Bernstein says video game shake-out favors giants as $220B market consolidates

Bernstein estimates the global gaming market will generate $220 billion in 2026, with consolidation favoring large publishers as rising development costs squeeze smaller studios.

"The shake-out is strengthening established developers with successful intellectual property and large player communities," Robin Zhu, analyst at Bernstein, said.

The $220 billion forecast represents 0.7% growth, slowing from 4.8% in 2025. PC gaming was identified as the strongest growth segment, supported by hardware advances and blockbuster releases. Zhu highlighted Asian gaming groups including Tencent, NetEase, Nintendo, Capcom and Konami as preferred investments, citing lower development costs and improving productivity versus Western rivals.

The November launch of Grand Theft Auto VI, published by Take-Two Interactive, is expected to be one of the biggest game launches in history. Rival publishers have crowded release schedules into September to avoid competing directly with the title, Zhu said. Pre-orders for GTA VI begin June 25.

Bernstein dismissed concerns that artificial intelligence will materially disrupt the industry's economics, arguing that successful franchises, creative storytelling and engaged player communities remain the key drivers of long-term value creation.

The broker's note comes as the industry navigates headwinds including a DRAM shortage that has pushed up hardware costs. Console gaming revenue reached $44.7 billion in 2025, up 2.8% year-on-year, while PC gaming grew 12% to $43.6 billion, according to Newzoo data cited by Bernstein. Mobile gaming remained the largest segment at $113.8 billion.

Studio closures and restructuring programs across the industry are reducing competition, Bernstein said, strengthening the position of developers with established franchises. Japanese, Chinese and Korean developers continue to benefit from structural cost advantages, Zhu added.

The consolidation thesis suggests investors should favor large-cap publishers with strong IP portfolios over smaller developers facing margin pressure. The GTA VI launch on Nov. 19 will serve as the sector's next major test of consumer demand and pricing power.

This article is for informational purposes only and does not constitute investment advice.