Unlocking the Future: Five Key Insights from Matthew Ball’s 2025 Hiss of Gaming Files

Can a specific individual accurately summarize the entire state of the video game industry? Entrepreneur, author, and Epyllion CEO Matthew Ball is certainly attempting to do so. The author of “The Metaverse” has released this week a detailed report filled with insights and analysis regarding the financial challenges facing the sector.

Ball’s presentation dives into a rather unfortunate reality: according to analysts, video game spending not only stagnated following the COVID-19 pandemic, but actually dropped by 3.5 percent in 2022 and recovered by only a few percentage points by the end of 2024. Additional data points, such as a decrease in gaming hours, add to the anxiety of game developers (and mine!).

Ball attributes this slowdown to a combination of key growth drivers from the period between 2011-2021 (when gaming consoles and mobile devices surged in capabilities, and numerous social networks emerged) losing momentum. It’s not a pretty picture, but this industry thrives on resolving significant issues by confronting them head-on.

His extensive analysis of the intricate market dynamics at play might caution investors and executives against further investment in the video game industry—however, this also opens a door for astute developers and leaders to step in and seize opportunities where others have withdrawn.

I have no doubt that this report is currently circulating through the inboxes of numerous studios and landing on the desks of various C-suite professionals. If you wish to make the most of Ball’s insights, consider how they apply to your everyday work. Here are a few takeaways that may resonate with mid-level developers.

Video game budgets need to decrease

This is likely painfully obvious to many readers, yet Ball’s data underscores a crucial point: video game budgets are excessively high. The investment in individual games is becoming increasingly difficult to recoup, especially as fewer players are purchasing new games each year. “Excluding annual releases but counting sequels, only 6.5 percent of gametime in 2023 was spent on new games,” Ball notes. “Games-as-a-service titles released before 2019 dominated the ‘gametime’ category last year. “Tens of billions in development and marketing costs, along with thousands of games, competed for that 6.5 percent of total player hours (with only four titles capturing half of it).”

Marvel’s Spider-Man 2 exemplifies the issues highlighted by Ball, as his analysis of sales versus budget for the hugely popular sequel compared to its predecessors reveals the heart of the problem. The series’ production budget soared from just above $100 million to over $300 million across three games (Miles Morales accounted for just over $150 million), while lifetime sales of the series haven’t seen exponential growth.

When you consider the limited market share the series is vying for, the financial dynamics become challenging. I can’t predict the future of budgets for upcoming Marvel’s Spider-Man titles, but I do know that Insomniac is aware that players aren’t necessarily witnessing the benefits of the increased spending, a fact that emerged during the concerning leak of documents obtained by hackers targeting the studio.

This is where things get tricky: how do you reduce budgets? There are only three primary options: lowering salaries, shortening development times, or reducing staff numbers. Each comes with difficult trade-offs that, in many cases, end up penalizing employees while rewarding executives who inflated budgets in the first place.

Devs need to engage with governments

Ball’s information points to two clear ways governmental regulations could influence the gaming industry—one explicit, the other implicit.

The implicit aspect isn’t clearly stated, and I wonder if Ball would agree with my interpretation. However, reading between the lines, a notable issue of larger budgets is this: game development is significantly impacted by cost of living and inflation. As we discussed last year, the type of developers you assign to a game comes with dramatically varying costs depending on the country you operate in. Developers in high-cost-of-living areas face challenges against those in low-cost areas, while developers in the latter regions risk being exploited due to their limited ability to negotiate higher wages.

Ball’s explicit argument focuses on the alleged monopolistic control that Google and Apple have over their mobile platforms. He asserts that if the iOS and Android app markets were to “open up,” new storefronts could potentially reduce the 30 percent “platform fee” levied by Google and Apple, enable fresh discoverability strategies that connect players to a much broader array of games, and stimulate innovation in new game genres.

Both issues may require industry leaders to brace themselves and advocate with local and national governments for favorable regulatory changes. So far, industry lobbying groups have primarily concentrated on tax incentives and regulations related to the import costs of materials and access to internet bandwidth. This has resulted in efforts that mostly benefit the largest publishers and studios in the industry.

Top likely Mr. Smith, it’s a while until video games reach Washington (or London, Ottawa, etc.).

Enthusiastic gamers react to exhilarating “new genres”—but where do these novel genres originate from?

When discussing contemporary game genres, Ball’s analysis concludes that the introduction of new game types typically revitalizes the video game industry’s overall reputation. He points to the era of the battle royale genre as a significant force propelling fresh development. According to him, the industry could experience a boost of creativity.

His theories on the origins of new genres are focused on the potential of technological advancements such as “mass concurrency,” “high-bandwidth data streaming,” “more persistent game worlds,” and “cloud-native games.” His exploration of generative AI also highlights the technology’s capability to create new genres, with some developers like those at Hidden Door experimenting with these possibilities.

Ball’s focus on technology is not without merit, as numerous past industry innovations emerged from advancements in graphics and rendering. However, there may also be an overlooked factor: the role of unpaid modding.

Many breakout genres of the 2010s originated as mods (emerging from unpaid efforts) for entirely different games. This includes MOBAs, battle royale games, tactical shooters like Counter-Strike, and more.

This situation complicates where developers can find true innovation that resonates with gamers—and who ultimately benefits from it. Valve and Blizzard ventured in to explore and capitalize on genres built on mods for their titles. Meanwhile, Brendan Greene was fortunate to find a partner who could transform his ARMA 3 mod into a complete game, although Epic Games quickly followed suit with Fortnite, effectively becoming the defining version of the genre in the United States.

A striking example of this trend presently can be seen in Grand Theft Auto Online‘s roleplaying servers. Their popularity supports Ball’s assertion that the next generation of video game players values social gameplay over competition, and currently, Rockstar Games is benefiting from the unpaid time and effort of gamers who are creating their own mini improv theaters. Will Rockstar capitalize on this audience after the launch of Grand Theft Auto VI? Will other developers swoop in to capture their share?

Video game analysts from the early 2000s may now find themselves with some egg on their face, as one of the few bright spots in the historical video game market has been the continued expansion of the PC gaming sector. Declining sales around 2010 led some to assert that consoles and mobile devices would inevitably surpass PC games, which have always presented challenges in terms of setup and operation.

“Twenty years ago, PCs accounted for 29 percent of non-mobile console spending. Now, it represents 53 percent,” writes Ball. “And while console [spending] has remained stagnant since 2021, PC gaming has increased by 20 percent.”

Before you leap from your seat to greenlight another generation of flight simulators, it’s crucial to examine why PC spending is on the rise. “A significant portion of Steam users have set Chinese as their default client language (which likely underrepresents the true portion of Chinese users on Steam),” notes Ball.

Additional information he provides indicates that Chinese users who have set their client language to Chinese are among the fastest-growing groups on Steam from December 2021 to September 2024. This demographic embodies what many publishers aspire to attract—a “fresh audience” with varied preferences and interests compared to the more established market.

However, while Chinese player spending on video games has increased by $39 billion since 2011, only 20 percent of their domestic spending is directed towards imported titles. Spending on imported games declined by five percent from 2023 to 2024. Ball draws a parallel between this trend and a similar one in the film industry: locally produced entertainment is outpacing imported entertainment across the globe in China, Nigeria, and India.

Box office hits like Wandering Earth, A Tribe Called Judah, and RRR are cinematic counterparts to Dark Fantasy: Wukong—content created by local talent that enjoys immense popularity in their home countries and also captures audiences abroad.

“As international markets expand, their domestic production capabilities and resources grow as well, which often leads to shifts in national preferences toward locally produced content,” Ball observes.

There is a significant opportunity for the gaming industry to embrace this evolution. We have seen exciting developments from South Korea regarding expanded passion in triple-A games alongside the nation’s enduring enthusiasm for free-to-play multiplayer games, with regions like Brazil and Eastern Europe also adopting similar trends.

If you are not located in those regions, you might wonder how your segment of the gaming industry can benefit. For the moment, the best I can suggest is that if international audiences spend more time with consoles and PCs than mobile devices, developers have a chance to capture some of that interest by focusing on localization.

Understanding player social interaction should always be a priority

Interwoven throughout Ball’s analysis is another longstanding trend: the way players interact and socialize through games is evolving.

The Roblox phenomenon, for example, is not just about younger players attracted to blocky graphics and user-generated content; it’s that the platform’s versatile tools have become a sanctuary for self-expression and social interaction. We can also observe the surge of Grand Theft Auto Online roleplaying servers as another data point on this trend, alongside the growing popularity of the chat platform Discord.

“One in five Discord users (or 40 million total) utilize the app to stream gameplay to their friends monthly—and nearly one in three watches monthly,” Ball observes. It’s a component of social connectivity that enhances interest in games such as Palworld, Smite 2, Phasmophobia, and Deadly Company.

Discord’s roster of users engaging with Steam Early Access titles as part of the total observed players is predominantly filled with co-op multiplayer games; however, it also includes single-player titles like Fields of Mistria, Hades II, and Manor Lords. Ball refers to this as “disproportionate” game discovery behavior.

The developers behind these games likely didn’t conduct any extensive research on the habits of Discord users (unless they did, in which case, feel free to reach out to me; I’d love to learn what you discovered), yet many of them have thrived on the platform in ways that suggest a deep understanding of how players interact.