Gaming Is Growing, but New Game Studios Are Getting Less of the Money

The gaming market attracts billions of players and billions of dollars, but less and less of that money is reaching the companies actually creating new games.

That is the clearest takeaway from the figures for the second quarter of 2026.

On the surface, everything still looks fine.

Steam is growing by 13%. Estimated quarterly revenue is around $5.5 billion. At peak moments, more than 42 million people are using the platform at the same time. Almost a record.

So there is no shortage of players.

On paper, the console market also appears to be growing. Combined revenue from Nintendo, Xbox and PlayStation is up by around 3%.

But that figure only tells part of the story.

Nintendo is growing by 90% thanks to the Switch 2. Meanwhile, Microsoft’s gaming revenue is down 7% and Sony’s is down 5%. Xbox hardware revenue has fallen by as much as 33%.

So the console market is not growing across the board.

Nintendo is pulling the total upward and masking the decline at the other two major platforms.

Mobile gaming has a different problem.

The market still generates around $19.4 billion in in-app purchases in a single quarter. Yet revenue is down 4% and installs are down 12%.

Over a longer period, revenue is still holding up reasonably well, while the number of new installs continues to decline.

That means the mobile market is becoming more dependent on existing players, existing games and established spending habits.

You can see that in the revenue charts.

Of the twenty highest-grossing mobile games, thirteen are more than four years old. Only two are less than two years old.

Titles such as Candy Crush Saga, Pokémon Go, Clash Royale, PUBG Mobile and Roblox are still generating billions years after launch.

That is good news for companies that already have a winner.

For new studios, the picture is very different.

New games are not only fighting for attention. They are competing against titles that have spent years building players, data, marketing budgets and paying communities.

The same divide is visible in investment.

Private investment in and around gaming rose to $3.1 billion in Q2. That is roughly six times more than a year earlier.

That sounds like a huge recovery.

But the number of deals did not grow with it. There were 108 investments, around 2% fewer than a year earlier.

So most of the additional capital came from a small number of very large funding rounds.

And that money is not mainly going to studios building new games.

It is going to AI, advertising technology and hardware.

AppsFlyer raised around $1 billion. Several AI companies raised hundreds of millions. Series A investment increased by around 530%.

At the same time, large funding rounds for actual game developers remain scarce.

That says something about where investors currently believe they can find security.

Not only in content.

But mainly in the technology, distribution, advertising, data and tools surrounding that content.

The acquisition market is also picking up. There were 54 transactions in Q2, the highest number since 2022. Together, they represented around $2.3 billion.

So more companies are being bought and sold again.

But here too, the strength is mainly in existing scale, recognised titles and valuable brands. Mid-sized deals are increasing, and companies with strong existing games or proven revenue are more attractive.

The picture on the stock market remains weak.

PC and console companies are down around 13%. Asian mobile-first companies are down around 42%. Western mobile-first companies are down around 37%.

This is happening while players are still gaming in huge numbers and several companies are reporting revenue growth.

So the players have not disappeared.

And neither has the money.

But investors are drawing an increasingly hard line between companies that simply make games and companies that already have scale, technology, profit, data or long-running franchises.

That makes Q2 2026 less a story about a shrinking gaming market.

It is a story about a market in which the money is becoming increasingly concentrated.

At Steam.

At Nintendo.

In old mobile hits.

At large technology companies.

In AI, advertising and infrastructure.

And at companies that have already proven they can keep players coming back and spending for years.

The market is still growing.

But not everyone is growing with it.

When billions of people continue to play games, but most investment capital flows to AI, advertising and old hits, where is the next generation of new games supposed to come from?

Want to read more? You can, find here the Q2 2026 Quarterly Gaming Report from https://aream.co/

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