Downloads Declined, Yet Revenue Increased? Unpacking the “Counterintuitive” Prosperity of the Gaming Industry in 2026

(Source: Sensor Tower)

II. Marketing Transformation:The Rise of AI Algorithms and “Content as Targeting”

Entering 2026, the underlying logic of game marketing has undergone a fundamental shift. According to relevant reports from Insight Research’s internal database, advertising platform algorithms have evolved from traditional “tag-based matching” to content understanding and semantic matching.

This means that creative assets themselves have become a form of “user identification code” written for the algorithm. The traditional strategy of “targeting users first, then testing creative” is no longer effective. In its place, content itself has become the targeting mechanism. Creative materials must deliver clear semantic signals within the first three seconds in order to help algorithms rapidly identify the intended audience. The report indicates that, compared with relying on a single breakout creative, the overall consistency and focus of the content direction have become key factors affecting campaign stability.

Against this backdrop, AI is playing a dual role in marketing. On the one hand, generative AI is being used to produce creative materials at scale, reducing production costs. On the other hand, strategy-level AI is beginning to take a more active role by analyzing competitors and user feedback to build dedicated creative strategy models. As a result, the essence of marketing competition is increasingly evolving into a contest of strategy AI versus strategy AI.

(Source: AppGrowing)

III. Segment Trends:The Mass Adoption of Mini-Program Games and the Standardization of IP Ecosystems

In the Chinese market, mini-program games, including Douyin mini-games, have become the industry’s largest source of incremental growth. Data shows that in 2025, China’s mini-program game market reached RMB 53.54 billion, representing a year-on-year increase of 34.4%. Aurora Mobile forecasts that the market will exceed RMB 100 billion by 2027.

(Source: Aurora Mobile)

The rapid growth of Douyin mini-games has been driven by the dual engines of content and social interaction. According to the report, the number of users viewing Douyin mini-game content increased eightfold compared with 2024, while revenue generated through direct content conversion rose by 160% year-on-year in the fourth quarter. Users no longer view mini-games merely as a form of casual entertainment; their social attributes have become increasingly prominent. For example, gameplay formats such as “co-raising Little Fireman” have already surpassed 100 million DAU, demonstrating the central role of social-driven viral growth in the expansion of mini-games.

In terms of IP operations, the “Legend” IP, as a long-standing pillar of China’s gaming industry, continues to demonstrate strong commercial value. Gamma Data notes that as of 2025, the cumulative value generated by the “Legend” IP had exceeded RMB 370 billion, and is expected to reach approximately RMB 40 billion in 2026 alone. Notably, the IP ecosystem is evolving toward greater standardization, with authorized products now accounting for nearly 70% of the market, forming a stable industrial chain centered on Shanda Games as the rights holder and Kingnet Network as the core developer and platform operator.

(Source: Gamma Data)

IV. Technology Restructuring: AIGC Empowerment and the Cloud-Based Trend of “Mobile-to-Mini-Program Conversion”

Technology is reshaping the gaming industry from both the development and distribution sides.

First, on the development side, AIGC (AI-generated content) is breaking down traditional barriers to game creation. AI-enabled “Vibe Coding” is driving a wave of democratization in mini-game development. Non-developer users can now utilize AI tools such as Ant Group’s Lingguang and the SOON platform to create complete games in a short period of time simply by providing natural language descriptions. This not only lowers the entry threshold, but also accelerates the realization of creative gameplay concepts.

Second, on the distribution side, the trend of “mobile-to-mini-program conversion” and cloud gaming technology is creating new opportunities for more complex gameplay models. As cloud technology becomes more widely adopted, an increasing number of heavyweight IPs, such as Honor of Kings and Eggy Party, are launching mini-program versions or cloud-based slices on platforms such as Douyin. This model not only enables players to transition seamlessly from “what they see” to “what they can instantly play,” but also creates new user acquisition channels and social distribution scenarios for more content-heavy games.

(Source: Aurora Mobile)

Taken together, the data suggests that the gaming industry in 2026 is undergoing a profound transformation from traffic-driven expansion to quality-driven competition. The market no longer relies primarily on acquiring new users at scale, but instead is shifting toward maximizing the lifetime value of existing users, making refined operations and long-term service models increasingly critical to survival.

At the same time, AI is no longer merely an auxiliary tool that enhances efficiency at the margins. It is now reshaping the industry’s underlying architecture across the full value chain—from the core logic of marketing algorithms and the efficiency of content production pipelines to new dimensions of gameplay innovation. Looking ahead, the era of extensive growth is clearly coming to an end. Game products that can effectively leverage AI for efficiency gains, fully understand the power of content + social-driven virality, and break through device barriers to enable multi-platform interoperability will stand out in the increasingly competitive mature market and define the next generation of digital entertainment.