The once-booming video game industry has entered a period of maturation.

Recent analysis from Matthew Ball shows that in leading markets like the United States, the number of active players has dipped, total hours spent gaming have declined, and revenue growth has failed to keep pace with inflation — while costs have often surpassed it.

Worldwide Consumer Spending on Video Game — *Source: Matthew Ball*

We can blame short-form videos for consuming growing time-share, but when growth halts, it’s important to zoom out and recognize the industry isn’t quite as monotonous as the overall growth rates may indicate.

There are still pockets of opportunity, and there are still examples where creative teams are finding new players and unlocking new playtime.

In today’s issue, we take a look at three corners of the market that are bucking the trend and wrap up with some big picture thoughts.

The Rise of Voice Games

Voice games have been around for years in various experimental forms, but they were often dismissed as novelty acts — simple trivia, choose-your-own-adventure stories, or Alexa "skills" that felt more like demos than full products. With emergent companies like Volley, which has built an expanding catalog of voice-driven hits, that perception is now changing.

Volley was founded in 2016 by Max Child and James Wilsterman, who saw an opportunity in the popularity of smart speakers like Amazon Echo and Google Home. They recognized that voice-controlled platforms offered a new, more accessible and more communal way to engage users. Early on, Volley launched casual quiz titles, and its big breakout came with Song Quiz, a music trivia game that quickly became a top skill on Amazon's Alexa in 2018-19.

Recent estimates from Voicebot.ai suggest that over half of U.S. households now have a voice assistant or smart speaker, and, of course, there’s a dizzying number of devices capable of running voice-activated apps. Not only are these devices near-ubiquitous, but they provide inherent accessibility — entire families can easily play together just by speaking out loud.

Us Smart Speaker — *Source: Voicebot.ai*

Volley expanded its offerings beyond devices like Alexa to TV platforms like Roku and Amazon’s Fire TV, plus other device-agnostic web interfaces. Competitors like Doppio and Drivetime have also emerged, targeting commuters and casual gamers with voice-based story games and talk-show-style experiences.

Investors have taken note of Volley’s rapid ascent. Last year, the company secured $55M in venture financing led by Lightspeed. This infusion has allowed Volley to further explore AI-driven enhancements, and license well-known IP for new titles.

Naturally, a new form factor like voice has its own quirks — discoverability issues, reliance on big platforms, tough retention, evolving monetization — but as our devices become even better at understanding what we want, new voice experiences, including games, will surely grow further. For more in-depth insight on Volley, check out our fascinating interview with Max Child from last year.

The Rise of Accessibility

According to the World Health Organization, over one billion people worldwide (over 15% of the world’s population) live with a disability. Fortunately, efforts across the industry are enabling people who wouldn’t be able to play (or play as much) to spend more time with games.

The business case has become clearer too. A 2024 Nielsen survey found that games advertising robust accessibility features reported higher day-one sales among players who identified as having a disability.

Gamers with a condition or impairment — *Source: Scope*

Big players like Microsoft, Sony, and Nintendo have all been investing heavily in accessibility; Microsoft’s adaptive controller was one of the earliest high-profile examples, and Sony followed suit with improved accessibility settings in PlayStation’s OS.

Major titles like The Last of Us Part II also introduced an unprecedented array of options for vision, hearing, and motor impairments. Meanwhile, Nintendo has been increasingly incorporating simplified control schemes and customizable difficulty settings in its first-party games.

Of course, there are a slew of startups that have created new technologies to tackle more types of disabilities and widen the field of play:

PlayAbility: Provides consulting and tools to help developers embed accessibility features from day one.
Zyrobotics: Games that help kids learn to code, including with tablet controllers and interactive apps for kids with motor-skill or cognitive challenges.
Evil Controllers: Modifies mainstream controllers for players with limited mobility.
EyeGaze Games: Uses eye-tracking to let individuals with severe mobility impairments play browser-based board games.
WalkinVR: Adapts virtual reality environments through real-time software adjustments.
Neuralink: More futuristic, but the team aims to develop brain-computer interfaces that lets people control computers through thought (including playing games).

Lastly, similar to voice games, it’s important to remember accessibility can mean more than helping those with disabilities. Breaking down any barriers to playing — whether solo or as a group — is worth exploring.

For instance, Sunderfolk, the upcoming game being published by Dreamhaven, enables a new form of TV couch co-op by letting each player use their phones as their controllers. Check out the trailer for more details.

Innovations here might unlock pockets of engagement that otherwise wouldn’t exist, and for companies struggling with growth, those pockets are worth thinking about. To learn more on this topic, read our deeper thoughts or listen to our podcast episode.

The (Re-)Rise of VR Arcades

In the early days of VR, a few smart entrepreneurs had the realization that VR wouldn’t succeed at scale as a personal device, but it could make for fun, novel group experiences.

Zero Latency, founded in 2014 in Australia, and The Void, launched in 2015 in the U.S., were among the first to offer location-based, free-roaming VR experiences. This allowed groups to walk around large physical spaces while immersed in virtual worlds.

As VR hardware became better and more affordable — and the franchise model pioneered by the likes of Sandbox VR took hold — the trend accelerated. By 2018, VR arcades ranging from small storefronts to multiroom "VR theme parks" were popping up across North America, Europe, and Asia.

Of course, COVID COVID had a huge impact on this business. The Void shuttered multiple locations amid financial struggles; other companies paused expansions or pivoted to private bookings and enhanced sanitation protocols while hoping revenue rebounded.

Today, COVID is very much in the rearview mirror, and growth has returned. Just last year, Sandbox VR reported it had opened its 50th location, sold 1.2M tickets in 2023 (+33% year-over-year), and confirmed that its 37 corporate locations grossed on average $1.9M annually per store. It also partnered with Hollywood studios on licensed experiences and said it plans on opening 280 new franchise locations over the next three to four years. This is despite generally high setup costs, complex maintenance, frequent content updates, and the challenges that come with operating real estate.

While perhaps not needle-moving for the entire game industry, this segment continues to grow at double-digit rates. By thinking differently about how people should consume games, these companies have created over $1B in entirely new annual revenue. And there's clearly more room for innovation: What about AR-enhanced escape rooms or laser tag?

Why Does This Matter?

Even if the game industry isn’t returning to material growth anytime soon, it’s important to recognize there are still pockets of innovation that can expand what the industry is and whom it serves.

When scrappy teams create new technologies, game types, and circumstances that involve or create more types of gamers, it may not immediately add several billions in revenue, but it does create the foundations for companies that wouldn’t have existed otherwise.

These three examples just scratch the surface, and we could also easily cover fantasy sports, the evolving intersection of toys and games, games in cars, and more. If you’re an entrepreneur looking to start a new business, why not take a moment to think a little less about jumping into the red ocean when you can pioneer something new and exciting instead?

While there’s certainly opportunity for traditional game teams to make their mark, perhaps there’s never been a better time to zag rather than zig and redefine what play can be in other ways.

A Word from Our Sponsor: Lightspeed

Partnering with Extraordinary Founders in Gaming & Interactive Media

Lightspeed is a globally leading venture capital firm across the U.S., Europe, and Asia with over $29B under management. Over the past 20 years, Lightspeed has partnered with hundreds of exceptional entrepreneurs and helped build companies to achieve 200+ IPOs and acquisitions.

With its dedicated gaming practice, Lightspeed Gaming, the firm invests from an over $6.5B pool of early and growth-stage capital – by far the largest set of funds in the sector. Lightspeed's team combines deep gaming, consumer, and enterprise technology expertise with a global multistage investment platform and a culture that truly puts founders first.

Focus areas are game studios (PC, console, mobile), interactive media platforms (social, UGC, distribution, streaming), and related technologies (AI/ML, 3D, engines, game development, AR/VR).

Selected investments include Epic Games, Inworld AI, Gardens, and The Believer Company – as well as designers and producers who led the creation of titles like Fortnite, Call of Duty, League of Legends, Wild Rift, Apex Legends, Overwatch, Valorant, StarCraft II, and Warcraft III.

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