The global video game industry witnessed a 5.3% surge in content sales, reaching a staggering $195.6 billion in 2025. However, this growth was overshadowed by a 55% decline in private funding, according to Epyllion's insightful State of Video Gaming 2026 report. The report highlights a concerning trend: despite the industry's success, funding continues to dwindle, leaving a question mark over its future. The report also sheds light on the industry's reliance on outsourcing, with 35.5% of developers' content investment going towards external sources in 2025, up from 30.6% in 2017 and 31.5% during the pandemic. This shift towards outsourcing is driven by the need for a 'flexible skillset' and the ability to 'build more content' and 'access hard-to-find skills'. The report further emphasizes the impact of layoffs, with 9,200 jobs lost in 2025, a 40% decrease from the previous year, yet a four-year total of nearly 44,000 layoffs. California bore the brunt of these redundancies, with 18% of layoffs occurring in the US, 16% in Europe, and 19% in the APAC region, China, the Middle East, and Africa. The report also delves into consumer spending, revealing a 30% growth in PC spending since 2020, reaching $40.7 billion in 2025. China, with its 20% share of global player spending, is a key market for game developers. Epyllion CEO Matthew Ball underscores the importance of capturing the Chinese market, suggesting that 'matching global growth' requires 'winning China' or 'growing 1.6 times the market elsewhere'. The report also highlights the rise of Roblox, which became the 'singular driver of the total video game market' in 2025, capturing 67% of net growth. With over 10 billion monthly engagement hours, Roblox surpassed Steam, PlayStation, and Fortnite combined. Looking ahead, the report predicts that the five biggest revenue growth areas for video games in 2026 will be non-core markets, advertising, direct-to-consumer and alternative payment channels, external development, and Roblox.
