The New Golden Age of Video Gaming

Richter Péter senior equity portfolio manager 2025. August 14.

Market Outlook, Key Trends, and Growth Drivers

One of the best-performing megatrends of the year has been tied to the companies behind video game development. But what’s driving this surge?

The world of video games has long since outgrown its traditional role as a niche entertainment sector. Today, it stands as a dominant, diverse, and increasingly investor-friendly global industry. In 2024, the global gaming market even surpassed total spending on professional sports. Following the explosive growth during the COVID-19 era, the sector appears to be entering another inflection point—fueled by breakthrough technologies (especially artificial intelligence), next-gen consoles, and a wave of long-anticipated major game releases. In the coming years, gaming’s influence will grow not just economically, but culturally as well.

The Main Growth Engines of the Gaming Sector

  1. The Global Gamer Population Could Reach 3 Billion

Although gaming experienced exceptional growth over the past decade, the post-pandemic correction slowed momentum, bringing the industry back to single-digit annual growth. From a 13% average yearly growth between 2017 and 2021, the pace dropped to just 1% by 2023. Future forecasts suggest a more moderate, yet steady, growth of around 5% annually. In 2024, the global gaming market is projected to be worth $221 billion, potentially rising to $266 billion by 2028.

This growth is not only quantitative, but structural and qualitative. The industry is transforming through new platforms, innovative business models, and technological breakthroughs that are redefining how games are developed, distributed, and consumed. By 2029, the global gaming population is expected to reach 3 billion – up 17% compared to 2024.

Source: Bloomber, VIG AM

  1. Cloud Gaming to Grow 25% Annually

Generative AI has ushered in a new era for gaming. AI doesn’t just personalize gameplay – it significantly reduces development costs and timelines. What once took years can now be prototyped in weeks. Automation and creative AI tools empower even small studios to release competitive products swiftly.

Meanwhile, the cloud gaming segment is expected to grow at a 25% annual rate, reaching $25 billion by 2029. Cloud infrastructure enables high-quality gaming regardless of a user’s hardware, attracting an even broader audience.

  1. Evolving Business Models

A key shift is the widespread adoption of Gaming-as-a-Service (GaaS) models. Instead of one-time purchases, developers now rely on recurring revenue streams through subscriptions, in-game purchases, and ongoing content updates. This approach offers more predictable and scalable income—even during periods when console sales or new game releases slow down.

  1. Even Boomers Are Playing All Day

Over 213 million Americans now play games regularly, with the average weekly playtime reaching 12.8 hours. The over-50 age group is also growing rapidly – from just 17% in 2004 to 29% in 2024.

Easing regulations have triggered a new growth cycle in markets like China, where the gaming sector grew by 7.5% in 2024, reaching $44.8 billion. Leading players include NetEase and Tencent. In Japan, the introduction of new hardware – like the Nintendo Switch 2 – is driving momentum. In 2025, Japanese gaming revenue could surpass $51 billion.

  1. Top Players Report Outstanding Results

Recent hit releases such as Call of Duty: Black Ops 6 and Helldivers II have greatly increased user engagement, helping leading publishers post strong performance in 2025.

Financial Stability, New Challenges, and the Road Ahead

As the market recalibrated post-pandemic, gaming companies streamlined operations, cut costs, and increasingly integrated AI tools. As a result, the industry’s financial foundations are more stable than ever. Free cash flow margins have significantly improved thanks to efficiency gains and cost reductions. Gaming is also relatively recession-resilient, with consumers maintaining digital entertainment habits even during economic slowdowns.

Still, challenges remain. The cost of developing AAA titles has outpaced revenue growth. On top of that, the industry faces regulatory, data privacy, consumer protection, and antitrust risksesp – ecially given its global exposure. Maintaining a strong pace of innovation remains critical for sustained growth.

Conclusion

The video game industry is no longer just a branch of the entertainment world—it has become a standalone global ecosystem. Driven by technological advancement, growing cultural acceptance, evolving business models, and regional expansion, gaming is on a growth trajectory that appears sustainable for the long term.

From an investment perspective, this megatrend offers a rare combination of innovation, stability, and resilience across economic cycles – making it one of the foundational pillars of future digital entertainment. This is why the VIG MegaTrend Equity Investment Fund considers the gaming sector a key component of its portfolio.

Source: GlobalX Insights; BCG, The Future of Global Gaming Industry; BCG, The gaming report

VIG MegaTrend Equity Investment Fund

The VIG MegaTrend Equity Investment Fund aims to benefit from global megatrends that transcend economic cycles.
These include demographic changes (aging populations, emerging markets), efficiency gains from limited resources (renewable energy, energy efficiency), urbanization, and technological innovation.
The fund is managed by Péter Richter, Senior Equity Portfolio Manager.

 

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