The global video game industry is facing a significant shift in the battle for consumer attention, according to new data, and analysis. While revenue remains substantial, a shrinking player base in key markets is raising concerns about the long-term sustainability of current business models and forcing publishers to rethink their strategies.
Industry analyst Matthew Ball’s forthcoming report, “State of Video Gaming in 2026,” reveals a concerning trend: a decline in regular gamers across several major markets. The data, highlighted in reports from PC Gamer, thegeek.games, and Outlook India, indicates that competition for leisure time is intensifying, with platforms like TikTok and emerging AI applications drawing players away from traditional gaming.
The “Mature Market 8” – the United States, Japan, South Korea, the United Kingdom, Germany, France, Canada, and Italy – historically accounted for over 60% of global consumer spending on games prior to the COVID-19 pandemic. However, Ball’s research shows that these markets are now experiencing a “severe, persistent, and surprising” loss of engagement. In the United States, the percentage of the population identifying as gamers has fallen by 2.5 to 4 percentage points since before the pandemic. Italy has seen a 5% decrease in adult gamers since 2019. Perhaps the most dramatic declines are in South Korea, where the number of self-reported gamers is down 15% compared to the 2017-2019 average, and Canada, where approximately one in six adult players have been “lost” between 2018 and 2022.
The trend isn’t limited to these countries. The United Kingdom, while still maintaining a higher percentage of gamers than pre-pandemic levels, is also experiencing a decline. In 2020 and 2021, nearly 60% of the British population reported playing video games regularly. That figure dropped to 55% in 2022, and further to around 51-52% in 2023 and 2024. Ball’s report suggests this downward trend is continuing into 2025.
This shrinking player base presents a significant challenge for the industry. As the number of players decreases, the financial burden shifts to those who remain, increasing pressure to monetize them through microtransactions and live-service models. Ball argues that growth can now only come from “greater monetization of (ever fewer) remaining players,” a strategy that risks alienating the core audience and creating a negative feedback loop.
The shift in attention is being driven by the rise of alternative forms of entertainment. Short-form video platforms like TikTok offer instant gratification and a constant stream of new content, while AI applications provide novel and interactive experiences. These platforms are effectively competing for the same limited resource: consumer time. The digital economy, as Ball points out, thrives on capturing and retaining attention, and video games are increasingly losing ground in this competition.
The implications of this trend are far-reaching. Publishers may need to re-evaluate their development strategies, focusing on creating experiences that are more engaging and accessible to a wider audience. They may also need to explore new revenue models that don’t rely solely on squeezing more money out of a shrinking player base. The industry is no longer simply competing with other games. it’s competing with the entire digital landscape.
The situation is further complicated by the fact that the pandemic-era surge in gaming, while initially beneficial, may have been an anomaly. Lockdowns and social distancing measures forced many people to seek entertainment at home, leading to a temporary increase in gaming participation. However, as life returns to normal, those players are returning to other activities, leaving the industry to grapple with a more challenging reality.
While the full extent of the decline remains to be seen, the data suggests that the video game industry is at a critical juncture. Adapting to the changing landscape and finding new ways to capture and retain consumer attention will be crucial for its future success. The industry’s ability to innovate and offer compelling experiences will determine whether it can win back the war for attention and maintain its position as a leading force in the entertainment world.
