Games industry predictions for 2025 part two: More layoffs, the future of UA, and HTML5 explodes in popularity

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It’s the new year, so that means it’s the perfect time for our Mobile Mavens — a collection of games industry experts — to give their thoughts on the year ahead. We asked:

What are your predictions for the games industry in 2025?

Check out part one and part three of this series for more predictions.

Discover more about the hottest games industry trends of the year at Pocket Gamer Connects London 2025 on January 20th to 21st.

We are cautiously optimistic that the current industry downturn will soon end, or at least significantly improve. This optimism is fueled by the emergence of new funds and increased M&A and venture activity over the past nine months compared to the previous year.

The HTML5 gaming platforms are consolidating: The bigger ones will only get bigger.

No comeback for Web3 games: Web3 games will continue to shrink and won’t achieve large-scale success this decade.

AI in game development will be efficient but limited: Despite significant investments, AI is expected to play a small yet solid role in game development.

Largest gaming titles will launch their social platforms: Roblox introduced “Party”, which allows friends to share experiences without leaving the platform, reducing reliance on third-party apps like Discord.

Similarly, HoYoverse created HoYoLAB for games like Genshin Impact, and Garena launched BOOYAH! for Free Fire.

However, past attempts by companies like Activision and Rockstar Games to create similar platforms have faced challenges, leading to their discontinuation. Despite these setbacks, integrating social features within gaming ecosystems is expected to continue.

As much as I dislike saying it, I anticipate even more layoffs and studio closures in the near future. Larger companies seem to be handling these actions as quietly and discreetly as possible, yet the signals reaching us are undeniably concerning.

On the other hand, studios themselves have become far more cautious and attuned to the changing dynamics of the market. They’re focused on creating hits that are in high demand and guaranteed to resonate with audiences. Watching this shift in mindset has been fascinating.

Beyond that, I remain optimistic about the future of skill-based gaming. The genre is still evolving, and it needs a few standout hits to establish its final form. Once that happens, I believe its potential will become undeniable, paving the way for a major breakthrough in the market.

Finally, games and applications integrated into platforms like Telegram are gaining significant traction. This is a promising and in-demand direction.

Much like web3 products, these innovations have the potential to coexist alongside traditional, more classical gaming experiences. They open up new possibilities while complementing the established gaming landscape, demonstrating that there’s room for diverse approaches within the industry.

In 2025, I predict that the potential ban of TikTok in the US will ripple far beyond the social space, creating broader implications for the games industry.

This kind of regulatory action surfaces how geopolitical factors can abruptly impact both the platforms themselves and the studio ecosystems they support.

Developers are both cognisant and proactive, and likely to begin protecting their games by migrating off providers that are owned by or housed within the regions that pose the same risks for platforms based in Western countries.

Conversations like these are already being brought to us and rapidly increasing in number.

Chinese games will continue to gain popularity into the global market, further solidifying their presence.

The majority of top earners in mobile app stores over the past decade will continue to dominate as top earners.

For 2025, I see more publishers moving to extend their popular franchises either cross-platform or with special editions. 

Community will become even more important and I expect to see developers and publishers double down on this either via Discord or gamers social networks like Gameram, who have developer accounts that they use to tap into their self-identified communities. 

The passion of gamers will also be reflected in UGC and modding – I expect to see platforms like Mod.io grow and younger people drive UGC to make it part of the norm. 

AI hype/panic will settle as we see established AI platforms like Ludo.ai for games design or Alison.ai for A/B testing ad creatives become part of every studio’s SaaS toolset.

Finally with the demand for more accessibility being driven by emerging markets I see HTML5 games becoming increasingly popular.

Finally, a hope rather than a prediction, I hope that the games industry starts talking more positively about itself – we need positive news stories to move us out of the downward spiral and breed more success in this amazing industry.

In 2025, I believe costs of discovery for mobile games will continue to rise and only the publishers that commit to a long-term investment strategy and venture out of their comfort zone will be able to stay ahead of the game.

Leveraging first-party data and allocating sufficient testing budget to try new networks and marketing strategies will be key to succeed in this increasingly challenging environment.

AppLovin spend will become a challenge for small to mid-size publishers

AppLovin UA spend will become more difficult to sustain for small to mid-size publishers. The ad network has gained a tremendous amount of share of wallet in the past few years for the majority of game publishers running UA.

In the last two quarters, Applovin has been vocal about its ambitions to become a new incremental channel for e-commerce advertisers alongside Meta. Early measurement studies are showing that it’s on a good trajectory to crack it which is great for them, e-commerce advertisers and app publishers monetising with MAX.

On the other side, it is more worrying for small to mid-size game developers that will face a stronger competitive environment with higher CPMs that they can’t afford. Small to mid-size studios will have to look for alternative solutions to keep running UA profitably for their game.

Segmentation strategies will be more widely adopted

Segmentation strategies are complicated and have historically been implemented by the large studios with lots of data and resources. I predict segmentation strategies will become more “mainstream” because acquiring engaged and paying users has become increasingly challenging, it now justifies the investment in-house or with a third-party.

Bringing a unique experience to their players based on their behavioural data (creative, ad placement, ad load, in-game events optimisation) and their source of acquisition (organic vs install vs ROAS campaigns) will make the user journey more relevant and consequently help increase retention and monetisation.

Increased investments on in-house technology to regain competitive advantage

To increase margins and revenue, publishers will focus on enhancing their tech stacks. Open-source mediations like X3M and Chartboost will gain traction, offering transparency and control over inventory.

Publishers will also develop in-house attribution mechanisms to complement SKAN and probabilistic measurement from MMPs.

The duopoly of Apple’s App Store and Google Play will face significant challenges from third-party app stores in 2025.

Regulatory pressures, such as the European Union’s Digital Markets Act, and similar mounting ones in the US and Australia, will accelerate the adoption of alternative distribution channels.

This shift will empower developers and consumers by offering more choices, reducing app store fees and driving reinvestment, and fostering innovation in the mobile ecosystem.