Full Breakdown
Video Games Losing Ground to Competing Industries
2/19/2026, 11:34:35 PM
Declining Engagement in Video Gaming
A recent report by Epyllion, led by venture capitalist Matthew Ball, highlights a significant decline in engagement within the video game industry. The report, spanning 164 pages, reveals that post-pandemic consumer spending in eight major markets—namely the USA, Japan, South Korea, the UK, Germany, France, Canada, and Italy—has dropped. Prior to the pandemic, these regions accounted for over 60% of global video game spending, but recent findings indicate a decrease in the gaming population. In the United States, between 2.5% to 4% of players have ceased gaming, while Canada reports that approximately one in six players stopped participating in video games since the pandemic began. This decline has led to an estimated $4.8 billion reduction in spending on console and PC games across these markets.
Shift in Consumer Attention
The report attributes this decline to a shift in consumer attention towards other forms of entertainment, including gambling, cryptocurrency, and adult content. For instance, TikTok usage in the U.S. has surged, with an increase of 39 million hours per day compared to pre-COVID levels. Additionally, spending on platforms like OnlyFans reached approximately $5 billion in 2025. The rise of cryptocurrency and AI applications has also drawn interest away from traditional gaming, with the latter experiencing a notable increase in installations, nearing one billion worldwide.
The Gambling Boom
Gambling has emerged as a significant competitor to video gaming. In 2025, U.S. net losses from sports betting soared to over $17 billion, a staggering 35-fold increase from 2019. Internationally, losses from gambling reached around $53 billion annually. The report also highlights the growth of iGaming, which encompasses online casinos, accounting for 21% of all U.S. video game spending. The global losses attributed to legal iGaming are estimated at $54 billion per year, indicating a substantial diversion of funds from traditional gaming.
Concerns Over Gaming Addiction
A separate study conducted by Rome's 'Sapienza' University raises concerns about the potential for gaming addiction, particularly among younger players. The research indicates that spending over 100 euros on digital goods within a six-month period can increase the risk of developing Internet Gaming Disorder by nearly tenfold. This trend is exacerbated by the industry's shift towards microtransactions and the sale of "skins" and other virtual goods, which can lead casual gamers to engage in compulsive spending behaviors akin to gambling.
Criticism of Industry Practices
Critics argue that the current business model of video games, which often promotes free-to-play structures with in-game purchases, fosters an environment conducive to addiction. The practice of buying pre-leveled game accounts further complicates the issue, as it encourages competitive behavior that can lead to increased spending and potential addiction.
Conclusion
The Epyllion report underscores a critical juncture for the video game industry as it grapples with declining engagement and competition from gambling and other digital entertainment forms. The implications of these trends raise important questions about the future of gaming and the potential risks associated with its evolving business models.
