The Business of Video Games Part 1: Debunking the Ex-Growth Canard – Ahead of the Curve® | TD Securities

By: Doug Creutz, Mei Lun Quach

Jul. 30, 2025 – 2 minutes

Overview:

• Investors may be concerned that the video game industry’s best days are behind it following a few years of sluggish growth after the COVID-19-driven boom,
• As a ‘steelman’ case for impaired growth, we use a deck by an industry advisor and expect a 6.3% industry compound annual growth rate (CAGR) through 2027 versus the potential consensus of around 3%–4%.
• We also include a detailed analysis of who plays video games, where and on which platforms, as well as market shares by video game genre and economic model.

The TD Cowen Insight

This is the first of a four-part series that will ultimately cover the business of video games. In this part, we focus on the characteristics of the video game software market. We address potential investor concerns that the video games business has gone ‘ex-growth’ whereas we expect industry growth of 6.3% between 2024 and 2027.

Our Thesis

The video game industry, which we have segmented into console, mobile, PC (the latter two excluding China) and the Chinese market could grow at a 6.3% CAGR between 2024 and 2027. Generally speaking, we expect video games to remain an above-Gross Domestic Product (GDP) growth industry for the foreseeable future.

What is Proprietary?

Our work includes a thorough analysis of the who, where, what and how of consumer engagement with video games. This includes a detailed examination of console and mobile genre share and an analysis of how players are changing their play patterns as new economic models emerge.

Financial and Industry Model Implications

We address a ‘steelman’ case for video games being ex-growth. Our industry outlook is consistent with very gradually slowing growth against the industry’s approximate 8% CAGR over the past 35 years. We expect the leading companies to continue benefitting from industry expansion.

What to Watch

We expect the launches of an updated console and iconic video game, along with continued growth in mobile, will remind investors that video game companies — particularly those with strong creative cultures — can be attractive long-term investments and not just trades around product cycle catalysts.

Subscribing clients can read the full report, The Business Of Video Games, Part 1: Market Size And Shape – Ahead Of The Curve, on the TD One Portal