The game industry’s post-pandemic reality check is here

New industry reports show a gaming business that's still big and growing, but not quite like it was in 2020.

A close-up of an Xbox controller being held by a player.

Looking ahead, these reports paint a picture of more tempered growth in more predictable fashion, but growth nonetheless.

Photo: Jung Yeon-Je/AFP via Getty Images

The growth of the video game industry over the past 18 months has in many ways reflected human behavior during the pandemic.

When everyone was locked inside, we turned to gaming to connect with friends, pass the time and spend discretionary income no longer reserved for nights out and vacations. The industry boomed as a result, and this past year we've seen the effects reflected in record gaming investments and consumer spending.

But new reports out this week on the financial state of the industry point to a more complex picture emerging. While COVID-19 marks a definitive turning point for the industry, game makers are now grappling with the reality that the industry may never again see the same level of cultural diffusion and unprecedented financial growth it did in 2020, when analyst firm Newzoo says the industry grew more than 23% from the year prior.

As expected, last year's growth hasn't been replicable as consumers become reacquainted with leaving their homes, returning to the office and traveling more often. Now, the industry has to chart a path toward a post-pandemic future that recognizes what worked during the pandemic, what won't keep working in the future and what's a more realistic expectation of gaming's new normal going forward.

This reality check hasn't stopped investors, for now. The game industry has emerged as one of the hottest investment markets in the world over the past nine months, with a record $71 billion in deals across nearly 1,000 transactions according to a report released this week from investment firm Drake Star Partners.

Scores of companies that never dabbled in games before now want a piece of the fast-growing pie. New studios are opening left and right, investments are pouring in (more than $9 billion across 493 deals), gaming startups have had massive, high-profile IPOs (Roblox and Unity, to name a couple) and buzzy new markets like NFTs and blockchain-related gaming startups are popping up around the industry.

The frenzied state of investments and industry consolidation illustrates just how confident the industry is that its best years are still ahead. But in many of the areas that count most for the short term, the industry's growth is starting to lag, and it's going to take careful maneuvering for game developers to weather the slowdown after last year's high.

Spending on video games in the U.S. jumped 35% in the first six months of the year compared with 2020, according to The NPD Group, but the percentage of players who play games dropped three percentage points to 76% of Americans compared with last year. That 3% drop is evidence of just how fickle audience growth and retention can be, as people are prone to abandon hobbies they picked up during lockdown once they're able to return to old habits.

Newzoo, which tracks global game spending, reported earlier this year the industry was on track to shrink roughly 1% to $175 billion, mainly due to remote work disruptions causing delays in big releases like Sony's Horizon Forbidden West and the global chip shortage resulting in drops in console and PC gaming spending. Those issues are expected to persist well into next year.

Looking ahead, these reports paint a picture of more tempered growth in more predictable fashion, but growth nonetheless. NPD says that while the number of Americans playing games this year has dropped from last year, it's still much higher than it was in 2019 and those that are playing games still are doing so far more on average.

"Despite the decline in number of people playing video games, the industry continues to see growth in the number of hours spent gaming," NPD wrote in its report. "There was a dramatic increase in time spent playing games from 2019 to 2020, with average hours played per week jumping from 12.7 to 14.8, respectively. And the growth continues, increasing to 16.5 hours per week this year."

NPD makes an interesting observation in its report: One age group, the lapsed gamer aged 45 to 64, is helping contribute to new audience growth. "We had a number of lapsed gamers in the 45-64 age group re-enter the market last year, not only for entertainment, but to stay connected with family and friends. And these gamers have continued to play more than other age groups," said NPD analyst Mat Piscatella. "Despite an overall decline in the percentage of folks that play games in the market, the time 45–64-year-old gamers spent playing continued to increase."

Mobile is another bright spot. While much of the global decline in game revenue this year can be attributed to contractions in the PC and console market, it's mobile holding the industry afloat with an estimated 4.4% year-over-year growth, Newzoo said last month, primarily because it's the type of gaming that doesn't require players to stay in one place all the time.

The firm now says the overall gaming industry will grow at a compound annual rate of 11% per year through 2024, to a record $200 billion. And mobile's ascendance will continue, with mobile gamers making up the largest chunk of new audiences (now expected to grow to 3.3 billion people by 2024) and the biggest spenders globally.

The game industry is already among the largest and most powerful entertainment sectors in the world, and it's only going to keep growing as more people play games, buy gaming hardware, try mobile gaming for the first time and spend more money more often on free-to-play games. 2020 marked a watershed moment for the industry, and it's not one easily or likely ever replicable again without another world-changing shift in behavior like the pandemic. But it's clear now more than ever the industry has only its brightest days ahead.

Protocol | Workplace

The whiteboard wars: Miro and Figma want to make meetings better

Miro and Figma separately launched features on Tuesday aimed at improving collaboration on their platforms.

Whiteboard rivals Miro and Figma each released collaboration improvements.

Logos: Figma and Miro

We expect a lot from our productivity tools these days. You can't just stroll over to your team members' desks and show them what you're working on anymore. Most of those interactions need to happen online, and it's even better if the work and the communication can happen in one place. Miro and Figma — competitors in the collaborative whiteboard space — understand how critical remote collaboration is, and are both working to up their meeting game.

This week, both platforms announced features aimed at improving the collaboration experience, each vying to be the home base for teams to work and hang out together. Figma announced updates to its multiplayer whiteboard FigJam, and Miro announced a new set of tools that it's calling Miro Smart Meetings. Figma's goal is to make FigJam more customizable and accessible for everyone; Miro wants to be the best place for content-centered, professional meetings. They both want to be the go-to hub for teams looking to get stuff done.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at

The way we work has fundamentally changed. COVID-19 upended business dealings and office work processes, putting into hyperdrive a move towards digital collaboration platforms that allow teams to streamline processes and communicate from anywhere. According to the International Data Corporation, the revenue for worldwide collaboration applications increased 32.9 percent from 2019 to 2020, reaching $22.6 billion; it's expected to become a $50.7 billion industry by 2025.

"While consumers and early adopter businesses had widely embraced collaborative applications prior to the pandemic, the market saw five years' worth of new users in the first six months of 2020," said Wayne Kurtzman, research director of social and collaboration at IDC. "This has cemented collaboration, at least to some extent, for every business, large and small."

Keep Reading Show less
Kate Silver

Kate Silver is an award-winning reporter and editor with 15-plus years of journalism experience. Based in Chicago, she specializes in feature and business reporting. Kate's reporting has appeared in the Washington Post, The Chicago Tribune, The Atlantic's CityLab, Atlas Obscura, The Telegraph and many other outlets.

Protocol | Workplace

Hybrid work is here to stay. Here’s how to do it better.

We've recovered from the COVID-19 digital collaboration whiplash. Now we must build a more intentional model for hybrid work.

This is a call to managers to understand the mundane or unwanted projects their employees face, and what work excites them.

Photo: Adobe

Ashley Still is Adobe's Senior Vice President of Digital Media – Marketing, Strategy & Global Partnerships.

When COVID-19 hit, we were forced into a fully digital mode of business operation. Overnight, we adopted available remote work tools — even if imperfect, they were the best tools for the job.

Keep Reading Show less
Ashley Still
As Senior Vice President, Digital Media – Marketing, Strategy & Global Partnerships, Ashley Still leads product marketing and business development for Adobe's flagship Creative Cloud and Document Cloud offerings. This includes iconic software brands such as Photoshop, Lightroom, Illustrator, InDesign and Acrobat. Her expanded remit now includes Adobe's strategic partnership work with technology companies globally, including Apple, Microsoft and Google; and driving Adobe's fast-growing mobile app business. Her team is also responsible for the demand generation marketing campaigns that makes Adobe the market-leader, across creative and document productivity segments. Previously she was Vice President and General Manager, Adobe Creative Cloud for Enterprise. Here her team delivered an integrated content creation, collaboration and publishing solution that securely enables brands to create exceptional design and content. Prior to this, Ashley was Senior Director of Product & Marketing for Adobe Primetime, an Internet television platform used by Comcast, Turner, NBC Sports and other global media companies to deliver TV content and dynamic advertising to any Internet device. Under Ashley's leadership, Adobe Primetime won an Emmy Award for the Adobe Pass TV-Everywhere service. Ashley joined Adobe in 2004 following her internship with the company and held several product management positions for Adobe Photoshop. Still earned her Bachelor of Arts degree from Yale University and her Masters degree from Stanford Graduate School of Business.
Protocol | Workplace

Meet the productivity app influencers

Within the realm of productivity influencing, there is a somewhat surprising sect: Creators who center their content around a specific productivity app.

People are making content and building courses based off of their favorite productivity apps.

Photos: Courtesy

This is the creators' internet. The rest of us are just living in it. We're accustomed to the scores of comedy TikTokers, beauty YouTubers and lifestyle Instagram influencers gracing our feeds. A significant portion of these creators are productivity gurus, advising their followers on how they organize their lives.

Within the realm of productivity influencing, there's a surprising sect: Creators who center their content around a specific productivity app. They're a powerful part of these apps' ecosystems, drawing users to the platform and offering helpful tips and tricks. Notion in particular has a huge influencer family, with #notion gaining millions of views on TikTok.

Keep Reading Show less
Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at

Payments Infrastructure

Fintech: Payments Infrastructure

A data-driven ranking of the most powerful players in tech — and the challengers best positioned to disrupt them.

Welcome back to the Protocol Power Index, a ranking of the most powerful companies by tech industry subsector, as well as the companies best positioned to challenge them. This time: payments infrastructure.

The payments stack has been evolving dramatically in the last decade with the rise of ecommerce and new forms of money transfers, and though it's a sector that's been touched by Midas through each of its iterations, there's somehow still space for newcomers to be minted. Payments giants have ceded coveted territory to new market entrants during the process, but they are hardly down for the count.

Keep Reading Show less
Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Latest Stories