Insights

The games industry is being reshaped along two currents: a shrinking user base and the spread of AI. Samjong KPMG frames the 2026 games industry through six key questions. The starting point is the change in the user base. Korea's game-participation rate fell to 50.2% in 2025, down 9.7 percentage points year on year, with a 2021–2025 CAGR of -8.4%. The most-cited reasons for not gaming were lack of time (44.0%), waning interest and satisfaction from watching game streams (36.0%), and the discovery of alternative leisure (34.9%).

The user base is broadening from "consumption" to "participation." In response to declining participation, game companies are widening their user base through user-generated-content (UGC) ecosystems, in which players create content themselves. Games built on well-known IP are drawing attention as a strategy that simultaneously secures a stable user base and generates incremental IP-based revenue (Questions 1 and 2).

AI cuts both ways—as opportunity and as concern. The advance of physical AI is spurring diversification, as studios extend game-development capabilities into adjacent industries such as robotics and simulation (Question 3). At the same time, concern is mounting over low-quality, mass-produced AI content—so-called "game slop." Indeed, annual new-title registrations on Steam have risen rapidly, reaching 16,491 in 2025, which is cited as intensifying the discovery burden on users (Question 4).

The global competitive landscape and cost structure are also shifting. China's games industry is accelerating its global expansion: in 2025, overseas revenue from Chinese self-developed games reached USD 20.455 billion, up 10.23% year on year (Question 5). Meanwhile, in response to rising software and hardware costs, game companies are pursuing IP-centered maximization of stable revenue, broader game accessibility through multi-platform delivery, and revenue diversification via business-model shifts toward subscriptions, the "patient gamer," and advertising (Question 6).

M&A implications. With user decline and cost inflation advancing in parallel, deal activity in the games industry is likely to reorganize around capability combination and IP acquisition. First, we expect an increase in IP-centered acquisitions to secure proven, well-known IP, and in bolt-on acquisitions of studios with stable user bases. Second, as studios diversify into adjacent fields such as physical AI and simulation, cross-domain deals that combine game-development capability with AI and robotics technology should gain momentum. Third, as China's global expansion coincides with domestic user decline, cross-border M&A to secure overseas markets, local publishing capability, and user networks is likely to expand.