I told you last week that the gaming industry is losing its moat. Now here’s the data.
The GDC 2026 State of the Industry report surveyed over 2,300 game professionals. It’s the most comprehensive snapshot we get of what’s actually happening inside this industry. The report presents data without a thesis — that’s its job.
My job is different. I’ve been developing an argument about where this industry is headed, and the GDC data confirms it almost point by point.
Here’s the argument: the gaming industry’s historical moats — capital, talent, technology — are all collapsing at the same time. Not slowly. Not theoretically. Right now.
Three moats. Let’s go.
1. The Money Moat
For decades, you needed money to make games. Real money. Publisher advances. Venture rounds. Platform deals. The development cycle was long, expensive, and required capital just to get in the room.
That’s ending. Not slowly. Not theoretically. But it’s not over yet — and the studios that recognize they’re in the middle of this shift, not past it, are the ones with the advantage.
35% of developers say self-funding is their primary source of funding. For solo devs, it’s 86%. Publishing deals? 20%. VC and private investment? 5% each. Crowdfunding, seed rounds, bank loans, accelerators — all at 1% or below. Platform-based funding sits at 2%.
Read those numbers again. The entire infrastructure of game financing — publishers, platform deals, VC — accounts for less than half of how games get funded. Most developers are funding themselves.
And it’s not by choice. The money isn’t just expensive — it’s gone.
“We attempted to secure venture capital... and got 0 bites and a lot of: ‘Wow, if you had pitched this 2 years ago, you’d already be funded.’”
— Director (Game Design), California
“There’s basically no funding at our scale: we’re too expensive for indie, too small for AA/AAA. Award-winning studio, ‘Triple I,’ prestige and history, but there’s a gap.”
— Senior Employee (Game Programming), Virginia
“Platform deals have dried up (Game Pass, PS+ etc.), which used to be a great way to finance indie games.”
— C-Level (Independent Studio 5+ Years), California
The “Triple-I” squeeze is real. Studios too big to bootstrap but too small for AAA publishing deals are getting crushed. The funding infrastructure wasn’t designed for a world where the cost of building dropped faster than everything else.
But here’s the thing. If building games is cheap, why does anyone need money at all?
» Distribution. «
When the GDC report asked what matters most when choosing a platform, audience reach was #1 at 78%. Discoverability: 43%. Top marketing methods? Social media (65%), streamers (39%), paid advertising (31%).
The money you used to spend building the game? You’re about to spend it making anyone notice it exists. I wrote about this last week — when anyone can build an app, and nobody has patience, you get a billion apps and seconds to prove yours matters.
The moat didn’t vanish. It moved.
2. The People Moat
You used to need a big team. Dozens of artists, engineers, designers, QA testers, producers, and PMs to coordinate them all. Scale was the price of entry.
Not anymore.
77% of newer indie studios have fewer than 20 employees. 11% of respondents at newer studios work entirely alone. Across the full survey, 8% identify as solo developers — and they’re shipping real products, not hobby projects.
I wrote about this in September — The Great Western Game Development Divergence.
The breakout hits on Steam and PC aren’t coming from 200-person studios. They’re coming from teams of 1 to 20. Lethal Company. Schedule 1. Project Zomboid. The GDC data confirms that pattern at scale.
Meanwhile, the big teams are bleeding out.
28% of respondents have been laid off in the past two years. In the US, it’s 33% — one in three. And it’s getting worse: 17% laid off in the past 12 months, up from 11% the year before. For AAA specifically, 19% personally laid off in the past year — more than double the prior period.
Of those laid off, 48% still haven’t found another job. For people laid off 1-2 years ago, 36% are still looking for work. The “course correction” everyone hoped for didn’t arrive. The jobs aren’t coming back.
The companies say it’s “restructuring” (43%), “budget cuts” (38%), and “market conditions” (38%). The people who got fired have a different take:
“Executives who have never actually worked as a dev are pulling up the boards on their ships, throwing people overboard, and expecting these scuttled ghost ships to keep making them infinite money.”
— Former Senior Employee (Game Design), New York
And the pipeline is breaking too. 74% of game dev students are worried about their future job prospects. 87% of educators expect a negative impact on placement.
“Most of my students will not have a career in game development.”*
— Educator (Computer Science), Michigan
“There aren’t any jobs. Everyone’s getting fired. It’s fucked.”
— Student (Game Design), California
The people moat used to mean you needed a hundred skilled professionals to ship a competitive game. Now you need five. Maybe one. The human cost of that transition is enormous — but the structural reality is clear.
3. The Technology Moat
This is the one nobody wants to talk about.
For decades, proprietary technology was one of the hardest moats to cross. Custom engines, institutional knowledge, and toolchains built over multiple product cycles. id Tech, Frostbite, Rockstar’s RAGE — these weren’t just tools, they were competitive weapons.
That era is ending.
Unreal Engine now sits at 42%, surpassing Unity (30%) for the first time. Godot is gaining traction with newer indie studios at 11%. Proprietary engines have dropped to 19%, with almost all of that in AAA. The tools to build a competitive game are available to anyone with a laptop.
But the real disruption isn’t which engine you use. It’s what’s happening to the people using them.
52% of game workers think AI is having a negative impact on the industry — up from 30% last year and 18% the year before. Visual artists: 64% negative. Designers: 63%. Programmers: 59%. And executives? 19% say it’s positive.
The open-ended responses capture what the percentages can’t:
“AI is theft. I have to use it, otherwise I’m gonna get fired.”
— Senior Employee (Visual and Technical Arts), Ukraine
Read that again. A person who believes the technology is morally wrong uses it anyway because the alternative is unemployment. That’s not adoption. That’s capitulation.
And it’s everywhere:
“I guess I’m hypocritical about it. I’m outspokenly against AI, but then do use ChatGPT as a sounding board for some of my marketing ideas.”*
— Manager (Marketing/PR), Canada
“I don’t tell anyone how I use AI, for fear of backlash.”
— Contributor (Game Design), California
Meanwhile, on the other end:
“We are intentionally working on a platform that will put all game devs out of work and allow kids to prompt and direct their own content.”
— Senior Employee (Machine Learning Ops), New Mexico
The technology moat isn’t collapsing from outside. People in the industry know it’s collapsing. Some are accelerating it. Most feel powerless to stop it.
That’s what makes this one different from the money moat or the people moat. Those are structural shifts you can adapt to. The technology moat’s collapse comes with an identity crisis. When your tools can be replicated by anyone, what makes you you?
The Moats Didn’t Vanish. They Moved.
The money moat shifted from development to distribution. You don’t need $50M to build a game anymore. But you might need it to make anyone notice.
The people moat shifted from team size to taste and speed. Small teams win because they move fast and build with their audience, not for them.
The technology moat didn’t shift — it’s shattering. Everyone has the same tools. Everyone has access to AI. The industry hates it and uses it anyway.
Studios still defending the old moats — raising money to build big teams using proprietary tech — are optimizing for a world that no longer exists. The new advantages are different: taste, speed, community, and distribution. Most studios aren’t built for them.
The industry isn’t in a downturn. A downturn implies things bounce back. This is a restructuring of who makes games, how they’re funded, what tools they use, and who survives.
The moats aren’t vanishing — they’re moving. And most studios are still standing where the old ones used to be.
Right now, 81% of game professionals use AI for research and brainstorming — but only 5% use it for player-facing features. The gap between AI as a thinking tool and AI as a shipping tool is enormous. The studios that understand that gap, and keep human judgment on everything past the line where AI’s usefulness drops off, are building a compounding advantage. But the window is closing. When adoption hits critical mass and the tools mature, understanding AI’s edges won’t be a moat — it’ll be table stakes.
That gap is your window. It won’t stay this wide.
This is the first in a series going deeper into each of these shifts. Next up: what the data says about who actually survives a moat collapse — and it’s not who you’d expect.
