Perspectives 2025: Inside the UK video gaming industry

The post-pandemic adjustment

The gaming industry has been forced to adjust to life after the pandemic boom, and the transition has been painful for many. In 2024, the combined effects of economic pressures, including rising interest rates and inflation, hit hard. Layoffs totalled 13,000 globally, and studio closures by major companies like Ubisoft, Tencent, and Take-Two became common headlines.

“The hype that carried gaming through the pandemic has faded,” Osborn notes. “Studios are facing a much tougher market, where even well-funded projects struggle to compete.”

This shift has been compounded by the dominance of a handful of live-service games, such as Fortnite, Roblox, and Minecraft. Research from Newzoo shows that five titles over six years old accounted for 27% of total console and PC playtime between 2021 and 2023.

“These games are more than just hits – they’ve become platforms in their own right,” Osborn explains. “Roblox and Fortnite, in particular, are evolving into ecosystems powered by user-generated content, making them competitors not only to game developers but also to the storefronts that host them.”

The challenge for developers is no longer just about releasing a great game. 

“It’s about convincing players to carve out time in a world dominated by a handful of massive titles.”

A promising year ahead

Despite the challenges of 2024, Osborn sees 2025 as a year full of opportunity. “This could be a pivotal year for the gaming sector,” he says. “Major releases like Grand Theft Auto VI, the next Nintendo console, and big-name titles such as Borderlands 4 and Civilization VII will inject fresh energy into the market.”

These releases are expected to drive both consumer excitement and business confidence, helping to shake off the gloom of the previous year.

At the same time, Osborn emphasises the importance of regulatory compliance. The UK’s Online Safety Act, which introduces stringent rules for games with user-generated content, is a priority for many companies. “The Act demands significant operational changes to avoid penalties of up to 10% of global turnover,” he explains.

Digital competition laws are also presenting opportunities. “With regulators pushing Big Tech platforms to open their ecosystems, gaming companies are exploring new business models, such as alternative app stores and direct billing solutions,” Osborn says.

Emerging opportunities for innovation

One unexpected result of 2024’s layoffs has been the rise of new independent studios. Osborn sees parallels to the post-2008 financial crisis, when many talented developers launched successful ventures of their own.

“This is an exciting time for investors who are willing to back these startups,” he says. “With proper due diligence, there’s significant value to be found in newly established businesses led by experienced teams.”

On a global scale, Osborn highlights how countries are vying to position themselves as hubs for gaming innovation. “Saudi Arabia has made waves with its Vision 2030 strategy, investing billions into the gaming industry,” he says. “This has spurred other governments to rethink their own approaches. For example, Australia’s State of Victoria has developed a holistic plan to support independent developers, while the EU is exploring broader strategies for sector growth.”

But most nations still rely on piecemeal support, like tax reliefs and limited funding. “There’s a real opportunity for governments to step up and create comprehensive plans to grow their gaming industries,” Osborn adds.

Challenges ahead

While the year ahead looks promising, Osborn cautions against underestimating the challenges. Chief among these is the dominance of a few live-service giants, which have consolidated much of the market. “Even well-funded companies will need to rethink their strategies to compete,” he says.

Regulation is another significant risk. “Video games have become influential cultural platforms, but that also means they’re under scrutiny for issues like child safety, extremism, and misinformation,” Osborn explains. With platforms like Roblox already facing criticism in Parliament, companies must tread carefully to avoid reputational and commercial fallout.

The generative AI revolution

One of the most exciting – and controversial – developments in the gaming industry is the rise of generative AI. While AI has long been integral to gaming, powering everything from NPC behaviour to backend analytics, generative AI takes things to a new level.

“Generative AI has the potential to fundamentally reshape how games are made,” Osborn says. “Some tools can already generate simple games from prompts, but the industry is approaching this cautiously.”

For now, most companies are exploring AI’s potential internally, using it to streamline production pipelines rather than as a central tool for development. “There are still unresolved questions about its precision and the impact on intellectual property rights,” Osborn explains. 

“But there’s no doubt it will open up new opportunities – and challenges – for the sector.”

Sentiment and outlook

So, what’s the overall sentiment in the gaming industry as 2025 begins? Osborn describes it as “shaky but hopeful.”

“2024 was a tough year, but the groundwork is being laid for recovery,” he says. “With major releases and new technologies on the horizon, there’s a sense that 2025 could be a turning point. That said, the industry will only regain confidence once we start seeing tangible successes – and that might take most of the year.”

For now, the gaming industry is poised between caution and optimism, ready to tackle its challenges and embrace its opportunities.