It’s been nearly 70 years since the first video game was revealed to the world and it’s been a wild crazy ride. While there aren’t nearly enough inches of column space available to me to tell you about the long history of video games, there is at least enough to dwell on the epic highs and lows of the past two decades.
Video games have long been on par with other entertainment industries when it comes to attention and revenue, but it wasn’t until the twenty-first century that they began to outpace them. The rise of digital publishing and distribution not only widened the global reach of video games, but it swung the doors open for independent game makers. Advances in technology and growing revenue made bigger budgets and greater production values possible. Plus, stay at home lifestyles brought about by the COVID-19 pandemic in recent years led to a boom in engagement and spending on video games.
As one acquaintance of mine put it, videogames are increasingly the primary form by which young people consume narrative now, whether it’s through seasonal story developments in live service games like Honkai Star Rail and Destiny 2, conventional cinematic presentation in games like Death Stranding 2: On The Beach or the upcoming Mafia: The Old Country. And over the course of the past thirty years, video games have become even more social. Not just via massively multiplayer games like World of Warcraft or Helldivers 2, but in ‘hangout’ games like Among Us, R.E.P.O. or Peak.
But all this growth hasn’t come without a cost. Like many other fields of business, video games are entering their terminal capitalism stage, where the ‘value’ being created and the successes had do not reward artists and workers with job stability, let alone individual prosperity. Publisher Activision Blizzard and EA rose to the top of business charts on the back of hit franchises like Call of Duty, The Sims and Madden NFL but accrued infamy for poor working conditions at their studios as well as management decisions that cost the long-term health of their studios.
Part of the problem is the executive class’ failure to recognize that limits of the video games’ massive growth. Consumer spending on video games experienced insane growth, because that is exactly what it was: insane. This was achieved through several growth pillars like freemium business models, live services and new platforms like mobile and social. But in 2025, this growth has slowed down tremendously. There are no new wallets to open, few players are left untapped and the games that currently exist have already captured all of the attention.
PlayStation Studios is emblematic of this problem. The publisher has invested heavily into creating new live services, overlooking the fact that it is difficult to enter a space already dominated by others. Sony couldn’t sell players on Concord not just because of poor marketing and an uninspired look, but because most players are already invested in games like Apex Legends or Valorant. Inglorious shut downs like those of Concord’s are why players have little willingness to try new online games. Why try a new live service when you’ve spent the last 2 years amassing skins in Overwatch 2?
PlayStation isn’t the only gaming megacorp trying to spend its way into success. The past decade has seen Xbox acquire dozens of companies, the most notorious among them being publisher Activision Blizzard, whose franchises hold an outsized portion of AAA gaming revenue. And while I’ve always been slightly more bullish than the average pundit about Microsoft’s gaming endeavors, there’s no denying the massive amount of bloodletting that’s followed since. Earlier this month, Microsoft laid off thousands of employees and cancelled projects despite claims of record growth.
Despite falling dead last behind Sony and Nintendo in sales of hardware, the Xbox gaming brand remains very profitable, largely due to the multiple revenue streams found in subscriptions and cross platform sales of software. But it is also doing the heavy lifting of keeping Microsoft out of the red while it struggles to keep income streams going elsewhere and burn hundreds of million dollars into the AI arms race. Xbox is one of Microsoft’s strongest product divisions, but it’s being torched to maintain and grow the company’s share value.
These are just a handful of the challenges video games face as the first quarter of the century comes to a close. While most are self-inflicted, some have emerged as part of the sobering reality that growth is not limitless. There are only so many product realms to conquer, the number of customers available are finite and their ability to spend is hamstrung by economic crises. If video games are going to return to sustainability, they’ll need to pioneer new genres, adapt to shifting palates, get budgets down and most importantly, treat game makers as part of the solution rather than assets to be cast aside.
