There is a perfectly logical way in which you can look at an election result – even a truly seismic election result – and say that it is largely irrelevant to the business decision-making of the games industry. Elections do not change your customer demographics; all of Washington or Westminster or Nagatachō may change overnight, but the people who bought your games yesterday are still the people who will buy them tomorrow, aren’t they?
If you follow that logic… well, nothing has really changed. The world of politics may have shifted, but that doesn’t change the facts on the ground. If yesterday decisions were made that the best way to engage and satisfy your audience was to pull back from diversity and minimise representation, then those decisions must make an equal amount of sense today. It’s not like the audience changed.
Yet you knew that was wrong, even as you read it. Democracy at scale is still a new and surprisingly thinly understood thing, but we all have a pretty strong sense that elections shift more than just the bums on seats in a legislative chamber. Elections move culture. They embolden, or cow, whole swathes of the public; they crown cultural ascendants and kick the legs out from under former icons whose moment is now past.
The overall climate around tech regulation is likely to shift to a stricter stance
That function of shifting the cultural moment could not be more relevant to an industry like the games business. Video games sit at the intersection of the technology and media industries, two areas which have been deeply embroiled in the tug-of-war that’s played out over the soul of America and of the wider world in recent years. The fortunes of both of those will be changed significantly by the political and cultural changes set in motion by this week’s US elections. Nearly every part of the video games industry will in turn be touched, at least to some degree, by those changes.
Some changes will be very overt. The incoming crop of Democratic Party legislators at both state and national level seem, on the whole, to be chomping at the bit about regulating tech industries, and are likely to overturn many aspects of the extremely laissez-faire regulatory environment that has prevailed for the past few years (including, to a certain degree, under the Biden administration).
Much of their early focus is likely to be on data centres – and ten states passed ballot measures against data centre construction as well, demonstrating voter appetite for such restrictions – but the overall climate around tech regulation is likely to shift to a stricter stance in many regards. It’s unlikely the United States will get as keen on tech regulation as the European Union, whose scepticism about the international influence of US tech giants and their billionaire owners continues to grow month to month. But equally, the way that so many of those billionaire owners threw themselves into full-throated support for, and full-walleted obsequence to, far-right movements over the past two years has likely made them quite an array of implacable foes who now occupy positions of significant legislative power.
The gut reaction of many people in the games business will probably be to clutch their pearls at the notion of such regulation – a lot of senior people in this business really do consider themselves to be temporarily embarrassed tech billionaires, after all (a solid chunk of the remainder consider themselves to be temporarily embarrassed Hollywood moguls). The actual effects, however, are likely to be mixed, and perhaps more favourable than not.
Certainly, some of the regulatory efforts we’re likely to see in the coming years will also slap the knuckles of the games business, albeit only in passing. Federal regulations on online gambling will largely aim at grotesque businesses like Kalshi and Polymarket, but may well catch some loot box and gacha mechanisms in the blast radius if they’re actually enacted. So it goes; it was only a matter of time before a major market gutted those questionable business models anyway. Child protection laws targeting social media companies may well, if enacted, catch the likes of Roblox in the noose as well. That’s also been predicted for some time – the election results merely make it more likely to actually happen in the foreseeable future.
The real prize is the possibility that this election is a sharp enough pin pressed against the straining membrane of the AI bubble to actually precipitate a pop
Other effects, however, would turn out far more favourable for games businesses. A renewed focus on aspects like net neutrality and a general environment of more sceptical regulation of giant-scale platform holders will generally favour companies trying to sell games and services across these platforms and networks.
Needless to say, though, the real prize on offer here is the possibility that this election is a sharp enough pin pressed against the straining membrane of the AI bubble to actually precipitate a pop – or at least a rapid deflation. There are games companies that are bullish on the prospects of AI in various aspects, for sure, but even the most bullish of them would probably gleefully cancel all their Claude subscriptions tomorrow if it got GPUs and consoles back to reasonable consumer prices overnight. Between the anti-data-centre ballot initiatives and the vastly more AI-sceptical incoming legislatures, the environment in the United States is going to become a lot more hostile to the bubble’s continued expansion; it won’t fix the component crisis overnight and a hell of a lot of financial pain will occur along the way, but perhaps there’s now a dim light at the end of the tunnel.
It’s also worth noting that the deflation of the AI bubble should also knock a bit of sanity back into the games industry’s finances, which have been brutalised in recent years by a gigantic shift in investor interest towards AI projects. Again, it won’t be fast – there’ll be a lot of wounds to be licked for a while – but once the AI blinkers come off, eventually investors looking for an interesting tech-adjacent sector to make some bets in should start glancing back in this direction.
That’s a lot of ifs and buts, of course; we’re making big assumptions about the willingness of America’s new politicians and institutions to really take on the tech industry, and of course, that industry will have its own agency and its own desire to keep the bubble going as long as possible. What’s rather more certain, though, goes right back to what I said at the start; it’s hard to tell what the political shift will deliver, but the cultural shift already looks stone-cold certain.
In part, it’s about who feels emboldened. Their voices get louder and their certainty that they speak for a majority gets unshakeable. An election that sweeps the legs from underneath their movement is humbling to a degree that no simple poll ever seems like it should be; when your worldview has rested on the notion that you speak for a gigantic, invisible majority who all think exactly like you, the discovery that you’re doing nothing of the sort can be devastating, isolating, and silencing. Not necessarily a bad thing; if what you’ve used that misbegotten confidence to promote is hatred and bigotry, that silence will be hard-won bliss for everyone else.
It’s been obvious forever that you win over far bigger audiences through better representation than you lose
Not that I think we can expect silence. The people who have railed for years against diversity, against minorities, against every kind of representation or nuance or even basic compassion appearing in video games – they’ll still be around and they’ll still be noisy. What is changed is that we now see how small and narrow the slice of the market they spoke for actually is. Absolutely nobody can claim with any degree of credibility that they represent anything other than what they seem; not the inevitable future of culture, but an angry, slightly pitiful, and almost entirely commercially irrelevant sub-sub-grouping.
This isn’t some grand revelation. Lots of people have known for years that the only way for the games industry to grow out of its moribund audience size is to diversify and expand, exploring new themes and ideas, winning over new audiences. It’s been obvious forever that you win over far bigger audiences through better representation than you lose; that the handful of vociferously angry people whose imagination cannot stretch to identifying with anyone other than a burly grunting white man will never make a whit of difference to your bottom line.
Yet for all that those things have been clear, there have still been so many decisions made in fear, and in a kind of cowardice dressed up as caution, in recent years. Much of it’s probably down to how many people in the industry still choose to sit in echoing chambers of Twitter’s corpse, hot-boxing themselves with the world’s angriest compulsive masturbators, its richest white supremacist, and an untold number of half-demented bots until the fumes tell them that this is somehow representative of their actual audience. Perhaps that can be the first step of your adjustment to the new cultural reality we’re waking up to; recognise that you’ve been fooling yourself, and allowing yourself to be fooled, about the relevance of X, and get the hell off that site. If the industry wants to position itself for what’s next, disentangling itself from the architects of what’s dead and dying has to be step one.