No kings left in gaming
Xbox, EA, and the myth of being too big to fail
Fixing my bike has been the best decision I’ve made so far in 2025.
My baby-blue 1973 Schwinn Speedster is rusty and weighs about as much as I do. But it gets me where I need to go throughout Brooklyn, especially now that the big kid is in middle school. New York City, I’m happy to report, is increasingly bike-friendly.
Unlike many of the devices I use every day, it’s a technology I actually understand.
Which is why I was surprised to see bicycles listed in an op-ed by my colleague Jonathan Haidt. His argument, which I support, is that smartphone use poses a threat to the mental health of children and young adults. But in building his case, he also found that 9% of parents wish bicycles “had never been invented.”
That, to a Dutchman, is a wild take.
On the opposite end of the spectrum is Steve Jobs’ famous line that computers are a “bicycle for the mind.” It’s an elegant metaphor and a great piece of marketing.
But this summer, I just need a bicycle for my commute. And my sanity.
On to this week’s update.
BIG READ: No kings left in gaming
At long last, the overall industry’s decline has started to catch up with the big players. Having remained largely insulated from the overall contraction in consumer spending since the pandemic, the top of the video games market now, too, faces declining growth and with it some hard choices.
Last week I outlined the different strategic approaches across the console sector. With as many strategies as participants, it is clear that console gaming is well on its way to transition into something new.
But such bold plans come with inevitable sacrifices.
Over the past few weeks, it has kept raining layoffs among the top echelon of game makers. Sony confirmed cutting around a third of the staff at its Bend Studio, most recently known for first-party title Days Gone, following the cancellation of an unannounced live service game.
Similarly, Electronic Arts (EA), the largest American games publisher, let go off several hundred employees recently, including at one of its more famous studios, Respawn, after reporting its first decline since the pandemic. For its fiscal year 2025, EA reported $7.5 billion in net revenue, down 1.3% from the previous year, with live services accounting for the majority of earnings, marking a slight decline from $7.6 billion in 2024 but still above 2023’s $7.4 billion. It also cancelled its planned Black Panther game.
And this week, Microsoft announced “major” job cuts at its gaming division as “managers within Xbox are expecting substantial cuts across the entire group." The news comes in the wake of its recently announced handheld, an expanded strategic partnership with AMD, and the release of its collaboration with Team Zuckerberg for the Meta Quest 3S Xbox Edition. Microsoft is deprioritizing its proprietary hardware strategy (effectively abandoning its HoloLens consumer strategy) in lieu of a software ecosystem approach.
What makes Microsoft’s move different isn’t that it was unexpected (it wasn't) but that it underscores a more fundamental shift: the end of growth among the industry's giants.
Tracking the annual revenue change of the top ten video game publishers and comparing it to all other publishers from 2016 to 2024 highlights a consistent trend: the largest firms outpaced the rest of the industry in most years, particularly during the pandemic.
For several years, revenue growth has been comparatively similar across all firms. In 2020, revenues surged across the board, with the top 10 growing 24% and smaller publishers an even more dramatic 30%. But the boom was short-lived. By 2021, growth slowed significantly. The top ten game companies still posted a 20% increase as a result of myriad acquisitions, while smaller publishers cooled off to just 5%.
The real divergence emerged post-pandemic. In 2022, the smaller publishers dipped into negative territory (-5%) while the majors essentially flatlined. That trend reversed in 2023, with top firms rebounding to 10% growth, likely fueled by consolidation and franchise strength, while others slumped by -14%. In 2024, the gap narrows again, but growth remains modest. The takeaway: scale and IP depth provided the top 10 with resilience, while smaller firms struggled to maintain momentum in a post-COVID, post-peak world.
In a way, the drop in growth among the largest firms signals a return to the mean. The cyclical nature of the industry—long masked by cheap capital and scale-based strategies—is once again revealing its structural logic. We are entering a new phase where distribution innovation takes precedence over content accumulation, and efficiency beats excess.
The Play Pendulum swings back. The era of expansion through acquisition and inflated production budgets is giving way to more deliberate, sustainable models. While smaller studios already absorbed the market correction in 2023, the major firms are only now reckoning with the delayed consequences of their scale. The industry’s center of gravity is shifting, not toward decline, but toward recalibration.
This isn’t the end of big gaming. But it is the end of assuming that size alone is a moat.
NEWS
Pearl Abyss looking to sell CCP Games
South Korean video game developer Pearl Abyss is reportedly preparing to divest CCP Games, the Icelandic studio behind EVE Online, in a strategic move to streamline operations and refocus on its core properties like Crimson Desert and DokeV. While EVE Online still generates an estimated $60 million annually and boasts a loyal niche player base, CCP’s broader product experimentation across virtual reality and the first-person shooter genre has failed to deliver comparable commercial success.
Even so, despite its niche appeal, EVE Online commands one of the most enduring and respected brands in online gaming, synonymous with player-driven economies, deep strategy, and emergent political drama. Its reputation as the “spreadsheets in space” MMO has become a badge of honor, fostering a highly engaged and loyal player base that values complexity and persistence over casual accessibility. With a third-party underwriter already managing the sale, CCP represents a valuable if mature asset, suited more for firms seeking operationally stable, cash-generative MMOs than for those chasing breakout growth.
Given that EVE Online has stabilized at around 400,000 subscribers, the game’s future is less about expansion and more about optimization. Rising in-game costs, as evident in CCP’s own economic reports, have made the MMO even more inaccessible to newcomers, further entrenching its existing community rather than expanding it. For a buyer, especially a private equity firm or an MMO-savvy publisher, the strategic opportunity lies in leveraging CCP’s deep operational expertise while driving efficiencies or cross-platform synergies. However, the challenge remains: EVE Online is a durable but difficult-to-scale property, best suited to owners comfortable with steady-state revenues and high player retention rather than breakout audience growth.
Switch 2 sales continue to break records
According to Famitsu data, the Nintendo Switch 2 sold 947,931 units in its first week in Japan (June 2–8), with launch title Mario Kart World selling 782,566 physical copies during the same period.
It marks nearly triple the performance of the original Switch, which sold 333,000 units in its debut week, and significantly surpasses the 284,000 first-week sales of Mario Kart 8 Deluxe. Notably, the 948,000 figure excludes sales through the My Nintendo Store, suggesting total sell-through may exceed 1.1 million units. Nintendo’s decision to release a Japan-exclusive version priced at 49,980 yen (around $350)—far below the $450+ price in other markets—underscores the strategic importance of its home market (via Niko Partners).
PLAY/PASS
Play. This week, NYC’s Parsons School of Design is hosting the 2025 Games for Change Festival. It’s exciting to see how much it has grown!
Pass. It is way too hot in New York right now (100F/38C). I’ll complain about something next week.
MORE, PLEASE
If you thought this was useful, you should consider reading “Console’s brand new death,” which explains how platform holders are redefining consoles not as hardware, but as distribution ecosystems. Also worth your time is an analysis of how the post-Epic v. Apple landscape is shifting power—and profit margins—away from app stores and back to developers in “Mobile gaming’s $4.1 billion reboot.”
My kids were both biking without training wheels by 4. Bikes rule.