AI drives gaming industry as growth slows

The gaming industry is facing significant challenges and opportunities as it adapts to a changing landscape (Image source: © 123rf 123rf)

Mobile gaming dominates the market, with over 1.90 billion mobile game users globally in 2023, projected to reach 2.30 billion by 2027, while the Esports sector is projected to reach $1.86bn by 2025, driven by investments and increasing viewership.

However, a changing landscape is challenging the gaming industry.

This is according to the report Modern Online Gaming Phenomenon Fuels Digital Marketing Fervor - Smart Brands Seek Fans Among 3.6 Billion Global Gamers from the CMO Council.

As a result, it finds itself at a crossroads as growth slows while risks have increased.

To ensure growth in the industry needs to find innovative monetisation strategies and market expansion, and there are opportunities for this.

Risks

Slowing growth is the result of rising interest rates and the return of players to traditional environments post-pandemic.

In addition, the industry has seen high-profile game failures and project delays that have led to layoffs and studio closures.

Events

rAge 2025 get a new home at Fourways Mall

6 Aug 2025

Opportunities

Several emerging trends are shaping the future development of gamification.

These include advancements in immersive technologies, increased personalisation through artificial intelligence (AI), and the growing integration of gamified solutions in new sectors.

Artificial intelligence and automation

The report says one of the most exciting trends is the use of virtual reality (VR) and augmented reality (AR) in gamification. It found that AI and automation would enhance efficiency in game development and improve revenue through more immersive games.

Generative AI provides better game creation and player engagement while reducing development costs.

The report found that AI systems can create intricate environments, levels, characters, and even complete storylines, decreasing the time and expenses involved in game development.

This enables developers to concentrate on more imaginative elements, creating engaging game environments.

Cloud gaming

Another opportunity is Cloud gaming, as this is transforming accessibility, allowing players to stream games on various devices without high-end hardware.

Developments in mobile technology mean that modern smartphones are now equipped with powerful processors, high refresh rate displays, and advanced GPUs, which support high-quality graphics and engaging gaming experiences.

This has enabled developers to create console-like gaming experiences on mobile devices, attracting casual and hardcore gamers.

Subscription models

Other opportunities include developing subscription models, which would provide a steady income beyond initial game sales.

Microtransactions

Microtransactions are a key revenue driver, as they allow for continuous updates and content releases, and gradual price increases. Premium versions can also drive revenue growth.

Advertising

The industry should explore advertising in games. The potential revenue from this source is projected to be $2bn to $3bn in incremental revenue by 2028.


Youth Month
#YouthMonth: Gaming - A gateway for Gen Z
Kyla Booysen  19 Jun 2025

Direct-to-consumer strategies

Direct-to-consumer strategies can reduce platform fees and enhance profitability, while targeting emerging markets and untapped demographics, such as older adults and young children, can drive growth.

Where the growth lies

Currently, Asia Pacific holds the largest market share, driven by smartphone usage and a large gamer population, particularly in China, while the Middle East & Africa are experiencing rapid growth, with significant investments in gaming and a youthful demographic.

North America is expected to grow steadily, supported by advanced digital infrastructure and a strong gaming culture.

South America is investing in digitalisation to expand revenue in the gaming sector. Europe is enhancing regulatory frameworks to promote responsible gaming and mobile betting.

Events

Comic Con Africa names Capitec as new headline sponsor

25 Nov 2025

Understanding the demographics

Understanding gamer demographics and preferences is crucial for targeting and engagement strategies.

Casual gamers represent the largest segment, engaging in gaming for relaxation rather than competition.

Adults aged 25-34 hold the highest market share due to disposable income and nostalgia for gaming culture.

The middle-aged demographic (35-54) is expected to grow significantly as they seek accessible gaming experiences.

The report also found that gaming conferences and events such as Comic-Con have provided opportunities for the gaming industry and developers.