Two troubling signs for gaming: First, Danielle Tran from Konvoy reports that AI accounts for only 10% of gaming investments, compared with 71% across all venture activity. Do VCs believe AI will transform every industry except gaming? AI is a growth mechanic, and the idea that gaming won’t benefit as much is a tough pill to swallow. But it’s not necessarily wrong, as our relationship to entertainment rather than tech may limit AI’s relative effectiveness in optimizing the supply chain.

Second, the game from the famed AI match-3 studio Cosmic Lounge is in soft launch, receiving another update this week, following its late December launch and initial appearance. Pets & Puzzles looks like a standard match‑3, albeit with a super‑cute Nintendogs‑style meta. This is the first public AI gaming bet stepping up to the plate, and it looks like they’ll have to win on the supply side, as the core matching doesn’t scream anything groundbreaking. This is one to watch!

Monopoly Go (MoPoGo) spent truckloads of capital quickly, but UA is simply maxed out. There’s no better evidence than the game’s shift to celebrity-driven TV advertising following a nearly linear decline in downloads since its August 2023 highs, dropping from 13m a month to 3m. Stocked in the F2P dev/pub medicine cabinet is F2P’s natural aspirin, a prescription known for its reliability and convenience: a game extension/re-skin.

Discord represented gaming’s best chance to be recognized among tech’s elite. A recognition that increasingly means political influence rather than only the validation the games industry always seeks. Jason Citron, founder and longtime Discord CEO, is stepping down at a pivotal moment, as the company gears up for an IPO. It’s a significant blow to what ought to be gaming’s broader ambition: claiming a seat at tech’s most influential table, dominated by founder-CEO figures like Zuckerberg (Meta), Chesky (Airbnb), the Collisons (Stripe), and Ek (Spotify). 

The answer to extraction shooters lies in system design. By creating a model, we can derive implications that help guide key design decisions and frame challenges in a quantifiable way. A model also lays plain some of the variables that shape the experience of extractions. There’s a reason Marathon’s design director mentioned a target survival rate of 50% (the percent of players who successfully extract). This single variable has enormous implications for how players experience progression. Hint: it’s the casino dummy.

This (the games industry is deprofessionalizing”) is an interesting line of thought by Ryan K. Ringey, and Simon Carless, especially when you consider how Roblox studios form – very much “de‑professionalised,” virtual, and less “sticky.” Sometimes, these Roblox studios look more like a Discord server than a company.

It echoes Coase’s famous argument in The Nature of the Firm: the only reason people don’t contract out rather than join a firm full-time is transaction costs. It’s expensive to search for new roles and manage old ones! (I have personal experience with the matter.)

The Games Industry would surely be the first to utilize technology to manage these costs and implement this way of working. But there’s a deeper way we’ve organized for decades, which may set us up for success.

Economists are fond of agglomeration effects, or productivity spillovers that occur when talent clusters. Learnings spread fast, and the whole industry accelerates. Games have a curious, global version of that: Stockholm, San Francisco, Istanbul, Leamington Spa, Barcelona…  If you want to travel and live globally, there’s no better industry than games. While there is a deeper economic phenomenon that warrants investigation into why this occurs in games, it has led to the development of globalized production supply chains, where 10 or more remote “outsourcers” might be utilized. Work is delegated and organized digitally, and there’s no physical stock to move; the biggest barrier is usually timezone.

AI looms, too, which I’ve seen seep in on so many development fronts.

This is all in stark contrast to mobile, ironically enough. Mobile was meant to be the  “people’s platform,” preaching “small teams, big reach.” The entire concept of the “Supercell” was built around a small team with minimal overhead! Now, even Brawl Stars is what, 80, 100 people? Many Western mobile teams approach 200+ headcount, with a substantial piggy bank to fund UA.

With the “blackhole” game notion of larger games growing larger, it creates an industry barbell effect with a “missing middle.” It’s been most acutely felt with the evaporation of true third-party publishing, where publishers fund developers for extended periods in the pursuit of future sales splits.

Marvel Rivals numbers are in free-fall. The engagement bump from the latest season won’t reverse its decline toward equilibrium: potentially matching but not exceeding Overwatch’s audience size, which has since recovered from Rivals’ launch. Is that a “successful outcome”? It feels like a blow to the arms race hypothesis.

Chinese developers are releasing AAA content at a historically high pace and quality, yet the outcomes remain…complicated. Genhsin, Honkai, and Zenless Zone Zero (ZZZ) are massive capital endeavors with limping revenue tails. Genshin Impact’s mobile revenue alone dropped from over $100m monthly last year to around $30m this March. Genshin’s annual budget is reported to be ~$200m on 700+ headcount, so while the game remains a profit powerhouse, its margins are significantly shrinking, a trend consistent across the entire portfolio. Honkai and ZZZ are following a similar but quicker decline from their launches, and it’s unclear if those projects remain in the red.