Matthew Ball's State of Video Gaming in 2026: "China is eating the video games industry"

• Global games content sales grew by 5% in 2025, hitting an all-time high.
• Yet, private funding fell by another 55%, far from pandemic highs.
• Chinese game makers have grown their share of overseas revenue to 14%.
• Chinese publishers have claimed around half of global player spending growth since 2019.

Despite reaching record revenues after three consecutive years of growth, private funding in the games industry fell by another 55% year-over-year in 2025.

According to Epyllion CEO Matthew Ball’s State of Video Gaming in 2026 report, now available to read in Early Access, the last three months of 2025 saw less than $100 million in pre-seed investment, just over $200m in early-stage funding, and around 40 deals in total.

All three figures were far from their peaks during the pandemic.

Early-stage private investment, for example, peaked in the third quarter of 2021 at around $1.3 billion total, while pre-seed private funding peaked in the first three months of 2022 at over $400 million.

The most deals landed in any three-month period were in Q4 2021, at over 210.

This means around five times more deals were made in the last three months of 2021 compared to the same period of 2025.

Difficulty finding funding and potential solutions was a prevalent topic this year at Pocket Gamer Connects London.

Rising expenses eat into profit

Ball’s report revealed that, industry-wide, global games content sales grew by 5% Y/Y despite flagging funding opportunities. This hit an all-time high of approximately $195.6bn in 2025, surpassing the industry’s prior record set in 2021.

This was accomplished through new highs across mobile, PC and console.

But, mobile spend is "five years flat" and Ball suggested the share of player spend and downloads going to new releases is at a decade low. "Old giants strengthen and UA costs crowd out discovery," he said.

Meanwhile, the console category has "more than recovered" from its post-pandemic decline, with consumer spending on console games content in 2025 surpassing 2020’s record. Among consoles, the year was hugely successful for Nintendo, setting industry records with the Switch 2 quickly surpassing 17m units sold.

PC games content never saw a sales decline post-pandemic. Annual sales have risen by 30% since 2020.

Overall development spend on games content also reached a record high. Collectively, the industry spent over $40bn developing games for the second year in a row across mobile, PC and console. Content investment as a share of net revenues hit a seven-year low, not including the pandemic.

Ball noted that, excluding China and developers with their own platforms to publish games on, operating margins were "far below" even pre-pandemic levels in 2025. They are struggling to grow, with total operating profits down below 2019 figures despite a 40% surge in consumer spending.

China vs the world

Ball’s annual report pointed towards China and Roblox among the few big winners in the current games landscape. China now accounts for 20% of global player spending and 38% of growth. The country’s players give 84% of their spend in games to Chinese titles, however, meaning developers looking to keep up must "win" in the country.

Meanwhile, Chinese game makers have grown their annual share of overseas revenue from 11% to 14% in six years. Chinese publishers have also claimed approximately half of all global player spending growth since 2019.

"China is eating the video gaming industry," said Ball. "Roblox is stealing share and growing its own garden."

This aligns with PocketGamer.biz’s own findings that Asia dominated successful new mobile releases in 2025, meanwhile even Western titans like Supercell have struggled with new launches. At the same time, Roblox did succeed in the West and spent the year setting industry records - like reaching beyond 45m concurrent users.

Ball added that many industry leaders have been growing or sustaining revenues through increasing their prices, not by growing playerbases, number of purchases or playtime. In fact, in the US the number of people playing games has actually fallen below pre-pandemic levels, and on mobile the time people spend playing has tumbled too.

He highlighted Candy Crush’s Gold Bars as one such example of price hikes, up from $10 for 100 to $15 for 100 in just two years.

In the same timeframe, Fortnite’s V-Bucks have risen from $32 for 5,000 to $37 for 5,000.

A glimmer of hope?

Layoffs also continued in 2025, but the report determined there were 40% fewer than in 2024. The year still saw around 9,200 people lose their jobs, but this was less than 2024’s 15,650 layoffs.

Combined with 2022’s 8,500 layoffs and 2023’s 10,500, the four-year total now stands at 44,000.

Still, 2025 broke an establishing trend where each post-pandemic year saw more layoffs than the last.

Notably, 61% of layoffs over this time were made in North America. In mid-2025, postings for open job roles in the region represented just 22% of the global total.

Conversely, 16% of layoffs have hit workers in Europe, but 22% of postings in mid-2025 were for the region.

"In sum, the video gaming industry overall continued its restructuring and retreat despite revenue growth," said Ball.

"To find growth, we have to acknowledge there is no ‘video gaming industry’. There are many."

Check out the full report right here.