Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Hit the Gaming Industry
Transcript
- Lucas: If you've been following our series on falling birth rates, you know we've looked at construction, luxury watches, even the funeral industry. Today I want to talk about something that might surprise you: video games. Luna: I have to say, that does surprise me. Gaming feels like it's everywhere — more people play than ever, right? Lucas: Yes and no. Total revenue keeps growing, but the composition of who's playing is shifting fast. According to Newzoo's latest 2026 global games market report, overall revenue grew just 2.1 percent in 2025. That's the slowest rate since they started tracking it, outside of pandemic dips. And the real story is demographic: the share of active players under 18 in North America and Europe dropped by 8 percentage points over the past three years. Luna: Eight points is huge. So the youth population that gaming traditionally relied on is shrinking, and the industry doesn't have a replacement pipeline. Lucas: Exactly. And this isn't just about fewer teenagers with free time. It's about the entire economic model. Most free-to-play games monetize through microtransactions and battle passes — and those work best when you have a large, engaged base of young players who are heavy users. If that base shrinks, unit economics get squeezed. Luna: What about the big players? I know Electronic Arts has been pushing live-service games hard. Are they feeling this? Lucas: EA is a great case. Their sports franchises — Madden, FIFA now EA Sports FC — have historically been huge with younger players. In their 2025 annual report, they noted a 6 percent year-over-year decline in players under 18 for Madden. Their response has been to double down on cross-play and PC/console convergence to retain older players who have more disposable income but less time. They're also investing more in the 'ultimate team' mode, which is basically a virtual card-collecting game that appeals to an older, nostalgia-driven audience. Luna: So instead of trying to lure back teenagers, they're pivoting to extract more lifetime value from the players they already have. That makes sense if the demographic trend is structural. Lucas: Right. And Nintendo is taking a different approach. They've always targeted a broad age range, but their hardware strategy is interesting. The Switch succeeded partly because it appealed to kids and adults — you could play Zelda on your lunch break. But now, with the Switch in its seventh year, Nintendo is facing the same demographic headwind. In their last investor briefing, they mentioned that the 18-to-34 demographic now accounts for 52 percent of their user base, up from 38 percent when the Switch launched in 2017. Luna: That's a massive shift. So their core audience is literally aging with the console. Lucas: Exactly. And they're responding by leaning into hardware gimmicks that expand the definition of 'gamer' — things like the Switch Lite for portability, and rumored next-gen features that emphasize social play for families, not just kids. But the real wildcard is Roblox. Roblox's entire business model depends on a young user base — 67 percent of their daily active users are under 16, according to their 2025 10-K. And that cohort in the US is projected to shrink by 3 percent annually through 2030. Luna: That seems existential for them. If the under-16 group is their bread and butter and that group is declining, what's their plan? Lucas: They're trying to age up. They recently launched 'Roblox for Work' — an enterprise collaboration tool — and they've been pushing experiences aimed at older teens and young adults, like virtual concerts and brand activations. But it's tough. The platform's core game design is built for simple, blocky interactions that appeal to younger kids. Older players tend to migrate to more sophisticated games like Fortnite or Minecraft mods. Roblox's average user age has only moved from 12.6 to 13.2 in the past two years. Luna: That's a glacial shift. It reminds me of the challenge Facebook had — once you're branded as a platform for a certain age group, it's really hard to pivot. Lucas: And the economics amplify the problem. In 2025, Roblox's average revenue per daily active user was $21.30 in the US. But for users under 13, it was only $14.50, because they face stricter regulations around data and monetization. So as the under-13 group shrinks, the revenue mix shifts toward older users who are actually less valuable on a per-user basis because they spend less time and money. Luna: That's a double squeeze. So what about the countertrend — are there any segments of gaming that are benefiting from an aging population? Lucas: Absolutely. The 'boomer gaming' market is real. AARP reported in 2025 that players aged 50 and older now account for 35 percent of total gaming time in the US, up from 22 percent in 2020. They tend to prefer puzzle games, strategy games, and narrative-driven titles like the 'Life is Strange' series. Companies like Zynga and Playrix have capitalized on this with mobile games like 'Words With Friends' and 'Gardenscapes' — low-commitment, social, and designed for older hands and eyes. Luna: And those players are also more likely to pay upfront for a game rather than get nickel and dimed by microtransactions. That might actually be a healthier business model. Lucas: It is. The lifetime value of a 55-year-old puzzle-game player can actually exceed that of a 15-year-old battle-royale player, because the older player is less price-sensitive and churns less. Some studios are explicitly designing for that demographic — 'The Last of Us Part II' was praised for its mature story, but it also had a player base where 41 percent were over 35, according to Sony's data. Luna: If walking through the economy with us has made something click, we should mention that the way these podcasts stay ad-free is listener support. If today was useful, buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small gesture that goes a long way. And we appreciate it, genuinely. Luna: So back to the industry — are there any other sectors within gaming that are being reshaped? Lucas: One that's often overlooked is the hardware side. Console manufacturers like Sony and Microsoft are seeing longer upgrade cycles. The PlayStation 5 and Xbox Series X launched in 2020, and adoption has been slower than previous generations. Sony's 2025 annual report noted that the PS5's attach rate — games sold per console — is actually higher than the PS4's at the same point in its lifecycle, but the total number of new console buyers is down 7 percent. That suggests that the installed base is aging and buying fewer new boxes, but the ones who do buy are spending more. Luna: So it's a 'super-user' dynamic similar to what we see in streaming services. The pie isn't growing as fast, but the slice per user is bigger. Lucas: Exactly. And that has implications for game development budgets. If you have fewer but higher-spending players, you can make bigger, more expensive games — but you also have less margin for error. A flop like 'Suicide Squad: Kill the Justice League' becomes more damaging because you can't rely on a huge base of young players to give it a chance. Warner Bros. lost an estimated $200 million on that title. Luna: And on the mobile side, where the bulk of gaming revenue really is, the demographic shift is also hitting. Supercell's 'Clash of Clans' is a decade old, and its player base has aged significantly. They tried to launch a younger-skewing game called 'Squad Busters' in 2024, but it underperformed. Lucas: Right. The challenge is that younger players are not only fewer in number, but they have more entertainment options competing for their time — TikTok, YouTube Shorts, Instagram Reels. Gaming used to be the default digital pastime for teens. Now it's one of many. In a 2025 survey by Piper Sandler, teens ranked gaming as their third-favorite leisure activity, down from first in 2019. Luna: That's a massive drop in just six years. So the industry can't just wait for the next generation to fill the gap. They have to adapt to an older, more discerning audience. Lucas: And that adaptation is already happening in interesting ways. One trend is the rise of 'cozy games' — titles like 'Stardew Valley', 'Animal Crossing', and 'Disney Dreamlight Valley' that emphasize relaxation, creativity, and low stakes. These appeal disproportionately to older players, especially women over 30. Nintendo reported that 38 percent of 'Animal Crossing: New Horizons' players were over 35, which is double the average for a first-party Nintendo title. Luna: So game design itself is being reshaped by demographics. That's a deeper effect than just marketing. Lucas: Absolutely. We're seeing narrative-driven games with older protagonists — 'The Last of Us Part II' featured Ellie as a 19-year-old, but the upcoming 'Intergalactic: The Heretic Prophet' from Naughty Dog reportedly has a protagonist in her 30s. That's a direct response to a player base that wants characters they can relate to. Luna: It would be fascinating to see if the industry starts investing in games for the 50-plus crowd more seriously. There's a whole generation of gamers who grew up with Pong and Space Invaders who are now retired with time and money. Lucas: That's the opportunity. The demographic headwind is real, but it's also a tailwind for studios that can pivot. The key takeaway for me is that the gaming industry can't rely on demographic growth anymore. It has to win through engagement, not acquisition. And that means better games, smarter monetization, and a willingness to serve audiences that the industry historically ignored. Luna: And if you're an investor or a developer, that's the lens to watch: which companies are adapting their product for an older player, and which are still chasing a shrinking youth cohort. Lucas: I think that's the right frame. We'll be watching the next earnings from EA, Nintendo, and Roblox to see how these strategies play out. For now, thanks for spending time with us on this deep dive. Luna: And if you found it useful, we hope you'll consider buying a coffee — buy me a coffee dot com slash fexingo.