Video game industry in decline? What's behind the Gamescom festival

The opening of the Gamescom Festival - the 2025 edition, yesterday, in Cologne, Germany, an event that will end on Sunday, represents a shining showcase for global gaming, but, beyond the spotlight, the industry is playing on a "hard" difficulty level, say experts in the field in an article published on the website zdfheute.de.

According to the cited source, this year's records - over 1,500 exhibitors from 72 countries and 233,000 square meters occupied - confirm the scale of the event, but they cannot hide the cracks accumulated after two complicated years. The public comes to Cologne for premieres, e-sports and meetings with digital creators, but developers arrive at the stands after difficult months, with cut budgets, reduced teams and pressure to deliver "more, faster, cheaper".

Experts told the cited source that, after the pandemic boom, when time spent at home blew up game consumption and triggered a fever of studio start-ups fueled by public support programs, the post-lockdown reality brought the harsh adjustment: demand normalized, wallets tightened due to high prices, and the revenue graph slipped by about six percent between 2023 and the end of 2024. What seemed like a three-lane highway to growth turned into a road with works, restrictions and limitations. Out of inertia, many studios continued to hire as in the peak years, hoping that sales would keep up; when they did not, the wave of layoffs followed. Even giant brands were not immune: the staff cuts announced by flagship companies sent a cold signal to the entire ecosystem.

In Germany, the effect was quickly visible: fewer studios, fewer employees, a step back that hurts especially in the AA segment and in the area of projects between prototype and launch. Video game industry specialists claim that the problem is structural, not just cyclical. Production costs are increasing on all fronts - from engines and licenses to distribution, QA and marketing - while the threshold for standing out in a hyper-crowded, ultra-competitive market is constantly increasing. To promote new mid-level video games, a good trailer and a few viral posts are no longer enough, but communities cultivated in advance, development transparency, testing with the right creators and an elastic pricing strategy are needed. In parallel, the "all-in on a single blockbuster" model is becoming increasingly risky: delays, costly pivots and launches below expectations can quickly dissolve margins for two to three years.

And yet, the video game industry still has cards to play, the source cited says. The public funding promised for local developers, if predictable and easy to access, can stabilize the pipeline. More importantly, the release schedule is putting fuel back into the ecosystem: series with huge fanbases are preparing their new chapters, and mobile-hybrid hardware is maintaining the interest curve for "pick-up and play” games. Portability, short sessions, cross-progression and solid optimizations for performance are becoming practical differentiators, not just marketing bullet-points. In the short term, flagship titles can pull up the entire landscape; in the long term, sustainability comes from balanced portfolios, smart iteration and diversification of revenue streams (DLC with authentic value, ethical cosmetics, subscriptions with a clean selection, not inflated).

In this context, this year's edition of Gamescom is transforming from an international event into a real barometer of the video game industry. Full stands and queues at demos don't automatically mean record sales, but they do indicate what themes resonate: clear gameplay, technical stability at launch, options for accessibility, respect for players' time. Creators who communicate honestly - what's in the game, what's not yet, what will be adjusted - gain trust, and trust translates into wishlists and conversions. On the other hand, communities demand accountability: no more "dying” of purchased games, no more preservation plans and offline options where possible, no more server shutdowns without solutions for those who paid.

The real challenge for the video game industry in 2025 is not to look bigger, but to be healthier. Less crunch, more planning; fewer one-off bets, more modular portfolio; less graphic ambition without coverage, more focus on satisfying gameplay loops. If publishers calibrate expectations and invest in tools that reduce waste - ethical analytics, continuous playtesting, production tools that lower costs without cutting corners - the next 18 months can turn the "unfortunate combination” of inflation and normalizing demand into a healthy restart. Under the bright lights of Gamescom, the message is clear: the games industry can remain the most creative laboratory of pop culture, but it needs discipline, transparency and respect for the players to transform the show on stage into solid results after the lights go out.