Matthew Ball, the analyst who best documents the global games industry, titled his State of Video Gaming 2026 report with one word that says it all: paradox. In 2025, global video-game software sales reached $195.6 billion, up 5.3% year over year. It is the world's largest entertainment industry. And in the same year, private investment in game studios fell 55%, big studios ran mass layoff waves affecting tens of thousands, and independent AAA projects shrank sharply.
How can record revenue coexist with a structural employment crisis? The answer is complex, but the main pieces are known. Revenue growth is not evenly distributed: it concentrates in subscription models (Game Pass, PlayStation Plus) and a handful of massive service games (Fortnite, GTA Online, League of Legends). Mid-size and small studios outside those models do not see that growth on their books. And the big studios that do participate use part of that revenue to restructure, kill projects that no longer fit the new strategy and concentrate resources on the highest-return titles.
Ubisoft: the most cited case
Ubisoft is the most cited example of a company that has been in crisis mode for years despite holding globally recognised franchises. Assassin's Creed, Far Cry, Rainbow Six, The Division: brands with tens of millions of followers. And yet the company has spent two years restructuring, selling assets, cancelling projects and cutting staff. Ubisoft's production model — large globally distributed teams, parallel production of multiple AAAs — worked well under sustained growth but proved fragile when games did not hit expected sales.
The industry paradox · 2025 numbers
- 2025 global software sales: $195.6B, +5.3%.
- 2025 private investment in studios: −55%.
- 2025 single-game and microtransaction sales: −11%.
- Companies with mass layoffs in 2025: Ubisoft, Microsoft Gaming, Riot Games, Epic Games, 505 Games.
- PC market since 2020: +30%, most stable, no recession.
- Subscriptions: cover the drop in individual sales, Game Pass and PS Plus at peaks.
Epic Games and Tim Sweeney: "market conditions"
Tim Sweeney, Epic Games CEO and founder, blamed "market conditions and the economic downturn" in his layoff statement as the main reasons for his company's cuts. It is a justification that sounds hollow when Epic generates billions in annual revenue from Fortnite alone. Critics pointed out that Epic's difficulties are more linked to failed bets on projects that did not work — digital stores, metaverses, 3D tools — than to "market conditions".
The pattern repeating in every major industry layoff in 2025–2026 is similar: the company had years of fast growth during the pandemic, hired massively expecting that growth to continue, and when the market normalised had to right-size its headcount. It is not exclusive to games: it is the same pattern tech lived through in 2022–2023. But in gaming it has an added ingredient: the creative workers — artists, designers, writers — who bring games to life are especially vulnerable to cuts.
European context: Spain has a growing video-game industry, with studios like MercurySteam (Metroid Dread) and Tequila Works gaining international recognition. But layoffs in big US and European studios indirectly affect the global ecosystem: they reduce investment available for international projects and raise competition for the jobs that remain.
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