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As of the most recent Circana charts, Black Ops 6 was the No. 2 best-selling game of 2024, behind EA’s College Football 25. (Activision Image)
It’s been a long, strange year for video games. We’ve seen some great releases, like Balatro, Astro Bot, and Pacific Drive, but the industry is riding a global downturn, multiple studio closures, two years of escalating layoffs, and several smaller controversies.
Much of 2025, at time of writing, is a question mark. We’re still waiting for firm release windows on several projects that’ll define the year, such as Grand Theft Auto VI or Nintendo’s new console, and no one seems to want to make a real plan until they know when one or both of those are coming out.
In the meantime, let’s focus on what we do know, about the year that’s passed and what’s coming next.
Microsoft: Playing its own game
While Microsoft’s gaming division still turns a profit, it’s spent the last two console generations seemingly hard-locked in third place behind Sony and Nintendo. The company’s reaction has been to attempt to redefine the video game console as a concept, with initiatives like its “This is an Xbox” PR campaign. Through this lens, what Microsoft is actually selling is an ecosystem, rather than a console, and that ecosystem can be reached through any internet-capable device.
Even so, the past year for Xbox has been marked by bold plays and occasional controversy. Arguably the biggest black eye for the company has been its waves of layoffs, both internally and at Activision Blizzard. In particular, Xbox Game Studios head Matt Booty reportedly told employees in May that the department needs “smaller games that give us prestige and awards,” the day after his company had closed the studio behind the small, prestigious, award-winning Hi-Fi Rush. (Tango subsequently reincorporated as a subsidiary of the South Korean company Krafton.)
In addition, Microsoft defied industry convention by opting to publish several of its console exclusives like Grounded on the PlayStation and Switch. While this is technically nothing new for Microsoft, which has kept Minecraft platform-agnostic for years, this has historically been a move that’s only made by a game company that’s about to exit the hardware market, and was met with an outcry by Xbox loyalists.
Microsoft’s final gamble was to bring the latest Call of Duty game, Black Ops 6, to its Xbox Game Pass service at launch. The risk was that this might cannibalize Black Ops 6’s sales, which would boost Game Pass at Call of Duty’s expense.
These moves seem to have worked in Microsoft’s favor. While Microsoft didn’t release any specific numbers (so take this with a grain of salt), it announced on Oct. 30 that Black Ops 6 had the series’ biggest-ever launch weekend, while many of Xbox Game Studios’ releases have appeared on the PlayStation Network’s top 25 list. Independent analysis firm Circana pegged Black Ops 6 as the No. 2 best-seller for 2024 as of the end of November.
It’s an odd strategy, particularly in the limited history of console gaming, but so far it looks successful. Microsoft isn’t explicitly competing against Sony or Nintendo, but instead, is playing all sides against the middle.
Indiana Jones and the Great Circle was a commercial success. (Microsoft Image)
In 2025, Microsoft should also revisit its plans to break into the mobile gaming market. This was supposed to launch last summer, but according to Xbox president Sarah Bond, the rollout was halted by a court order.
When and if that’s sorted out, a successful beachhead in the mobile market could be a major profit driver for Xbox in 2025, but it can expect serious pushback from competitors like Apple.
As a game publisher, Microsoft enters the new year on a high note, due to the critically and commercially successful release of MachineGames’ Indiana Jones and the Great Circle on Dec. 9. An interquel to the film franchise, Great Circle pits Indy against Italian fascists, a Nazi rival, and a secret society in the Vatican.
Xbox’s next major first-party game, Obsidian Entertainment’s action-RPG Avowed, is scheduled for Feb. 18. Other releases for the year potentially include the action prequel Doom: The Dark Age; the long-awaited revival of the Fable franchise; and original IP such as Replaced and South of Midnight. You can also expect another Call of Duty for the 2025 holidays, as usual, which is rumored to be another entry in the Black Ops subseries.
Amazon: Massively multiplayer
Throne and Liberty is an online action-RPG by NCSoft, the Korean publisher behind Lineage and Guild Wars. (NCSoft Image)
While Amazon’s gaming ambitions have yet to really pay off, it does have a few reasons to be cheerful.
Amazon scored a major hit last summer with its live-action adaptation of Bethesda Softworks’ Fallout for Amazon Prime, and its recent localization of NCSoft’s Throne and Liberty saw respectable numbers at launch.
Amazon also ported its original MMORPG New World to consoles this year, which came alongside a New World-themed episode of its video game show Secret Level. After a big launch in 2021, which was buoyed by cross-promotion via Amazon’s Twitch, New World appears to have stabilized at a regular population of roughly 19,700 daily players.
That’s enough to keep the game in the worldwide top 20, which arguably qualifies New World as a sleeper hit, but that seems to be its ceiling. Amazon’s got a respectable MMORPG on its hands, but not a blockbuster.
On the negative side, Bandai Namco announced it will sunset its MMORPG Blue Protocol on Jan. 18, which scuttled Amazon’s plan to release it in territories outside Japan.
Other than that, it’s hard to know what’s next for Amazon’s gaming arm. Its highest-profile projects include a Tomb Raider reboot, headed up by Crystal Dynamics, and an untitled Lord of the Rings MMORPG, but neither have a release date. Amazon’s stated plan has always been to make big, expensive “AAA” games, so many of its bets in the sector may not pay off for another couple of years. In the meantime, it’s demonstrated a knack for bringing big live-service games from overseas to the American market.
Valve: Signs of life
Valve’s Steam Deck, 2023 OLED Edition. (GeekWire Photo / Thomas Wilde)
Valve Software’s sunny refusal to stick to any kind of schedule has been a running joke since the company was founded. In 2024, however, it had more going on than usual.
This year saw the official debut of Deadlock, a player-vs-player action game that’s currently in semi-open testing on Steam; you can’t sign up for it, but you can be invited to play Deadlock by people who are already in the beta. This is Valve’s first original IP in years (since Artifact was technically an adaptation of Dota 2), as well as its entry into the “hero shooter” genre. No official release date has been announced.
In a more surprising move, Valve released “The Days Have Worn Away,” the seventh and apparently final issue of the official Team Fortress 2 webcomic, on Dec. 20. The comic had been on an unannounced hiatus for almost eight years before that point, and issue No. 7 reads like an attempt to close out TF2. If this was coming from any other company, it’d suggest Team Fortress 3 is on the horizon, but this is Valve. There’s no way of knowing what’s next.
In hardware news, rumors persist that Valve plans to release a third iteration of its Steam Deck in 2025, either as another iteration on the hardware or as a console-styled living room option. Valve itself has made no announcements one way or the other, aside from regularly updating the Steam Deck’s OS.
The Deck’s success — Valve reported in 2023 that it had sold “multiple millions” of units — has ignited a growing competition, as other companies like Asus and MSI brought their own portable gaming PCs to market.
This has led to predictions that the next big “console war” will be fought in the handheld sector, between Valve, PC companies, and Nintendo’s next Switch. Sony has signaled that it’s ready to participate as well, with products like the PlayStation Portal, and rumors of a dedicated portable Xbox unit have been in circulation for years. Forget your living room; the next battle is for your lap.
The 2025 startup scene
PitchBook tracks a steep dive in unique gaming investors over the last couple of years. (PitchBook)
The biggest issue confronting gaming startups in 2025 involves simple brand recognition.
Some analysts are more bullish than others on the scene going forward. PitchBook notes in its end-of-year report for 2024 that the gaming sector is currently underinvested, citing factors such as lengthy game development cycles proving “unpalatable” to funders, rising interest rates, and 2024 having a weak release calendar by comparison to the all-time high of 2023. This year’s gaming startups might initially face an uphill battle to find funding.
The real struggle may come from the audience. As PitchBook’s Eric Bellomo writes, “In the face of abundant content, consumers increasingly chose to play established ‘forever titles,’ leaving a shrinking pool of time for net-new releases.”
Other analysts, such as Circana’s Mat Piscatella, have sounded similar alarms. Essentially, the industry’s increasing focus on “games as a service” has begun to visibly pull oxygen away from everything else on the market. When faced with poor online discovery, a shrinking enthusiast press, and million-dollar PR campaigns, many fans will opt to spend their time on the games they already know.
A useful example here comes from Valve Software’s “Steam Replay” feature, which gives Steam users a series of at-a-glance infographics that summarize what they’ve been playing this year. When I checked my own numbers out, I was shocked to see that the median Steam user only played four games in 2024, out of the 200,000+ on the platform.
I’m obviously a massive statistical outlier, but according to Valve, half the users on Steam played 4 games or less this year. (Steam screenshot)
You could also point to a particular disclosure from 2023’s legal battle between the FTC and Microsoft, where Sony noted that approximately 8 million PlayStation owners put 70-to-100% of their gaming time into the Call of Duty franchise. For a substantial part of the PlayStation audience, their PS4 or PS5 is just the box that Call of Duty comes in. It’s a scary stat for anyone who doesn’t work on CoD.
With those data points in mind, it sets up a growing challenge for any game startup in 2025. Game development is arguably easier than it’s ever been before, with a growing number of new tools to help new creators and small studios with tasks like quality assurance, online safety, or zero-code engines. If you were ever going to work on that video game project in the back of your head, 2025 is a good time to start.
Much as with modern films or TV, however, the biggest challenge for new gaming IP in 2025 is simply getting noticed. The competition in the “attention economy” has never been higher, and smaller developers have worse and fewer ways to break through the noise.
AI in gaming: Facing the PR hurdle
Seattle’s Rec Room used several different AI programs to generate Fractura, a new area within its social hangout app Rec Room. (Rec Room image)
Early in 2024, I attended a get-together for Seattle games industry professionals, where the mood was bleak. Many of the assembled developers were quietly convinced that it was only a matter of time until their employers let them go and replaced their role with an AI model.
Some of that cynicism can be chalked up to the environment. The games industry has always had more than its share of vulture capitalists in executive suites, and these have been good years for bad management. (More on that later.)
In practice, as we noted last year, many of the possible uses for AI in game development aren’t wildly dissimilar to mechanics and practices that were already in use. If your game randomly creates dungeons for the player, there isn’t much practical difference between using an LLM or procedural generation to do it.
One crucial, growing sector for AI in games is quality assurance. Companies like Live Aware use custom-trained AI models to help sort through hundreds of hours of testers’ gameplay footage. As founder Sean Vesce told me, it’s a question of training their LLM to look for certain specific phrases in what would otherwise be an inaccessibly vast pool of data. A human could never hope to get through it all, let alone extract any meaningful information, but an appropriately-equipped AI can.
The biggest hurdle for AI in game development in 2025 is still likely to be its massive PR problem. Generative AI programs have a reputation as being plagiarism machines, as well as providing easy ways for bad actors to flood open storefronts with zero-effort dreck.
That’s led to substantial audience backlash against any company that openly uses, or appears to be using, AI to create art or text. For example, Renton, Wash.-based Wizards of the Coast has dealt with several different AI-related controversies in the last year, such as advertising a position for an AI engineer or its parent company’s CEO’s continual flirtation with integrating AI into Dungeons & Dragons.
In its current state, AI has several applications in gaming, but the best are used behind the scenes, in vital fields like data analysis or rapid prototyping. Advocates still push dreams of a day when generative AI is good enough to allow a single person to quickly create the game of their dreams, but for the time being, only other AI advocates are buying what they’re selling. Everyone else’s mood could be described, at best, as “hostile disinterest.”
The (stock price) needle and the damage done
Washington state’s Firewalk Studios shut down in October, after a failed launch for its debut project Concord. Sony attracted controversy for failing to publicize the launch in any way, then yanking Concord from sale after just two weeks. (Firewalk Studios image)
If there’s a single story that defines video games in 2024, however, it’s the layoffs.
Just over 25,000 game developers lost their jobs over the course of the last two years. January 2024 was particularly brutal, with almost 6,000 dismissals across companies like Riot Games, Unity, and Activision Blizzard.
Here in Washington state, we’ve seen big cuts this year at Microsoft, Bungie, Epic Games, and Hidden Path Entertainment, while local studios like Firewalk, Galvanic Games, and Ridgeline Games shut down.
While you can point to multiple factors behind the layoffs, analysts argue the single biggest culprit is a post-COVID market correction. The audience for video games hit new heights during the pandemic lockdowns, which led to a big influx of investment in 2021 and 2022. Would-be empire builders like Sweden’s Embracer Group went on an M&A spree, while existing entertainment companies like Amazon and Netflix spent heavily to break into the video game market.
Many of these newcomers were explicitly betting that the good times would last forever, and they didn’t. Subsequently, investors started backing off of the games business as early as Q4 2022, citing economic uncertainty, rising inflation, and after Microsoft’s battle with the FCC in 2023, the potential for increased regulatory scrutiny.
At the same time, once the lockdowns were lifted, the games industry faced renewed competition from every other hobby on Earth. That led to a slight but noticeable decline in overall revenue at the same time that the easy VC money dried up, with chaotic results.
The final, most important nail in the coffin mirrors that of the greater tech industry, which has had similar recent issues. Like tech companies, many larger game studios have stockholders to appease, and simply put, layoffs are good for stock prices.
That means even overwhelming success often isn’t enough to protect employees’ positions, as we saw with companies like Wizards of the Coast, which results in a constant drain of companies’ experience and talent. This pattern has repeated itself throughout the games industry for years, where overpaid executives freely trade short-term gains for long-term loss, but it’s rarely been as widespread as it was in 2024.
Whenever you have a conversation like this about the video game business, someone always asks if this is the start of the next big crash. Ever since 1983, when the American games industry fell apart almost overnight, fans and analysts have speculated about when and if history will repeat itself.
Those questions are premature, at least for now. Even after the recent revenue slump, analysts estimate that video games are a $72 billion global business driven by some of the biggest corporations on the planet, including all the FAANG companies. It’s hard to imagine another 1983-style crash unless it was a knock-on effect from a truly historic global recession.
What you can take away from this year, however, is that the games industry is (still) long overdue for serious internal reform. There are other conversations you can have about the current state of affairs, like how graphics have essentially plateaued, but the events of 2024 have shone a spotlight on how much of this business is built on exploitation of labor.
Before COVID, there were a number of serious conversations happening about game developer unionization, and several departments across the industry have successfully organized. Expect more of that to come.
This situation has been unsustainable for years, and something has to give. Maybe 2025 is the year when it happens.
