What’s next for the videogame industry?

As we have written about in recent months, the videogame industry is in a bit of turmoil right now, stemming from financial and geopolitical instability. But with risk and uncertainty also comes opportunity, and while we don’t know what will happen, the industry will undoubtedly rise from the ashes. It may look different from the past few years and the balance of power may shift, but it will be stronger than ever.

To get a sense of what the future may have in store, we spoke to Lawyer.se Founder Tommy Persson, who has worked as a videogame lawyer for over 25 years.

In his time in the videogame industry, he’s seen four recessions or periods of financial downturn: In the early 2000s when tech-heavy NASDAQ market crashed, which caused layoffs and bankruptcies; the global financial crisis of 2008; a downturn in 2017-2018 which forced some videogame studios to cancel their projects; and since 2023, high interest rates have scared many publishers and venture capitalists away from acquiring studios and finance large projects.

But Tommy thinks that what will come out of this most recent downturn is a shift in priorities, where smaller projects with less financial risk will become more popular, while big AAA games will become less common (unless they are part of a well-established IPs, like GTA, Helldivers, The Elder Scrolls, etc.).

“Big games made by teams of a hundred people over three, four, five years are really high-risk,” Tommy said, adding that many things can impact the success of a game, including such fickle things as trends. “[Publishers] are canceling more and more games, because they don’t believe in them.”

The winners will be the studios with 5-25 members. Tommy also believes that some full-time employees will be replaced with consultants who are experts in things like motion capture, music production and animation, which means that those capable of driving own projects and contribute when needed on others’ projects will probably see greater success.

“Spend $1 million per game on ten games—one of them will probably succeed enough to make it worth it.” Tommy said.

He also believes that creative solutions to make a game profitable, like utilizing new technologies or combining a game with other forms of media, like film.

“That’s the future—cool games on new platforms.”