Richard Faichney looks at the state of play in 2026 and at the power of UGC in the video games market.
Positive headline figures in 2025 signalled an industry which has returned to growth and reached new heights. This, however, obscured a more challenging reality. Many in the sector continue to struggle, while a number of outperformers have been the real winners. The industry is undergoing change and may look quite different in the next five years.
The user-generated content (UGC) space, and in particular its chief proponents, Roblox and Fortnite, have seen huge success. Is UGC set to become a major new category that drives significant future growth, not too dissimilar from the impact of mobile? Are there legal obstacles which may inhibit that growth? And, more broadly, does the success of UGC platforms in the current market offer lessons to the wider industry in how to navigate a changing environment and new competition for the attention of gamers?
State of the games industry in 2026
In recent years, it has often felt difficult to make sense of the games industry. In many respects the headline metrics look good. Worldwide revenues reached an all-time high in 2025, hitting US$195 billion, and were up almost 5x from the US$40 billion generated in 2000. This is an industry which has consistently grown over the last quarter century, with the key exception being the period between 2021-22 which saw a marked post-Covid19 correction. Revenues have returned to growth over the last three years to reach a new high, driven by growth in PC, console and mobile. However, if you ask many players in the industry – developers, publishers, investors, and gamers – the mood is less positive. Adjusting for inflation, the industry is arguably flat or even in marginal decline. Private capital investment from venture capital and private equity was down another 55% in 2025, underlining questions about the viability of games as a venture capital asset class. High profile projects continue to be cancelled and studios closed. Investment in new content as a share of industry net revenue in 2025 was at a seven-year low (annual content spend in 2022-25 was US$2.3 billion compared to US$11 billion in 2019-22). Layoffs also continued and, though these were less severe than in prior years, the loss of another 9,000 jobs brought the four-year total to 44,000. Where jobs are returning, this is often in lower cost locations (China, APAC and remote rather than North America). Despite topline revenues hitting all-time highs and significant cost-cutting, operating margins are actually lower than pre-pandemic levels in 2019 and are struggling to grow despite consumer spending rising 40% since then. What is going on?
The latest 2026 report from seasoned industry observer, Matthew Ball, in his seminal "State of Video Gaming" series offers many important insights. It identifies a number of significant trends which, notwithstanding a return to growth across the industry, have left most Western or non-Chinese developers and publishers chasing a shrinking pool of gaming revenue and facing markedly increased competition.
The rise of China
China now makes up 20% of global spend on games but accounts for 38% of global industry growth, outperforming rest of world. Within China, 84% of spend is on Chinese-made games, while Chinese developers are also performing well internationally, increasing their share of non-China markets to 24%. For non-Chinese developers and publishers to keep pace with the global growth rate, they need to win in China (which is difficult) or outperform the global market by 1.6x. In reality, however, of the US$9.7 billion in growth seen globally in 2025 around US$6.9 billion was captured by Chinese publishers, with the rest going to console platform fees and Roblox. Most Western developers and publishers basically captured none of this growth.
The (relative) decline of Western markets and crowding-out by major franchises and platform fees
The 'Major-8' markets of US, Japan, South Korea, UK, Germany, France, Canada and Italy have historically been the focus for gaming and comprised 61% of the market in 2019. Since the highs of 2020, however, these markets have, in aggregate, seen a decline in overall player count, engagement hours and/or spend, with some markets now below pre-pandemic 2019 levels. This at a time when the rate of annual content releases across PC/Console has surged but share of engagement hours continues to be dominated by older established titles like Call of Duty, EA FC, GTA, CSGO, Fortnite and Roblox – the top ten franchises across PC/Console are all over ten years old and captured almost 50% of engagement hours. It is a similar picture on mobile as existing giants leverage massive UA spend to crowd out new entrants. New titles continue to chase a flat or shrinking revenue opportunity. The increased consumer spend on console has largely gone to platform services and subscription sales (PS Plus, Nintendo Online, Xbox Live/Game Pass) – 119% of console sales growth since 2020 – while mobile game developers continue to bear the cost of up to 30% app store fees.
The attention wars: interactivity still the key weapon, but video games losing the fight?
The world has changed a fair bit since the Covid19 pandemic, when we were all stuck at home and turned to video games for solace, entertainment and social interaction. In the years since, new forms of interactive entertainment have gained viral popularity, stealing attention and consumer spend from key demographics which overlap with video games, especially 18–34-year-olds generally and men of all ages. These new competitors comprise online gambling (including iGaming, sports betting, and prediction markets), crypto, creator pornography, AI apps, and social media video. Consider the following:
- TikTok – in the US alone, consumption is up 39 million hours a day on 2020 figures (hitting 102 million hours per day) and this has not cannibalised the direct competitor market share held by YouTube, Instagram and Facebook.
- OnlyFans – in 2019, total global spend on OnlyFans was less than US$250 million but in 2025 that had risen to over US$7.5 billion, with US$5 billion in the US alone.
- Crypto – the industry has seen a resurgence under the second Trump administration, with installs of crypto trading apps at levels not seen since 2021. The value of Bitcoin also reached unprecedented heights in 2025 and, despite falling from its peak in recent months, has remained higher than at any other time since 2021.
- AI apps – usage across all aspects of the economy has surged since the release of ChatGPT4 in 2023, and adoption via consumer apps has grown exponentially.
- Gambling – legalisation, particularly in the US, has seen huge growth in online sports betting and iGaming or "real money gaming" apps, with these increasingly displacing social casino games in mobile. New start-up entrants like Polymarket and others have also driven the creation of new 'prediction markets', which see users place bets on any manner of real-world events, and so far operate largely outside normal gambling regulations.
The ready availability and mainstream coverage of these pastimes is shifting prior taboos and broadening popularity and adoption, eating into the limited free time and finite wallet of gamers.
The rise of UGC platforms
Against this backdrop, however, the performance of UGC platforms has been a standout success.
Roblox in particular has excelled. Herculean growth in recent years has seen Roblox alone capture 4.5% of all non-China consumer spend in the industry and 60% of the net growth since 2021. Those numbers are staggering. Roblox is now as big as Steam, PlayStation, and Fortnite combined in terms of engagement hours, and averaged over 150 million DAUs at the end of 2025 (up 69% in 2025 and 3x since 2020). Roblox's 13 billion average monthly engagement hours in 2025, up from 3 billion hours in 2020, is fast approaching Netflix which has been relatively flat at around 16 billion hours since 2023. The most successful UGC titles on Roblox (eg Grow a Garden, Steal a Brainrot, Brookhaven) now rival the likes of CSGO, Fortnite and all Blizzard titles for average monthly engagement hours. Creators on Roblox took home over US$1.5 billion in revenue share payouts in 2025 (+70% YoY).
Meanwhile on Fortnite Creative, as Naavik reports, Epic continued to build on the hyper growth of 2024 (which saw a near trebling of creators to 70,000 and engagement numbers in creator experiences hit 5.23 billion hours – around 36% of all Fortnite playtime). In 2025, while the number of creators remained flat, the number of creator-made game experiences more than doubled, UGC share of Fortnite playtime hit 40%, and aggregate payouts to creators on Fortnite are projected to be around US$370 million (+5% YoY). Late 2025 also saw the UGC game, Steal the Brainrot, set a new record of over a million CCU, the first Fortnite UGC game ever to do so and surpassing Epic's own Battle Royale on key weekends. Even more impressive is that Steal the Brainrot is itself an officially licensed Fortnite spinoff of the uber-popular Roblox UGC game, Steal a Brainrot.
So, what exactly is going on in UGC?
UGC refers to gaming content, from skins or other cosmetic items all the way up to fully-fledged game experiences, which have been created by gamers or "users" themselves and shared with the wider community. Consider the business model of YouTube, Instagram and TikTok, where video and photo content is created and shared by users, and often monetised by a smaller and an increasingly professionalised sub-segment, the 'creator' or 'influencer' community. In recent years, platforms like Roblox and Fortnite Creative have offered extensive suites of creator and publishing tools, revenue share incentives and the convening power of large existing audiences to fuel the growth of gaming UGC platforms. Add to this the impending culture-defining release of GTA6 – which is strongly expected to integrate UGC features along the lines of Roblox and Fortnite – and the growth of these platforms looks set to continue.
While UGC has been a feature of gaming for a number of years – with many popular franchises such as CSGO, DotA and PUBG starting life as mods of existing games – the professionalisation and platformification are more recent innovations driven largely by the success of Roblox and Fortnite. Each has taken a different approach, but both have seen success in building UGC platforms which have facilitated the release of successful UGC content and the emergence of a creator ecosystem which is attracting growing interest from investors. As InvestGame reports, in 2025 alone the highly successful Roblox UGC game, Grow a Garden, was acquired by Splitting Point Studios (a network of professional Roblox creators), while Brookhaven, another highly successful Roblox UGC game, was acquired by Voldex (a Roblox native publisher backed by a16z and Makers Fund). Meanwhile on Fortnite, Gaijin Entertainment acquired The Pit from the creator studio, Team Geerzy, the second most played Fortnite creator map of all time with over 30 billion minutes played. Taylor Wessing acted for Team Geerzy on the sale.
The future of UGC platforms
The significance of UGC in gaming looks set continue, with the current leaders Roblox and Fortnite well-positioned to grow their platforms, and new entrants poised to scale their own platforms around hugely successful game franchises (eg Take-Two Interactive and GTA6). Continued growth of UGC platforms is not guaranteed, however. They will, in addition to various macro-economic and commercial challenges, likely need to navigate a number of legal issues as they continue to scale and create an attractive environment for professional creators and investors:
- Investability – revenue certainty: payout formulas are one of the realities in current UGC economics that give many non-UGC-native investors pause. For investors who are used to the 70/30 split of mobile app stores (and possibly already chafe at those), the engagement and other sometimes esoteric payout metrics of UGC platforms can raise an eyebrow. This is a different proposition from the end-user IAP pass-through minus platform fees that many investors are used to from mobile (though both Fortnite and Roblox now also include revenue share for in-game purchases). The concentration of revenues in a single customer – the UGC platform – which ultimately controls the business relationship via terms of service underscores these concerns. Such fears were reinforced in recent years with unilateral changes to payout terms on certain platforms which prioritised new user acquisition and saw payouts to certain UGC games with stable recurring audiences shrink dramatically. If UGC platforms are to continue scaling and attracting professional creators and investors, it remains to be seen whether a move towards more contractual certainty as between platform and creator will be needed.
- Investability – the ability to sell UGC projects: on a similar note, greater clarity and certainty will be needed in platform terms of service regarding the ability of creators and UGC studios to sell their creations to third party investors. An investment is not worth much if its value cannot be effectively realised. While this ability tends to be obliquely recognised in the various terms of service and policy documents of both main UGC platforms, this is not yet at the level of clarity that many investors (and their stakeholders and lawyers) will require. Without clarity on: (i) the fact that transfers are legally permitted under terms of service; and (ii) the exact steps which need to be taken to effect a valid transfer and have this be legally recognised by the UGC platform, and possibly also the courts in the event of a dispute, the number of professional creators and investors who can commit to the space may plateau.
- Creator-owned IP and the ability to protect it effectively: the terms of service for both major UGC platforms recognise that creators own the residual intellectual property in their UGC creations (ie excluding the retained intellectual property held by the platforms in the core creative tools, engines and assets provided as part of the toolkits made available to creators). Many creators obtain formal copyright and trade mark registrations over their projects. The practical limits of this, however, are often being tested in the context of clones. Successful UGC content often finds itself the subject of widespread cloning by other creators on popular UGC platforms, driving the more sophisticated and professional creators to take protective measures in the form of takedown requests. UGC platforms will need to ensure they handle these issues well. The success and widespread adoption of social media platforms has shown that the ability to scale and maintain attractiveness to creators, investors and advertisers alike is inherently tied to how effective platforms are at adequately protecting the intellectual property of their stakeholders.
What lessons do UGC platforms offer the wider industry?
Beyond the future of UGC platforms themselves, what lessons does the success of UGC platforms offer the wider industry as it navigates a changing environment and new competition for the attention of gamers?
Roblox and Fortnite are very popular among younger GenZ and Gen Alpha gamers, many of whom are arguably less exposed to the new forms of competition which have joined the ranks of the attention wars. While the industry cannot, of course, solely target this demographic, the developer that truly understands its target demographics and designs games accordingly, taking into account specific competing demands on that group's attention, will surely be poised for future success.
Both Roblox and Fortnite are also less demanding to run in hardware terms and deprioritise high graphical fidelity. This has helped them win in emerging markets outside the Major-8. Much of Roblox's growth in 2024-25 came from APAC and rest of world (rather than North America and Europe), where lower-end devices, and faster and cheaper to develop game experiences, facilitate a business model which can succeed in markets with much lower ARPU (average revenue per user).
Faster and cheaper development also facilitates greater innovation and creativity in game creation, helping the most successful Roblox experiences find large, sticky and profitable audiences (eg Grow a Garden, Steal a Brainrot, Brookhaven). Not for Roblox creators the five-to-seven-year cycles and US$500 million budgets of AAA game development – a combination which sets up even the most successful games for failure and must surely be re-examined in a world where overall market size is barely growing. Smaller projects with tighter budgets and timelines, allowing developers to take more creative risks on novel and innovative experiences, may yet offer a compelling way to cut through the discovery challenges and draw back gamers who are spending more of their time and money on other pursuits.
Both Roblox and Fortnite have also had success in driving D2C sales channels and reducing value leakage to platform fees. Roblox D2C revenues in Q4 2025 were 30% of total revenues while aggregate platform fees consumed only 22% of gross revenue (compared to 12.7% and 27% respectively in Q4 2021). Fortnite also returned to the mobile app stores in 2025 after a five-year absence and much-publicised legal battles with Apple and Google. In addition to IAP revenue via the app stores, Epic is now able to direct users to its own payment channels and has recently reported that approximately 40% of iOS payments are now processed via Epic directly.
Looking to the future
The video game industry is undergoing a change right now and may look quite different in the next five years. A return to growth by the sector as a whole tends to obscure the realities being faced by many – not all video game businesses are created equal. Growth, in recent years, has been a zero-sum affair with a small number of winners. UGC platforms stand out as one of the biggest success stories of the last three years. It remains to be seen whether their growth trajectory can be maintained and how they will drive evolution in the industry in coming years. It seems certain, however, that the success of these platforms in the face of growing competitive pressures offers a number of lessons to those industry players brave enough to look.
