The era of double-digit growth in games is over. However, if companies start thinking outside of traditional business models, there are still ways to expand the market.
At GamesBeat Summit 2025 in Los Angeles, behavioral games economists Catalin Alexandru, Wedbush Securities Manageing Director Michael Pachter, and Rhys Elliott, market research head at Alinea Analytics, had a lively discussion about how to find industry plight and new opportunities for growth.
Pachter compared the current state of the gaming industry to where the film and television industry were when the film and television industry in the 1960s could only watch programming in theaters and television. These days, there are plenty of options to watch that content, whether you use an on-demand service, a streaming subscription, or YouTube.
“There are many ways to access this type of content. I think the gaming industry is trying to embark on a new way to access games, and I think that’s supported by advertising,” says Pachter. “So we’re not yet in the ad-supported business model that works in the game yet, but I think it’s coming. And when that happens, you’ll expand the market even further.”
He brought up how successful Netflix has been with adding ad-supported plans. He said Microsoft should consider similar things and offer an ad-supported version of the Xbox Game Pass at a cheaper price. If the company offers an ad support plan that costs $7.99 a month, he could theorize and attract double subscribers.
He also didn’t understand why Microsoft hadn’t added its mobile games to its service yet. He wants to see a future in which all these forms of entertainment (games, films, television) can be found on one platform.
“But why is Candy Crush not on the Game Pass? Why is Diablo’s immortality not on the Game Pass? Why is Call of Duty: Mobile not on the Game Pass? That’s because no one at Microsoft is thinking about it.
And if GamePath doesn’t move into this all-in-one future, he believes Netflix will.
“[Microsoft] You can’t do this if you continue to run your business the way that the same old man has always done it. They need young new punks who think differently, and if they think differently, they have the opportunity to win. And to be honest, I think Netflix will actually win,” says Pachter.
Netflix has steadily acquired studios to streaming services in recent years and added games, but has yet to be immersed in consoles and PC games. If you can add these types of games to the platform using a developer-friendly revenue sharing model, I think he’ll have a real shot of expanding the market and becoming the next huge player.
However, the subscription business model is not without obstacles. Unlike Spotify and Netflix, Elliott pointed out that most consumers can only play one or two games in the same time frame, simply because they can consume a lot of songs and videos in a month. And it doesn’t take into account other factors like free games that steal some of that free time.
Alexandru said that the game pass model “already proves not a silver bullet” because many people have a big backlog on Steam and other platforms. Also, other built-in features like Steam Kurators and Friends Lists make it difficult to imagine many people switching to Netflix even if developers gain a share of revenue.
“This is something you have to overcome to get a flywheel on Netflix, and once you get a flywheel on Netflix, you just have to move that monopoly from A to B,” says Alexandru.
Check out the full video for more thoughts on the hour-long panel, including the future of live service games, the creeping budget in Triple A, and the impact that Nintendo Switch 2 and Grand Theft Auto VI will have on the industry, and more.
