This piece reviews the major themes from the 2025 Game Developer Conference (GDC), which included the rise of AI, user-generated content, and the vexed question of how to unlock faster growth in the games market.
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Summary
The Game Developers Conference (GDC) was held in San Francisco on March 17–21. Omdia’s Games team attended the show and, in this piece, reflect on the major themes, which include the rise of AI, user-generated content, and the vexed question of how to unlock faster growth in the games market.
An industry hunting for growth
The 2025 edition of GDC was widely considered by attendees to be a somewhat quieter affair than previous years. The slightly lower-key show was undoubtedly downstream of the layoffs and cost-cutting that have plagued the games industry in recent years. GDC tends to be reflective of the state of the industry at any given point in time, and there was undoubtedly a sense of a market in transition in San Francisco this year.
The rate of job losses has slowed recently, which has helped to somewhat improve the mood in the industry, but the market has yet to reach a true recovery phase. Growth has resumed, with Omdia finding that overall games content and service revenue (including advertising) increased a modest 0.6% in 2024, with a much healthier 7.9% forecast for 2025, boosted by the launch of the Switch 2 and Grand Theft Auto VI. But these are one-off factors, and the longer-term trend is still far off the rapid growth rates to which the games market became accustomed during the mobile gaming boom of the 2010s. As a result, the search is now on for the next great innovation or platform shift to move the market forward.
AI comes down to Earth
One of the most obvious candidates for a structural growth driver is AI, which has yet to be deployed at any serious scale in the games industry. But while AI was indeed a major topic of conversation at GDC 2025, the general outlook was cautious. Many game developers remain deeply skeptical of the technology due to concerns about the impact on jobs, the ethical use of training data, and doubts about the quality of AI-generated material. Even among AI enthusiasts, however, there is an increasing acceptance that it will take time for the technology to deliver results.
There was excitement in some quarters earlier this year about the possibility of whole games being generated by AI models, but few in game development believe this will be a viable prospect any time soon. Moreover, even more modest applications of real-time AI to generate game content on the fly mostly look unrealistic in the short term as well, hamstrung by hardware and cost limitations. On the other hand, the use of AI in production contexts—to generate assets, or for QA testing, for instance—appears far more realistic.
Numerous companies showcasing AI tools of this sort were visible on the GDC expo floor, though the mostly modest booths and displays were a reminder that these companies, perhaps surprisingly, are not backed with anything like the funding enjoyed by the previous wave of (now mostly failed) web3 startups. Vendors and investors alike now increasingly regard the rollout of AI as a long-term project. General-purpose AI models are being translated into tools to address specific developer needs and, in turn, get embedded into workflows—an approach that will take time but is eventually far more likely to convince game studios of the value of their products.
UGC emerges as a key industry hope for elusive growth
As recent Omdia analysis makes clear, in the broader world of media and entertainment, only social video is enjoying an increasing grip on consumer time and attention, with advertising revenue from this medium set to rise over 53% between 2025 and 2028. This is in large part due to the vast wave of recent innovation in user-generated content (UGC) enabled by platforms like TikTok. The progress of UGC in games over the same time period suffers in comparison—and the consequent rise of social video is, in turn, a contributor to the testing times that the industry is currently experiencing.
This status quo may yet change, and many hope it will. UGC was the most frequently cited next great hope for growth among those Omdia spoke to at GDC. Advancements in generative AI (GenAI) tools are expected to lower the friction required for the creation of UGC within individual games while also paving the way for platforms that host bitesize user-created games to echo China’s Minigame boom.
The expected addition of mouse-like functionality in Nintendo’s upcoming Switch 2 console suggests that Nintendo is preparing to capitalize on this trend. For publishers of live service games, establishing a healthy network of UGC creators is not just a monetization opportunity but a means of supplementing and even replacing a frequent cadence of content updates.
The search for growth drivers
Perhaps the one theme uniting the various hot topics at GDC is the search for something that can truly produce a step change in growth for the games industry. There are numerous candidates on the table. Some believe that AI has the potential to revolutionize the economics of game development, or even eventually to create whole new categories of games. Others feel that UGC can unlock the creative energies that have powered the growth of social video. Still others hope that hardware advances allowing AAA experiences on mobile could be transformative, aided by new devices and smartphone controller peripherals such as those by Backbone and an increasingly crowded field of competitors.
Not all of these ideas are new. Some in the industry remain adamant that VR and XR might yet deliver on their early promise, pointing out that they are among the few game platforms not suffering from a crush of content. Another strand of thinking, meanwhile, argues that game companies need to find ways of applying their expertise or technology in other, faster-growing industries in the broader world of entertainment and perhaps beyond.
None of these ideas is entirely implausible, and each has credible supporters. Equally, however, there is still no widespread consensus in the industry about which, if any, can truly boost the growth trajectory of the games market. In the absence of a proven structural growth driver, the games industry is likely to remain in the relatively subdued and cautious mood seen at GDC this year while the search goes on.
Appendix
Further reading
Metaverse Games Benchmark – 2024 (November 2024)
AI in the Games Industry: State of the Market (October 2024)
“How handheld gaming has become more complex – and more lucrative” (April 2024)
Author
Liam Deane, Principal Analyst, Games Tech
James McWhirter, Principal Analyst, Games
Dom Tait, Research Director, Games, Music, and Audio
