investors and shared some insight into the constant layoffs and cancellations.
With all-timer hits likeClair Obscur: Expedition 33,Baldur’s Gate 3,Astro Bot, and far too many other games to list coming out every other month (with even more games likeGTA 6andThe Witcher 4on the horizon), I wouldn’t blame you for thinking that the gaming industry is in a great place.That couldn’t be further from the truth, though.
Over the past few years, the gaming industry has been absolutely ripped apart thanks to over25,000 layoffs in 2023 and 2024 across studios both big and small, from titans likeRespawnandBethesdato entire indie teams. Despite games never being better, the industry itself is in its roughest place ever, and it can be hard to truly understand everything that’s going wrong.
Alanah Pearce Deep Dives Into All The Problems The Gaming Industry Is Facing, From TikTok To A Lowered Population
“It Doesn’t Matter How Good The Video Games Are”
Earlier today, former IGN journalist and Sony Santa Monica developerAlanah Pearce shared a video on her YouTube channel titled “The games industry is screwed”, which goes over some of the biggest reasons it’s in the state it’s in. Pearce spent the last few months talking to investors to get a better understanding of the issues, whilealso referencing Matthew Ball’s 225-page State of Gaming in 2025 presentation.
Off the bat, one of the main reasons for the issues is the stock market’s response to how successful games were in 2020 and 2021, which Pearce describes as “insane” thanks to spending being up compared to every other entertainment industry.Gaming was even making more than the GDP in the US at a time, which speaks to how “disproportionally strong” its performance was.
Analysts expected that growth to continue (with one company even suggesting a $300 billion growth) and while gaming is still worth $30 billion now than it was in 2019, the growth flattened and didn’t make its projections. This led investors to pull out and put their money elsewhere (mostly in AI in 2025), which investors explain is due to the market being “mature” and not having much room for growth.
It’s not that video games aren’t selling because they’re all trash, it’s still a very profitable industry, it’s just that people pull out when profits aren’t ridiculously profitable enough. - Alanah Pearce
One of the other big issues is thatthere are simply less people playing games than in previous years(despite weekly play time being up), which is mostly due to social video sites likeTikTok,YouTube, and Instagram. Games are no longer competing with each other and are instead having to fight those sites and an “insane surplus” of entertainment options for attention.
As Pearce puts it, there are only so many hours in the day for entertainment and,with apps like TikTok up by 35 million hours, that’s time taken away from gaming. Social video is so intentionally addictive that it’s simply impossible to fight against and encourage people to spend money on games and play them instead of mindlessly scrolling content.
The only light at the end of the tunnel is GTA 6, which Pearce hopes can be big enough to draw gamers back to consoles and back to gaming in general. That remains to be seen, but it’s a hope that many have shared for the industry.
So much time being spent on social video means thatfunding for gaming is down 72 percent from where it was in 2020 and 2021, with investors jumping over to other industries. In fact, one of the key industries right now is AI, with investors telling Pearce that they’re specifically being instructed to invest more in that technology. There’s also the problem of “black hole games” likeFortniteandCall of Dutythat are taking up so much time on their own, and it becomes clearer and clearer where the issues lie.
All of those factors combined at the same time means that all games simply need to be a massive success and make an “incomprehensible amount of money” to do so.Pearce’s video does a great job of explaining each problem in more detail, but it all adds up to an industry that’s looking shakier by the minute andpinning a lot of hopes on big releases like the Switch 2 and GTA 6.
