Switch 2 (finally), GTA 6 to dominate, AI in game dev (again): Analysts predictions for 2025

After an extended period of strong growth, the games market has begun to face growth challenges. Some game makers will turn to advertising – which has largely been untapped on console and PC – to drive growth. Advertising will become more prominent at platform level (Xbox and PlayStation menus) and at game level (immersive, interstitial, and rewarded alike).

What is more, mobile developers are increasingly entering console and PC (and will bring mobile ad monetisation learnings with them). While game developers have experimented with advertising in the past, the revenue stream is more viable now as programmatic advertising means ads are more automated and specific.

Gaming is now at the front of mind for marketers and there is also a necessity: the games market and advertisers alike need new revenue streams.

“Advertising will become more prominent at platform level and at game level… The games market and advertisers alike need new revenue streams”

Rhys Elliott, Midia Research

Portable gaming skyrockets

Nintendo will release its Switch 2 in 2025, and we should expect to see a new Mario Kart and a Super Mario title during the launch window. This console will sell well, driving game-related hardware and console revenues in 2025.

However, this is just the beginning for portable gaming’s oncoming tailwind. The attention economy is oversaturated, and Nintendo was shrewd to release a hybrid handheld that allows both at-home play on the TV and portable play. Similarly, companion portables like the Steam Deck complement a gamer’s main platform (a gaming PC, in this case). Companion portables give players more opportunities to engage with their ecosystem of choice, and more opportunities for games to grow their share of the attention economy.

Microsoft’s CEO of gaming Phil Spencer confirmed Xbox is working on a portable, and leaks reported by Bloomberg indicate Sony is as well. A portable strategy would also fit in with both companies’ current strategies and recent peripheral releases/partnerships, such as the PlayStation Portal (a companion device letting players stream their PS5 remotely to the Portal’s screen via WiFi) and Xbox’s play anywhere initiatives and partnership with the ASUS ROG Ally portable PC.

The year of the portable is coming.

Multi-game subscriptions growth will take a back seat

Unlike video and music, game subscriptions will not be the sole future of distribution any time soon – but they will have their place. While a consumer can listen to hundreds of tracks and watch dozens of movies or TV episodes in a month, the majority only have time to play a few games. That is why multi-game subscriptions are only worth it for the most dedicated players.

Most gamers are already served by the free-to-play markets – or are happy enough to buy a few games a year à la carte. Free-based tiers and cloud gaming could change this in the long term, but for the coming years, subscriptions will remain a secondary revenue stream for the games market.

Generative AI will divide game leadership and game makers

Generative AI will undoubtedly have a bigger role in game development going forward, but the transition to this new technology will face struggles in 2025. While game publishers will continue to inject generative AI to cut costs and streamline game creation, the technology will continue to worry game developers.

“The year of the portable is coming”

Rhys Elliott, Midia Research

Generative AI is relatively new and more use cases will hit the market in 2025, leading to yet more debate. More developers will publicly decry generative AI and will mobilise fans of their games to do the same. Inevitably, a high-profile game will use “no AI was used in the making of this game” as a marketing bullet point.

Creator-led games will start to show their worth

Creators and influencers that got rich through gaming video content have their eyes – and their capital – on game development. For example, popular YouTuber Videogamedunkey already owns his own indie publisher, Bigmode. Meanwhile, several influencer-led game studios are creating game experiences on Epic Games’ Unreal Engine for Fortnite (such as Typical Gamer with his own studio JOGO).

These creators are using their audiences (marketing), networks (B2B), and knowledge of games to cater to their audiences and gain momentum in the market. In 2025, we expect to see a viral hit from one of these influencer-led publishers – or at least a game becomes part of the gaming cultural zeitgeist.

Lisa Cosmas Hanson, Niko Partners

2024 predictions

Asia & MENA to account for over 60% of global PC & Mobile games revenue
Almost correct. Asia & MENA will generate $82 billion in player spending across PC & Mobile in 2024, which is roughly 56% of global PC & Mobile game revenue.

A deal valued at more than $2.5 billion (among the Top Ten of all time) will happen
Correct, but not from Asia. EQT acquired Keywords Studios for nearly $2.4 billion in 2024. EQT is not from Asia, however.

Instant games will reach over one billion MAUs in Asia & MENA
Correct. We believe this prediction was achieved with 800m MAUs for mini /instant games coming from WeChat and Douyin in China alone.

New console hardware will be announced in 2024
Correct. While the Nintendo Switch successor was not announced, as we previously expected, Sony announced its PS5 Pro and multiple PC gaming handhelds were also announced.

The new global esports landscape will be centered outside of the west
Correct. There were more high-profile esports tournaments and viewership in Asia & MENA compared to the west this year by a growing margin.

“In 2025, additional markets will require Apple and Google to remove their walled gardens”

Lisa Cosmas Hanson, Niko Partners

Blizzard will re-enter China in an official capacity
Correct. Blizzard announced its return in April 2024 and re-established its partnership with NetEase

More than 100 import games will be granted an ISBN for release in China
Probably correct, but not yet confirmed. 98 Import Games have been approved as of writing (December 16), and we could see another batch before the end of the year taking the number over 100.

Governments in Southeast Asia & India will actively support games industry growth
Correct. Multiple governments in the region announced policies that include support for video games and esports in their respective markets. Indonesia, Malaysia, India, to name a few.

2025 predictions

The following predictions pertain to the primary markets that Niko Partners analyzes every day – i.e. those in Asia and MENA. These are a subset of predictions and topics that our team of analysts is considering about 2025 and beyond to help guide our clients in their global business strategic planning.

China’s video game market revenue will reach $50 billion

Niko Partners proprietary market model forecasts that player spending on video game software and services will surpass $50 billion in China next year – making it the first country to do so. While China is a mobile-first market, with over two-thirds of spend from smartphones and tablets, we continue to see notable growth from the PC and console game segments, especially on the heels of the successful launch of Black Myth: Wukong.

China won’t be the only market to achieve a milestone in 2025. India is set to exceed $1 billion in player spending, the Philippines will reach $500 million, and Thailand will closely approach $2 billion. In fact, the Asia & MENA region as a whole will reach $89 billion in player spending across PC, mobile, and console, with a user base of 1.76 billion gamers.

2025 will be better than 2024 for the games markets in Asia & MENA

The global video games industry has experienced significant fluctuations during the post-pandemic period, and Asia & MENA are not exceptions to this. However, while layoffs continue along with global economic uncertainty, we see 2025 (particularly after Q1) as a more stable year for the industry compared with 2024.

India’s games revenue will grow 14.7% YoY in 2025, followed by MENA-3 (8.3% YoY) and Southeast Asia (6.1% YoY). However, Japan and Korea likely will not see positive growth rates until 2026.

In emerging markets like India, MENA, and Southeast Asia, new gamers and a growing middle class will drive increased spending on video games. We also expect to see companies that significantly downsized their gaming operations, such as ByteDance and Garena, indicate recovery by greenlighting new titles and other gaming related projects.

“We forecast that player spending on games will surpass $50 billion in China next year – making it the first country to do so”

Lisa Cosmas Hanson, Niko Partners

Over 1 billion gamers in Asia & MENA will watch gaming & esports content online

Niko Partners conducts an annual online survey of 7,500 gamers across Asia & MENA to understand gamer behavior, motivations and insights across the region. One important stat that we’ve paid attention to recently is the increasing number of gamers that watch gaming and esports related video content online.

In 2024, we found that just over half of all gamers surveyed watch gaming and esports content online. In 2025, we expect this to increase to nearly 60% as publishers and content creators fuel demand for video content.

Southeast Asia and India already index higher than China, East Asia, and MENA, which typically fall slightly below 50%. Game video and livestreaming continues to play a greater role in the region for game discovery, marketing, and even distribution. One notable trend we’ve seen recently is the sale of in-game content via livestreams, with viewers able to make purchases without leaving the stream.

Game companies will shift back to geographic expansion

Niko Partners believes game companies will recognize growth through geographic expansion in 2025, after new technologies such as Web3, VR/AR/XR, and cloud gaming underperformed expectations. We anticipate firms will double down on international expansion particularly to Asia and MENA, given the growing appetite for gaming and the recent success of global IP in these markets.

In 2024, Korean game Dungeon & Fighter launched in China and grossed over $2 billion. Likewise, Supercell’s Brawl Stars has recently seen South Korea, Japan, and China emerge as its Top Three markets outside the US.

Geographic expansion not only diversifies a company’s player base but also mitigates the risk associated with untested new technologies, ultimately driving sustainable growth in a more predictable and stable market environment.

New regulations will further open up walled gardens on mobile

The past few years has seen the US, EU, Japan, South Korea, and India take antitrust action against walled gardens on mobile, primarily operated by Apple and Google. This has led to Apple and Google allowing third party app stores, alternative payment systems, and removing anti-steering provisions in certain countries.

However, stakeholders and regulators continue to argue that Apple and Google are not in compliance with these rulings, and regulators in other countries have also started to take an interest in opening up digital markets after pressure from the industry.

In 2025, we fully expect that additional markets will announce rulings that require Apple and Google to remove their walled gardens, and we believe that both parties will be required to remove their commission fee in at least one market when developers link out to an external web shop. We expect this to accelerate out-of-app monetization growth, benefiting game developers who will be able to earn higher gross margins on in-game payments.

Piers Harding-Rolls, Ampere Analysis

2024 predictions

Not at the end of the industry layoffs
Correct, unfortunately

Market growth in low single digits
Looks to be correct. We’re currently forecasting 1.4% growth

Switch 2 release at end of the year, PS5 the best-selling console, VR to have another tough year
Wrong, right, right

Use of generative AI-driven NPCs
Wrong. Hasn’t really happened (although plenty of tech demos!)

Microsoft to challenge EA to become the biggest publisher across Xbox and PlayStation, Activision Blizzard new releases to go into Game Pass, Cheaper Game Pass with mobile content
Right, Right, Wrong

Mobile app store status quo to continue
Right. However see below for thoughts on increasing off-platform disruption

Microsoft to experiment with a mobile app store
Wrong. Launch has been delayed

Netflix to broaden its game streaming offer to more countries
Correct

MMO resurgence, uptick in games IP adaptations, more AA games from biggest publishers, GTA 6 launch date late in 2025
Generally, right. MMO resurgence hasn’t really happened although peak WoW’s player numbers in 2024 were the highest for several years.

2025 predictions

It’s been a really tough year for the industry. Slower market growth and rising costs combined with the devastating number of layoffs has created a tense and difficult operating environment. It’s likely that backdrop will continue into 2025 to an extent, though I don’t think we’ll see the same level of industry contraction and job losses.

Overall market performance in 2025

I’m expecting continued slow growth in games content and services spend globally. Gone are the years of 10-15% market growth driven by huge increases in mobile gaming spend. With that fuel seemingly burned for at least the next few years, the market is in a slow growth era. However, to put this in a more positive context, total global market size is expected to be similar to historical market peak from 2021 where consumption was heavily driven by the impact of the pandemic.

The console market is set to grow marginally with Switch 2 launch (currently expected it to arrive in Q2 at minimum $400/€400) and GTA 6 releasing. US import tariffs are a dark cloud on the horizon, but I’m going to positively predict that console hardware is once again made exempt from these import charges.

GTA 6 will be the largest entertainment release of all time in terms of revenue generated in its launch months. Such is the size of a new GTA, if it is delayed into 2026, the console market performance will probably be down even without the potential impact of tariffs. GTA Online will continue for gamers that play on PS4, Xbox One and PC, meaning a fractured GTA userbase for Rockstar to deal with.

If Switch 2 hits in Q2 (one to three months later in the year than the original Switch did), I’m forecasting sell-through of a little north of 13 million units. That’s a sales rate higher than the original Switch. I’m interested to see what Nintendo does with Nintendo Switch Online at launch. I’d like to think it will expand its content and feature set for the launch of the Switch 2.

“GTA 6 will be the largest entertainment release of all time… If it is delayed into 2026, the console market performance will probably be down”

Piers Harding-Rolls, Ampere Analysis

Off-platform app monetisation

There’s been a lot of talk about the potential for mobile app store disruption with the introduction of more third-party stores from the likes of Epic and Microsoft to compete with the incumbents following various legal ruling across different countries and regions. While this is interesting to track, shifting consumer behaviour around game discovery is challenging so I’m not expecting major changes in 2025 even if Microsoft does get around to launching its mobile app store. After all, there have been alternative app stores on Android devices for many years and, in the PC space, Epic has thrown large amounts of investment behind competing with Steam through Epic Games Store. Neither of these factors has altered the status quo in terms of consumer behaviour significantly.

However, beyond new app stores offering a collection of games, the practice of driving high-spending gamers off-platform to monetise directly through publisher-specific web stores is something we’ll see a lot more of in 2025. This could drive increased profits for mobile games companies and will drive a bigger share of spending outside the App Store and Google Play than we’ve seen previously.

Funding and M&A activity picking up

I’m expecting funding and M&A activity to increase in 2025 compared to 2024 as investment appetite returns. A lot of recent funding has focused on the games production value chain and games technology, with less investment in developers and publishers. That trend will continue, but I expect the investment pipeline to return to games content-based companies progressively through the year.

What will happen with Ubisoft?

I think it depends on the performance of Assassin’s Creed Shadows to an extent. A strong performance could change the leverage different parties have in discussions to take the company private, which may delay any change in the company’s position.

Content trends

I think we’ll see a deeper focus on remakes and sequels as publishers stay risk averse when it comes to investment. A new wave of extractions shooters is expected in 2025, but I don’t think there is enough demand to support multiple new entrants. Unfortunately, that will result in some big budget failures. Publishers will continue to aggressively look at ways to drive more value from their existing games IP and franchises. That means more cross-game licensing, brand partnerships, cross-media licensing, sponsorship, and advertising in and around their games.

“Total global market size in 2025 is expected to be similar to the historical market peak from 2021”

Piers Harding-Rolls, Ampere Analysis

Web3 games will probably have a decent resurgence due to coin prices, so expect to see more releases and investment again in this area. Black Myth: Wukong’s success will prompt more investment into these sort of single player games and will drive all Chinese publishers and developers to consider the global appeal of their upcoming games.

Unexpected twists and turns

There are things that are inherently hard to predict, such as Payday being deeply integrated into PUBG, which seems like an off-the-wall collaboration. I think the hunt for engagement and player attention, and the difficult market backdrop will mean more unexpected collaborations and partnerships, where companies are pushed to get more creative and ambitious to carve out a space in the market.