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The games industry is in a strange place. Thousands of developers have lost their jobs, studios have closed, once-reliable business models are faltering, and publishers are discovering that there may not be enough hours in the day (or money in players’ wallets) for every game to become the next forever game. Riot Games co-founder Marc Merrill doesn’t deny that upheaval. Speaking at PAX West in Seattle this weekend, however, Merrill argued that the industry isn’t shrinking so much as undergoing a massive correction; one ultimately being directed by the people playing the games.

"I see a really bright future, but I see an industry that is going through some structural changes, not dissimilar, but on a much bigger scale, compared to the sort of packaged goods-to-service transition, or sort of pre-internet," Merrill says at PAX West. "There is a big inflection point, but it's happening across a variety of different vectors simultaneously. Platforms, formats, AI... a bunch of large overinvestment around live service, etc., but it's all being recalibrated."

And who is doing that recalibrating? Players.

Players, not publishers, will decide what gaming’s next era looks like

“The beautiful thing about that is that it’s being recalibrated because players are voting with their time and wallets, and we don’t want this stuff,” Merrill continues. “So the stuff that is working is where everybody is spending their time.”

And it's the companies, Merrill says, that keep attuned to what players want (and will want) rather than what the companies want them that are the ones able to make it through these volatile times.

“It’s on us, our teams, and the whole indie scene to find ways to make it better,” he says. “To find those niches, to find those incredible games.”

Merrill said he remains “incredibly optimistic,” in large part because demand for interactive entertainment shows no signs of a downturn. The industry’s present problems aren’t caused by people suddenly deciding they don’t like video games; they are caused by a mismatch between what some companies chose to make and what players actually wanted to play.

“It’s not like interactive entertainment is going to be less cool in the 21st century,” Merrill says. “There are so many incredible capabilities that are coming online where the new possibilities that are emerging for players are just through the roof, and will only compound.”

Better tools and global competition are raising the bar for every game developer

Merrill points to improvements in "engines, middleware, different AI capabilities" as ways developers may be able to take responsibility for broader portions of a game rather than becoming confined to one highly specialized piece of a massive production pipeline.

"And so, again, that's awesome because it's going to continue to contribute to raising player expectations, and it's incumbent on us to figure out how to keep doing justice to those increasing expectations," says Merrill. 

And the competition is no longer coming primarily from the traditional centers of the Western games business. Merrill cited the global success of Genshin Impact and Black Myth: Wukong, alongside the continuing strength of developers in Japan and a growing number of European hits, as evidence of a healthier and increasingly international market.

“I think the globalization aspect is another really healthy, cool feature of what’s happening right now,” Merrill said. “It makes more diverse styles of gameplay able to reach broader and broader audiences.”

The transformation Merrill describes won’t necessarily make the industry’s current instability any less painful, particularly for the developers whose jobs have already been lost during that “recalibration.” But his larger point is that gaming itself isn’t in danger. Old assumptions are.

“I love competition because I think it keeps us on our toes,” Merrill says. “And we just have to keep getting better.”

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