What Will 2025 Bring for Gaming?

As we stand on the brink of 2025, it’s remarkable to think that we are nearly five years into the current generation of Xbox and PlayStation consoles. The Xbox Series X|S and PlayStation 5 launched in late 2020, and despite early supply chain issues caused by the global pandemic, both have seen significant adoption. As of late 2024, the PlayStation 5 has reportedly surpassed 65 million units sold, while the Xbox Series X|S has crossed the 29 million mark. These numbers reflect a healthy demand for gaming hardware for sure. Yet, we can’t help but wonder what will 2025 bring for gaming?

The Industry’s Growing Pains

For anyone into the gaming scene, it is clear that the software side of the industry faces significant challenges. The relentless push for higher specifications has led to spiraling development costs. Triple-A games now often require budgets north of $100 million, and the stakes are higher than ever. This economic pressure has contributed to a troubling pattern of mass layoffs within the industry. According to estimates, over 6,000 jobs were lost in game development in 2023 alone, with major studios downsizing or shuttering entirely due to underperforming titles or unsustainable budgets.

These layoffs underscore a fundamental imbalance in the industry. As development cycles grow longer and more expensive, even successful games struggle to recoup their costs. Live-service models, initially seen as a solution to this problem, have proven to be a double-edged sword. While they can generate ongoing revenue, they also demand continuous content updates, often leading to burnout and instability for development teams. We’re looking at you Concord…

The uncertainty of the future has trickled down beyond AAA gaming. The AA and indie market has also seen its losses – so many smaller, independent studios rely on funding from third parties. These funds are getting harder to access since returns are so unpredictable. Getting your game noticed has become incredibly difficult.

A Market in Flux

Times are tough in the games industry. That’s undeniable. People ARE gaming, and still in record numbers. Yet the market is saturated, the eco systems complex and the returns on new hardware from a graphical standpoint are diminishing. Where can game devs, publishers and manufacturers pin their hopes?

We’ve seen a push to new revenue streams. Subscription services like Xbox Game Pass and PlayStation Plus have gained traction, offering players access to vast libraries of games for a monthly fee. However, these models also raise questions about sustainability. How can developers maintain profitability when players are conditioned to expect hundreds of games for the price of a single retail title? Are these anywhere near as profitable as selling a unit? The jury is out but with Microsoft now releasing their flagship Gamepass games on rival platforms, it is suggests to us it is not covering the cost of game dev.

What about cloud gaming? It promised to make high-end gaming accessible on a wide range of devices, from smartphones to smart TVs. Sure, services like NVIDIA GeForce Now, Xbox Cloud Gaming, and PlayStation’s streaming options have made significant strides, but they’re still hampered by latency issues and the need for robust internet infrastructure—barriers that limit their appeal in many parts of the world. Stadia died a death (not for quality of service, but for store and software costs we’d argue). Luna isn’t setting the world on fire either. It could be the future but it hasn’t rocked the traditional boat.

The Rise of Handheld Gaming

Possibly the most exciting ‘new’ growth area in gaming has been the resurgence of handheld gaming. The success of devices like the Steam Deck has proven that there is a robust market for portable gaming PCs that can deliver console-quality experiences on the go. Following Valve’s lead, competitors like ASUS with the ROG Ally and Lenovo with the Legion Go have entered the fray, each offering their take on handheld gaming PCs. These devices cater to a growing demographic of gamers who value flexibility and portability without sacrificing power.

Meanwhile, the long-rumored Nintendo Switch 2 looms on the horizon, expected to launch in 2025. If reports are to be believed, the new console will feature improved hardware capable of delivering better performance and fidelity, keeping it competitive in an era dominated by high-spec devices. Nintendo has historically thrived by charting its own course, focusing on innovation rather than raw power, and the Switch 2 is likely to continue that trend.

Intriguingly though, the love of handheld gaming has highlighted a fundamental flaw in the games industry. By their nature, handheld gaming means lesser hardware. This means reduced framerates and graphical fidelity. The sort of things the games industry tells gamers they need to enjoy their games. So if hardware like the Switch and Steam Deck are so popular, doesn’t that say something about gamers feelings when it comes to powerful hardware

VR and AR – fizzle and fading?

Virtual Reality and Augmented Reality have been touted for years as the future of gaming. There has been undeniable success – the PSVR and Meta Quest Range sold well, and we don’t think the market is going anywhere just yet. It just hasn’t shaken up the game industry like pundits expected – indeed, PC and AAA VR games in general are thin on the ground. The PSVR2 has not sold well, with a crippling high cost at launch. Apple are rumoured to be halting manufacturing on their $£3500 headset. It is the lower end of the market that has seen success and there isn’t muchcross over with those consumers and traditional dedicated gamers.

So the industry is finding itself strung out and at war with itself. Hardware manufacturers push for newer, more powerful hardware, but this is killing game devs by ever increasing budgets and delivery times. At the same time, the only successful new market in years, the handheld scene, is proving that new hardware is LESS of a priority for many. Subscription services were the future, except now, they clearly aren’t. They cannot cope with the soaring cost of constant content. The smaller players are scrabbling for the scraps of funding left over in an uncertain world. Cloud gaming and VR haven’t revolutionized the industry,they’ve just added to a complicated market.

What Does the Gaming Industry Need?

With the industry at a crossroads, the question arises: what does gaming need to thrive in the years ahead? Is the answer more innovation, or does the industry need a fundamental reset?

On one hand, innovation has always been gaming’s lifeblood. New technologies, mechanics, and genres can keep gaming relevant. The rise of AI, procedurally generated content, and more immersive VR experiences hints at the possibilities on the horizon. Maybe we will get a Bloodborne 4k remaster. However, innovation alone isn’t a panacea. Without sustainable business models to support it, even the most groundbreaking ideas can falter.

On the other hand, a reset—a reevaluation of priorities and practices—may be what’s truly needed. This could involve scaling back on hyper-realistic graphics and massive open worlds in favor of smaller, more focused projects. Indie developers have already demonstrated the viability of this approach, producing critically acclaimed titles on modest budgets. Perhaps the broader industry could learn from their example, emphasizing creativity and storytelling over sheer technical spectacle.

The Path Forward

As we enter 2025, it’s clear that the gaming industry is in a state of flux. Hardware manufacturers are diversifying their offerings with handhelds and cloud gaming initiatives, while publishers grapple with the challenges of skyrocketing budgets and unstable revenue streams. The upcoming Nintendo Switch 2 and the continued evolution of gaming PCs promise exciting possibilities, but they also highlight the growing divide between hardware capabilities and the financial realities of game development.

Ultimately, the future of gaming may depend on finding a balance between innovation and sustainability. Whether that means embracing new technologies, rethinking business models, or adopting a more measured approach to game design, one thing is certain: the next few years will be pivotal for an industry that continues to captivate millions worldwide. The question remains: will 2025 bring the breakthrough the industry needs, or will it serve as a reminder that even the most powerful consoles and the most advanced games cannot succeed without a solid foundation?

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