Mobile games growth cools as spending plateaus in 2025

The research indicates that while mobile gaming remains the largest segment of the global games business by user numbers, its rate of expansion has softened as players cut discretionary spending and developers face rising acquisition costs. AppMagic’s tracking of app store revenues and installs suggests that overall year-on-year growth was modest, with some leading markets posting near-flat performance after inflation is taken into account.

Industry executives and analysts point to a convergence of pressures. Smartphone markets in North America, Europe and parts of East Asia are saturated, limiting the pool of first-time players. At the same time, higher interest rates and persistent cost-of-living concerns have weighed on in-app purchases, particularly in casual and mid-core titles that rely on small but frequent transactions. Advertising-driven monetisation has also come under strain as brands tighten marketing budgets.

The data shows a widening gap between top-performing publishers and the rest of the market. A relatively small group of studios continues to command a disproportionate share of revenue, driven by long-running franchises and live-service games with loyal player bases. These titles benefit from continuous updates, seasonal events and sophisticated retention strategies that smaller developers often struggle to replicate.

By contrast, new releases face an increasingly difficult path to scale. User acquisition costs on major platforms have remained elevated, and changes to mobile operating systems over the past few years have made targeted advertising less precise. AppMagic’s figures suggest that fewer new games are breaking into the top-grossing charts, and those that do often require substantial marketing outlays or backing from established publishers.

Geographically, growth patterns diverged. Emerging markets in Latin America, the Middle East and parts of South-East Asia continued to add players, driven by expanding smartphone penetration and cheaper data plans. However, average revenue per user in these regions remains significantly lower than in mature markets, limiting their ability to offset stagnation elsewhere. In China, the world’s largest mobile games market by revenue, tighter regulatory oversight and a slower economy have kept growth subdued, despite strong engagement in approved titles.

The report also highlights shifts in player behaviour. Spending is increasingly concentrated around a narrower set of games and genres, notably role-playing games, strategy titles and social casino games, which tend to monetise more effectively over time. Casual puzzle and hyper-casual games, once engines of rapid download growth, have seen sharper declines in revenue momentum as advertising yields soften and players cycle quickly between titles.

Developers are responding by diversifying revenue streams and platforms. Cross-platform play, linking mobile titles with PC or console versions, is becoming more common as studios seek to deepen engagement and justify higher development budgets. Some publishers are investing more heavily in direct-to-consumer channels, community features and merchandising to reduce reliance on app store economics.

Mergers and acquisitions activity has remained selective rather than expansive. While major publishers continue to scout for proven studios and intellectual property, valuations have moderated compared with the peak years of 2021 and 2022. Investors are placing greater emphasis on profitability, predictable cash flows and long-term retention metrics, rather than raw download numbers.