Web gaming has seen an interesting resurgence recently. With leading portals like Poki attracting tens of millions of users and platforms such as Telegram and Discord incorporating embedded games, web gaming is steadily gaining traction.

Unlike console- or PC-only titles, web-based games benefit from cross-platform compatibility, letting users move from one device to another. This flexibility not only builds user loyalty, but also expands the accessible market. Let’s have a closer look.

Growth Catalysts

Key Drivers

Cross-platform accessibility - Gamers increasingly prioritize experiences that transcend device limitations. Platforms offering interoperability—where progress and gameplay can shift fluidly across mobile, desktop, and cloud-based environments—are leading the pack.
Demographic shift - Younger audiences, particularly those aged 2-18, represent the bedrock of web gaming’s growth. According to Bain’s 2024 report, 80% of this cohort identifies as gamers, spending nearly a third of their entertainment time on games.
Engagement through UGC - User-generated content (UGC) has redefined how players interact with games. Nearly 79% of gamers engage with UGC, while 16% actively create content. This participatory dynamic not only deepens user engagement but also creates monetization avenues through virtual goods and content marketplaces.
Resurgence of web technology - The adoption of HTML5 has revitalized web gaming, replacing Flash and enabling seamless experiences across devices. Modern engines like Phaser and PlayCanvas allow developers to create high-quality games optimized for mobile and desktop browsers.
Emerging platforms - Portals like Poki and CrazyGames dominate with millions of monthly active users (MAU), and platforms such as Telegram and Discord are embedding games into their ecosystems, enhancing accessibility and engagement.

Revenue Perspective

Web gaming generated $196 billion in 2023, outpacing streaming and global box-office revenues combined. Analysts forecast 6% annual growth rate through 2028.

Web gaming ecosystem and monetization. Source: Naavik

Current Trends

Immersive Environments as Social Ecosystems

Web games have evolved beyond mere entertainment to become digital social hubs. Platforms like Roblox and Fortnite exemplify this trend, offering players a space to socialize, shop, and even create their own content.

Investor takeaway: Companies that excel at creating expansive, immersive ecosystems will capture a disproportionate share of user engagement and spending. Strategic investments in these platforms can yield long-term growth.

Monetization Diversification

Gamers who engage in activities beyond traditional gameplay such as socializing or shopping spend five times more per hour than those who only play. Microtransactions, virtual events, and hybrid physical-digital goods are driving this trend.

Investor takeaway: Monetization models are diversifying. Companies capable of executing innovative revenue streams, from subscription-based access to in-game digital marketplaces, will emerge as leaders.

Push for Interoperability

Players demand seamless cross-platform experiences. Surveys indicate that 70% of gamers use multiple devices, and 48% cite interoperability as a priority feature. Developers that prioritize this functionality are well-positioned for sustained growth.

Investor takeaway: Funding development studios that focus on cross-platform compatibility while maintaining high quality user experiences is increasingly critical.

IP-Driven Ecosystems

Strong gaming intellectual property (IP) offers cross-media opportunities, from movies to merchandise. For example, Netflix has successfully created series based on gaming IPs like Arcane (from League of Legends) and Cyberpunk: Edgerunners (from Cyberpunk 2077), illustrating how gaming narratives can transition into successful television content, thereby enhancing brand visibility and audience engagement.

Investor takeaway: Companies with strong gaming IP can leverage it for broader media expansion, enhancing brand visibility and generating incremental revenue streams.

Challenges Ahead

Despite its promise, the web gaming sub-sector is not without hurdles. Investors must be cognizant of the following challenges:

Market Saturation

With over 3.1 billion gamers globally, user acquisition costs are escalating. The saturation of the market places pressure on developers to innovate continuously to attract and retain players.

Mitigation strategy: Investments in analytics-driven marketing and retention tools can help companies maximize lifetime value per user while maintaining cost efficiency.

Rising Development Costs

The complexity of cross-platform development and immersive game design significantly increases production costs. Furthermore, marketing expenditures—which can account for 25% of a gaming company’s revenue add to the financial burden.

Mitigation strategy: Companies with scalable infrastructure and strategic cost management frameworks are better positioned to navigate these headwinds.

Fragmented Distribution Channels

The proliferation of distribution platforms, from app stores to subscription services, complicates the competitive landscape. Gamers increasingly seek consolidation, with 90% expressing interest in a unified marketplace.

Mitigation strategy: Backing firms that align with these consumer preferences either by integrating distribution channels or creating differentiated platforms offers a competitive edge.

Performance and Monetization Hurdles

HTML5 games face technical challenges, particularly for midcore and non-casual genres requiring complex assets. Monetization through ads often delivers lower returns compared to native mobile apps.

Mitigation strategy: Supporting innovations in browser performance optimization and IAP integrations can help overcome these barriers.

Strategic Opportunities

Leveraging AI for Personalization and Efficiency

Gen AI is revolutionizing game development and user engagement. From creating adaptive gaming environments to optimizing targeted ad campaigns, AI enables cost-efficient scalability and hyper-personalized experiences.

Example: TapNation’s adoption of AI-powered user acquisition tools has resulted in greater campaign precision and increased return on ad spend.

Targeting Underserved Demographics

While younger players dominate, older audiences remain underexplored. Players aged 45+ present opportunities, especially for casual, mobile-first games with simple mechanics.

Investor takeaway: Expanding the audience lens to include older demographics can unlock new revenue streams in mature markets.

Investing in IP-Driven Ecosystems

Strong gaming IP offers cross-media opportunities, from movies to merchandise. Titles that transition successfully into other media not only expand the audience but also enhance long-term revenue potential.

Investor takeaway: Companies with a robust IP portfolio and a strategy for transmedia storytelling are primed for growth.

Embracing Embedded Gaming Platforms

Platforms embedding HTML5 games offer scalable user acquisition and retention opportunities. These platforms are increasingly supporting advanced features like IAPs, leaderboards, and gamified social interactions.

Investor takeaway: Backing companies innovating in embedded gaming can provide exposure to a growing segment of casual and social gamers.

Diversifying Geographically

Many geographies, including emerging ones, are building their own online gaming ecosystems and attracting millions of users. Platforms like WeChat, for example, have rolled out HTML5-based mini-games - these have increased revenues by 50% year-on-year in 2023, thanks to the integration of in-app purchases (IAPs) and advances in 3D graphics.

Investor takeaway: Early-stage investments in such ecosystems could yield significant returns.

Our Takeaway

Web gaming is making steady progress, thanks to better technology and new ways of reaching players. Platforms that integrate games directly, such as Telegram and Discord, are contributing to the expansion of this segment. While challenges remain, we believe that recent momentum suggests that online gaming growth should continue and remain an important part of the gaming industry.

Bytedance Ltd

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