Video game intellectual property (IP) has emerged as the next battleground for Hollywood as comic book movie enthusiasm begins to wane and wobble, and studios are leveraging video game assets better than ever after years of resistance and failure. Globally, 82 percent of people play video games. In the U.S., this number is 85 percent, according to GWI. Familiarity de-risks content investments in the eyes of Hollywood decision makers whose mouths
The film industry is currently enduring a painful contraction. Though a rebound in 2025 is expected, returning to pre-pandemic levels of wide release volume and revenue will be difficult. On the small screen, the number of new streaming originals is shrinking, too, as the industry desperately attempts to claw its way Wolverine-style toward consistent profitability. Between Q1 2020 and Q1 2024, the percentage of quarterly streaming original TV growth dropped from 11 percent to just 4.6 percent, according to Parrot Analytics, where I work as Senior Entertainment Industry Strategist.
In this climate, gaming arguably provides the most reliable upside under the entertainment umbrella right now. The accounting firm PwC projects total video game revenue to rise 19 percent from $262 billion in 2023 to $312 billion in 2027—that’s more than six times the record global theatrical box office ($42.5 billion) of 2019.
“Despite the recent waves of layoffs I still think gaming is a growth sector with a promising future because of the industry’s creativity, variety of offerings, cultural impact and its significance in the lives of Gen Z,” Derick Tsai, former transmedia chief at the video game company Bungie and now CEO of Magnus Rex, an IP development studio that builds franchises across games, entertainment and brands, told Observer.
Tsai argues that the industry has never offered such a diverse range of captivating experiences for players across PCs, consoles and mobile devices. Live-service multiplayer competition games such as Fortnite and League of Legends still draw hundreds of millions of monthly players. Single-player experiences such as Sony’s God of War and Horizon Zero Dawn offer immersive worlds. Older IPs such as Dungeons and Dragons and the Wizarding World are reinventing themselves with Baldur’s Gate 3 and Hogwarts Legacy, respectively. And new titles, such as the well-received Sea of Stars, can still break through.
“Content-wise, I think everyone’s very, very interested in IP right now. Something that has a built-in audience and adapting that into a narrative, whether that’s TV series, movie, or a special,” Ben Kalina, chief operating officer of Titmouse, the animation studio behind Big Mouth, Star Trek: Lower Decks and The Boys Diabolical, told Observer. “If they know that there’s an audience in something that had a life prior to a series, that’s super compelling.”
Adaptations have escaped from the graveyard of critical and commercial flops that littered the 1990s to the mid 2010s. Video game series and movies are now enjoying a genuine hot streak. Shows such as Netflix (NFLX)’s The Witcher, Castlevania and Arcane, HBO’s The Last of Us, Peacock’s Twisted Metal, Paramount+’s HALO, Amazon’s Fallout—along with movie franchises such as Sonic the Hedgehog—are, at worst, successful enough to warrant multiple installments. At best, it’s a sign of things to come.
There are six big-screen video game adaptations set to hit theaters between this August and April 2026. Margot Robbie’s production banner Lucky Chap is developing a film based on The Sims, joining a dozen more cinematic video game adaptations in various stages of development.
“There’s little evidence that the market is oversaturated with these films, and a good chance we’ll see more of them as the industry at least partly moves on from comic book superheroes,” box office guru and The Numbers founder Bruce Nash recently wrote.
Every brand is always chasing younger audiences. In order to capture the attention spans of the next generations with disposable income, entertainment media needs to align their thinking with the interests of Gen Z and Gen Alpha. That is increasingly found in the gaming world as all parents who must compete with Fortnite and Roblox for their kid’s attention can attest. According to a Deloitte study, Gen Z is more likely to spend their entertainment time on games as they see the medium as a way to express themselves and have positive interactions with their peers.
Major studios and streamers continue exploring transmedia franchise opportunities
Though Netflix is creating its own ad-platform, its collaboration with Microsoft on its ad-supported tier lays the groundwork for further partnerships. Could a bundle including the male-skewing XBox’s GamePass and the female-skewing Netflix build out a more evenly distributed customer demographic profile for both? As Disney seeks out a strategic partner for ESPN, a combination with the consumer-centric EA Sports makes sense (as some have already suggested). Where is the next great gaming and content pairing à la Illumination and Nintendo?
Streaming churn, or the rate of cancellation, has tripled in the U.S. over the last four years, according to Antenna. Premium content libraries alone are not enough to maintain viewer attention and consumer spend. Consistency in that realm may very well require added value that spans across mediums and utilities. Identifying audience interest overlap between brands—as well as complementary consumer pain points—can help pave the way to unique partnerships and bundles that activate a wider array of customers and create stickier ecosystems. (Utility bundles such as Verizon’s ad-supported Netflix plus Max collection or Amazon Prime shopping including Prime Video are basic examples).
Magnus Rex’s Tsai believes the next creative development within the convergence of Hollywood and gaming should be “a holistic, lifestyle-brand strategy for franchise development focused on gaming IP. The goal would be to create a multi-dimensional relationship with audiences where the IP becomes a part of their daily lives through a bundle of transmedia experiences.”
This starts with film, TV and animated adaptations revolving around key characters and storylines from the games to maintain audience attention after they’ve put their controllers down. The scripted format allows for greater exploration of the IP that the gaming medium may limit. This can help snare new viewers (how many of The Last of Us’ nearly 32 million average viewers actually played the game?)
Designing a cross-platform franchise that funnels interest from format to format requires a system of discovery and rewards, which aligns with natural gameplay and enhances an audience’s understanding of the IP and their connection to it. These access points should serve as both compelling standalone experiences for existing fans and organic entryways for new fans.
Star Wars has done this masterfully between its roster of live-action and animated series, its collection of novels (both canon stories and the Expanded Universe) and a series of popular video games. Interconnected experiences, such as Lucasfilm’s High Republic novels and comics setting up Disney+’s The Acolyte or the many episodic entries in the Marvel Cinematic Universe, helps to keep audiences engaged within the franchise ecosystem.
Alexei Bochenek, creative director at the animation studio Titmouse, echoes the importance of multimedia coordination moving forward, despite the logistical challenges involved. “I would like to finally see the transmedia promise fulfilled in which games and shows actually work together and happen in tandem in smart ways,” he told Observer. “I know that the lead time on developing a show and the lead time in developing a game are very complicated and you make different decisions in each medium for very legitimate reasons.”
There’s a reason Netflix is investing heavily into gaming and why Disney struck a $1.5 billion partnership with Epic Games. The goal is to provide added value to subscribers, further monetize major IP, and better compete for off-platform consumer attention. (Former Netflix CEO Reed Hastings once said the service was competing “with sleep”).
The long-awaited string of video game adaptations winning over audiences in recent years are just the first step in a larger journey. To extract the full value out of the gaming world and build a bridge to a healthier future in the process, more is needed than just good TV shows and movies. Studios must fully integrate gaming into unique packages and partnerships, multimedia development, and strategic creativity. Easier said than done, of course, but still necessary.