Gaming Industry Rebounds: 5.3% Growth and 40% Fewer Layoffs in 2025

The video game industry showed signs of recovery in 2025, with global content sales growing 5.3% year-over-year to reach $195.6 billion, according to Matthew Ball's State of Video Gaming 2026 report. This growth comes after a period of contraction and represents a significant rebound for an industry that has faced multiple challenges in recent years.

Perhaps more notably, the report indicates that job losses in the gaming sector fell by 40% year-over-year, dropping to 9,200 people in 2025. This reduction in layoffs suggests that the industry may be stabilizing after the wave of cuts that affected major publishers and developers throughout 2023 and 2024.

However, the positive employment trends were accompanied by a concerning development: private funding for gaming companies fell by 55% in 2025. This substantial decline in investment capital could pose challenges for smaller studios and emerging developers who rely on venture funding to bring new projects to market.

Epyllion, the research firm behind the report, notes that while the industry has shown resilience in terms of revenue growth and employment stability, the funding environment remains challenging. The combination of strong sales performance with reduced investment suggests a maturing market where established players are thriving while new entrants face higher barriers to entry.

Industry analysts point to several factors contributing to the sales growth, including the continued success of live service games, the expansion of mobile gaming markets in emerging economies, and the gradual recovery of consumer spending following inflationary pressures. The report also highlights the growing importance of subscription services and cloud gaming platforms in driving revenue growth.

The employment data provides a more nuanced picture of the industry's health. While the 40% reduction in layoffs is encouraging, the absolute number of 9,200 job losses still represents significant disruption for affected workers and studios. The improvement may reflect both better economic conditions and more conservative hiring practices among gaming companies.

Private funding's 55% decline raises questions about the long-term sustainability of the current growth trajectory. Venture capital firms have become increasingly selective in their gaming investments, focusing on proven business models and established teams rather than speculative projects. This shift could lead to a more concentrated industry with fewer independent studios.

Several major publishers have responded to these market conditions by doubling down on their most successful franchises and live service offerings. Companies like Activision Blizzard, Electronic Arts, and Take-Two Interactive have prioritized games with recurring revenue streams over one-time purchase titles, contributing to the overall sales growth while reducing financial risk.

The report also notes regional variations in the industry's performance. While North America and Asia-Pacific markets showed strong growth, European markets faced more challenges due to economic uncertainty and regulatory pressures. Mobile gaming continued to be the fastest-growing segment, particularly in markets like Southeast Asia and Latin America.

Looking ahead, industry experts suggest that the gaming sector's future will depend on its ability to adapt to changing consumer preferences and technological advancements. The rise of AI-generated content, cloud gaming infrastructure, and cross-platform play are expected to shape the industry's evolution in the coming years.

Matthew Ball, the report's author, emphasizes that while the current data shows positive trends, the industry remains in a state of transition. The balance between growth, employment stability, and investment availability will likely continue to shift as gaming companies navigate an increasingly complex market landscape.

The State of Video Gaming 2026 report provides valuable insights for investors, developers, and industry observers trying to understand the current state and future direction of the gaming market. As the industry continues to evolve, these metrics will serve as important benchmarks for measuring progress and identifying emerging challenges.

For more detailed analysis and data from the report, visit MatthewBall.co.