H1 2026: Mobile Gaming’s Stability Illusion

Hi everyone!

Written by Harshal Karvande (Principal Designer at Rovio) and Abhimanyu Kumar (Co-founder of Naavik)

Mobile gaming entered 2026 with a paradox. According to Sensor Tower data, global downloads fell to ~22B in H1 2026, a significant -3B YoY (-12% YoY) reduction in volume. On the other hand, revenue hit ~$28B, a relatively modest -$0.6B YoY (-2% YoY) decline in value. Specifically in Q2 2026, downloads fell to pre-IDFA and even pre-pandemic levels to ~10.8B (-12% YoY), while revenue was slightly less impacted, dropping to ~$13.3B (-5% YoY). The market is clearly losing downloads faster than it is losing revenue, which makes H1 2026’s revenue story look stable even though some of its foundations seem to be shifting underneath.

To understand what’s really happening, this article will dig deeper than the aggregate numbers above — analyzing movements across platforms, genres, subgenres, and games. Note that the data does not include DTC, China Android, or ad revenues. Also, the market size numbers come from Sensor Tower’s “Market Size” feature, which showcases a subset of the entire mobile gaming market. While the aggregate numbers look smaller than mobile gaming’s true market size, we’ve confirmed that analyzing this subset is representative of broader market trends.

Let’s dive in.

When splitting H1 2026’s download decline by platform, Android was the major culprit, declining at a -13% YoY rate and contributing to ~92% (~2.8B) of the entire decline. iOS drove the rest (~8%, ~0.2B, -6% YoY).

The geographic breakdown makes this concentration even clearer. Tier 2 and 3 markets accounted for ~88% of Android’s decline and ~80% of the combined decline across platforms. The top 5 contributing countries were India, Brazil, Indonesia, Mexico, and Turkey.

Given the above, it is not surprising to see that the typical high-volume genres that receive installs from Tier 2 and 3 countries were primarily responsible for Android’s H1 2026 download decline. The Arcade genre accounted for ~30% of the drop, followed by Simulation, which drove an additional ~22%. Lifestyle, Action, and Tabletop also dropped. Collectively, these five genres represented ~78% of Android’s decline.

Digging deeper, Android’s genre-specific declines were concentrated within certain subgenres that typically garner high volumes of Tier 2 and 3 region installs. For example, Arcade’s decline was driven by Platformer / Runners (~46% share), Other Arcade (~20% share), and Mini-game Hub (~12% share). Similarly, Simulation’s decline was mostly driven by Simulator (~38% share), Driving / Flight Simulator (~23% share), and Sandbox (~15% share).

That said, it should be noted that across most of these subgenres, the download decline was subgenre-wide (spread across multiple titles). This was primarily due to two simultaneous effects:

1. In certain subgenres, many short-lived game launches faded faster than newer releases could replace them. For example, Other Arcade, Mini-game Hub, Simulator, and Driving / Flight Simulator all followed this behavior, with “pop-and-drop” games contributing 50-60%+ of the subgenres’ decline.

2. In other subgenres, their weakness was primarily caused by older games fading. For example, in Platformer / Runners, mature titles drove ~85% of the subgenre’s download decline, while rapid decay in more recent launches drove the rest.

Overall, H1 2026’s 12% YoY download decline can be summarized as follows. Android experienced a much sharper contraction than iOS, generating ~92% of the combined platform decline. The correction was concentrated in high-volume Tier 2 and 3 countries and a small set of genres and subgenres that usually receive a large share of their installs from these territories. Within the largest declining subgenres, a mix of short-lived launches and aging titles saw their download volume fade faster than newer releases could replace them.

That said, what’s very striking to see in H1 2026’s results is that all genre downloads declined YoY at a combined platform level. Unfortunately, this seems to be part of a longer-term structural shift in mobile gaming’s top of the funnel that goes beyond post-COVID and post-ATT effects. It’s not only concentrated to Tier 2 and 3 markets but also seems to impact Tier 1 regions. We will explore a few hypotheses behind why this might be happening (and what it means for mobile gaming’s future) in the final section of the article.

Given that H1 2026’s IAP revenue was relatively flat (-2% YoY) alongside downloads falling -12% YoY, the question becomes: What helped make up the difference?

The difference came from revenue per download, which rose +11% YoY and balanced out the significant downloads drop to result in relatively flat YoY revenue. In other words, applying H1 2025’s revenue per download to H1 2026’s downloads volume would’ve reduced its revenue by ~$3.3B. However, H1 2026’s increased revenue per download restored ~$2.8B of that, leaving the -$558M (-2% YoY) decline.

Yet, higher revenue per download math masks significant genre movement underneath. Some of mobile’s largest revenue-generating genres, like RPG, Casino, Strategy, and Action, lost a combined ~$1.6B YoY, while Puzzle and Shooter offset ~$1.3B of those losses. A closer look at those genre movements reveals several key observations.

Note that DTC revenue outflows, which are not tracked in Sensor Tower’s data yet, might also be contributing a bit to the genre IAP revenue movement discussed below. According to Appcharge, 2025’s global mobile DTC revenues were estimated at ~$17B, which accounts for ~15% of the $113.3 billion mobile gaming IAP market in the same year. And some subgenres are adopting DTC payment channels more aggressively than others — for example, RPGs (across multiple subgenres), Casino games (especially Slots), and Strategy titles (especially 4X Strategy ones). However, it likely doesn’t change the broader trends and takeaways noted through this analysis.

#1 — RPGs’ decline was severe and genre-wide: RPGs’ -$664M YoY decline fully explains mobile gaming’s H1 2026 revenue decline and was driven by multiple key revenue driving RPG subgenres:

• MMORPGs dropped by -$455M YoY (~69% of total genre decline), due to the portfolios of established Asian publishers seeing natural aging over time. For example, NC Corporation’s (formerly known as NCSoft) Lineage M, Lineage W, and Lineage 2M contributed to ~30% of RPGs’ decline, while other mature Korean MMORPGs also declined significantly. This is not uncommon for MMORPGs, but new major releases are necessary to make up for the gap to ensure overall subgenre stability.

• Turn-based RPGs dropped by -$266M YoY (~40% of total genre decline), primarily due to weakness in various mature titles like Honkai: Star Rail (-$69M), Fate/Grand Order (-$40M), and RAID: Shadow Legends (-$37M). Across the three titles, their declines were driven by either MAU erosion (natural to mature titles), underperforming ARPDAU (weaker live-ops roadmap), or a mix.

• Squad RPGs dropped by -$157M YoY (~24% of total genre decline), again due to declining established titles like CookieRun: Kingdom (MAU erosion), DC: Dark Legion (post-launch year decline), and Hero Wars (MAU erosion).

• Open World Adventure offset some portion of the above with a +$173M YoY bump, mainly due to Arknights: Endfield’s and Tencent’s Roco Kingdom’s strong launch performance in China.

#2 — Casino’s decline was Slots and Monopoly Go! driven: Casino saw a -$376M YoY decline in H1 2026, with two subgenres accounting for ~95% of the genre's decline:

• Slots was down by -$233M YoY, contributing to ~62% of Casino’s decline. It was spread across numerous incumbent games, such as Slotomania, House of Fun, DoubleDown Casino, Huuuge Casino, and more. While all these games face growing maturity-related declines (and DTC revenue outflows contributing a bit to the numbers too), most Slots game publishers also lost the ability to retarget lapsed payer cohorts post-ATT to help replenish churned cohorts and thereby keep the subgenre afloat. However, some Slots game publishers were able to navigate this UA hurdle better than others — see our interview with SciPlay.

• Coin Looters was down by -$125M YoY, contributing to an additional ~33% of Casino’s decline. Monopoly Go!’s slow downloads, DAU, and ARPDAU deterioration, likely due to a rapidly scaled game gradually maturing and normalizing, explained all of it.

#3 — Strategy suffered a Pokémon problem: Strategy experienced a -$319M YoY decline with the following taking place:

• Pokémon TCG Pocket fell by -$300M YoY, which accounted for ~94% of the genre’s decline. The game dropped sharply from its launch-period highs as downloads, DAU, and ARPDAU contracted during its second year of live-ops.

• 4X Strategy was up by +$193M YoY, but beneath that were approximately +$974M of gains and -$781M of declines. Kingshot and Last Z: Survival alone generated roughly +$576M of the gains. However, mature leaders such as Last War: Survival and Whiteout Survival (!) subsequently absorbed much of that growth.

#4 — Action witnessed four subgenre corrections: Action saw a -$250M YoY decline with four subgenres (and key titles within them) driving most of it:

• Shoot ‘em Up was down -$101M YoY (~40% genre decline contribution) with ~80% of it explained by weak performance from Habby’s Achero 2, Survivor.io, and Archero. This is not surprising since even the best hybridcasual games today haven’t yet figured out how to fully evolve out of hypercasual‘s typical UA-fueled front-loaded performance, and scale revenue beyond the first three to six launch months. Unfortunately, Habby’s portfolio performance also defines the subgenre trends due to its dominating revenue market share.

• Dungeon & Fighter Mobile/Origin lost around -$97M YoY, more than the Beat ’em Up subgenre’s net decline. Almost all of this came from the game’s post-China launch year decline.

• Zenless Zone Zero lost -$40M YoY, while Solo Leveling: ARISE lost -$18M YoY. Those two franchises explain most of Hack and Slash’s decline before new Bleach releases provided offsets. Hack and Slash‘s revenue performance has always been major launch-driven, as the subgenre’s stagnating audience volume buys into new-release hype before cycling through titles quickly.

• NetEase’s Identity V versions lost -$40M YoY due to a weaker live-ops roadmap, explaining Asymmetric Battle’s decline.

#5 — Puzzle’s rise was mobile’s MVP in H1 2026: Puzzle added +$915M YoY, with two subgenres accounting for nearly all of that growth (as we also previously covered here):

• Merge 2 was up +$640M YoY, primarily driven by the UA fuel behind Microfun’s Gossip Harbor (+$320M) and Century Games’ Tasty Travels (+$132M).

• Sort was up +$303M YoY, mainly driven by a newer cohort of games, such as Pixel Flow (+$125M), Magic Sort (+$33M), Yarn Loop (+$22M), Sand Loop (+$18M), Marble Sort (+$17M), and Gecko Out (+$16M). Most of them, except for Magic Sort, are relatively recent launches and continue to scale with heavy UA.

• Unfortunately, all other Puzzle subgenres collectively declined by ~$28M, including staples like Match Swap, Hidden Objects, and Merge 3.

#6 — Shooters transformed due to Tencent’s new China-release cohort: Shooters grew +$218M YoY, almost entirely because FPS / 3PS increased by +$225M YoY. This was driven by three Tencent-operated releases — Delta Force, Valorant Mobile, and Reverse War: The Future. Over H1 2026, Delta Force significantly grew in China, while Valorant Mobile and Reverse War brought new revenue to the genre as both launched after H1 2025. However, that single-publisher, single-geography growth hid large incumbent declines, including CrossFire Mobile and Call of Duty: Mobile.

Overall, H1 2026’s relatively flat -2% YoY revenue performance shouldn’t be interpreted as a sign of mobile gaming successfully extracting more value out of a dropping downloads base. Puzzle’s outperformance and the Shooter revenue bump masks a common thread across the various declining genres discussed above — growing incumbent weakness and new releases not always being able to make up for the gap in a sustainable long-term fashion. This is most notably seen in the RPG genre, which entered freefall from 2022 onwards as its incumbents weakened and new releases were unable to take their place. We’ll explore this common thread (and why it might be occurring) in the next and final section of the article.

In our eyes, H1 2026’s performance showcases the symptoms of two fundamental problems the mobile gaming industry is currently facing.

First, H1 2026 saw a universal top-of-the-funnel decline across all genres, and it is unfortunately the continuation of a multi-year structural decline in install volume across platforms, with Android being the key contributor. The image below illustrates two downloads market phases:

1. 2020-2023 Plateau: Annual downloads plateaued between ~55-56B, post-pandemic normalization. However, while iOS faced a double whammy post-pandemic and post-ATT download decline, Android’s Tier 2 and 3 markets grew enough to keep the combined platform view broadly flat.

2. 2023-2026 Structural Decline: While iOS downloads continued to decline, Android’s Tier 2 and 3 download engine also began to weaken, after peaking in late 2023. Rolling-four-quarter downloads fell from ~56B in Q3 2023 to ~46B in Q2 2026, a -17% contraction, ~94% of which was Android-driven. This essentially made Android the center of gravity for mobile gaming’s downloads downturn, with weakness in Tier 2 and 3 downloads driving ~80% of it.

Given that Tier 2 and 3 inorganic install share remained relatively flat during a period of significant downloads loss, a mix of two effects could be accelerating this volume decline:

• External factors like the attention wars could be driving low mobile gaming intent install volume to other forms of entertainment — an effect that would even extend to high-value Tier 1 market installs.

• Inorganic install spending pullbacks could be occurring due to rising CPIs, which in turn create a poor ROAS environment. According to Sensor Tower’s Gaming Digital Market Index report, over H1 2026, gaming digital ad spend was up +8% YoY (~$7B), and ad impressions were up +14% (~1.4T). Taking those numbers within the context of ad network market share increasingly consolidating and download volumes dropping would indicate CPIs rising at a faster rate than product LTVs can improve to maintain healthy ROAS results across key downloads (Tier 2 and 3) and revenue (Tier 1) markets.

Second, H1 2026’s revenue results tend to showcase a sobering reality about mobile gaming’s mature state:

• The market has become increasingly dependent on an aging base of long-standing incumbents. Games five years or older now generate ~57% of the revenue among the top 200 grossing titles — roughly 70% of total mobile gaming revenue. That share has risen rapidly over the years, underscoring the aforementioned market dependence.

• However, the above doesn’t mean the revenue impact of younger hit games has disappeared. In H1 2026, games less than two years old added roughly $2.3B YoY, replacing 99% of the roughly $2.4B lost by incumbents five years or older. The bigger concern is how rarely successful new launches mature into enduring incumbents. Roughly one in four young top 200 grossing entrants remain on that list long-term and eventually become an incumbent five years or older.

Simply put, while mobile gaming can still generate commercially meaningful launches, few become the durable next-generation incumbents. This raises the dependence of market health on existing incumbents, while increasing the incumbent replacement burden for new games.

All the above reminds us of Supercell CEO’s words from his recent annual letter: “It’s an industry coasting… getting very good at optimizing what already exists… but here’s the reality: live game excellence alone doesn’t grow an industry. It maintains one. For the market to truly expand, we need to bring new players in… And that requires innovation. New genres. New ways to play… That’s what Clash Royale did in 2016. That’s what Pokémon GO did that same summer. The industry needs more of those moments.”

His annual letter is titled “The Best Games Haven’t Been Made Yet”. While we can understand a mobile gaming entrepreneur wanting to hold an optimistic stance, this analysis makes us think about the opposite — have the best games already been made? That’s, of course, a very pessimistic view for an industry that rests on creative foundations that inherently have no design ceiling. However, mobile gamers (new or old) have one important ceiling — dedicatable daily time to mobile gaming. That means they have to make two choices: whether to spend their limited time on mobile games instead of other forms of entertainment, and, if so, which games earn that time. If those games remain long-time incumbents, then natural churn eventually takes over — and there is a chance the mobile gaming industry loses those players entirely, unless a new game takes the incumbent’s place and wins the lost players’ time back.

In other words, Ilkka is broadly right, even though what he’s rallying the industry towards is one of the hardest things to achieve in gaming. At the same time, it doesn’t look like the alternative path is getting mobile gaming anywhere healthy either. So current and future mobile game developers who care about returning mobile gaming to healthy growth (and creating highly durable long-term mobile gaming businesses while at it) may as well be ambitious and solve the harder problem. Mobile gamers are likely eager to experience another market-defining game like Clash Royale for the first time too.

Written by Max Abrahamsen, Consultant at Naavik

• Google and Epic Games have withdrawn their request to replace a U.S. court injunction with a negotiated settlement, clearing the way for rival Android app stores to be distributed through Google Play from July 22. The injunction follows Epic’s antitrust victory, which found that Google had maintained an illegal monopoly over Android app distribution. Google is also opening access to its Play catalog, meaning eligible third-party stores can list apps and games already available on Google Play unless developers opt out. Participating stores must pay a $5,000 annual review fee, operate only in the US, remain open to eligible developers, publish trust and safety policies, and keep malware install attempts below 1%.

• The ruling creates a materially easier route for alternative game stores to reach U.S. Android users. For mobile game companies, distribution through Google Play is the most important part of the ruling, because it gives rival stores access where users already search for apps. That could make stores from Epic and other publishers easier to install, while creating more competition over fees, discovery, payments, and developer terms. The withdrawal also preserves developers’ right to link users from Play-distributed apps to external downloads. However, it does not settle whether Google can charge fees on those link-outs, leaving a potentially important DTC economics dispute unresolved. Broad adoption of alternative stores still looks unlikely since most consumers have little reason to leave Google Play. The more probable outcome is a small number of publisher-led stores building meaningful but niche audiences around exclusive content rather than a fragmented mass market.

• Tencent is currently in negotiations to acquire mobile game developer SuperPlay from Playtika in a deal valued between $1B and $1.5B. Playtika originally purchased the studio behind Dice Dreams and Domino Dreams in November 2024 for $690M in cash. That initial deal included a performance-based earnout structure worth up to $1.25B tied to the studio’s financial targets between 2025 and 2027. SuperPlay subsequently launched the highly successful Disney Solitaire, which helped the studio generate $573M in revenue in 2025, beating the baseline earnout target by 67 percent. Under the proposed terms, Tencent would assume responsibility for the ongoing earnout payments to SuperPlay’s founders, removing a major financial liability from Playtika’s balance sheet.

• This transaction highlights a rare scenario where a subsidiary’s rapid success has become a financial burden for its parent company. Playtika is facing $2.3B in debt maturities over the next few years and has suspended its dividend to preserve cash. Selling one of its most valuable assets marks a significant strategic reversal, as the SuperPlay acquisition was originally intended to diversify Playtika away from its declining social casino titles and into the growing casual games market. For Tencent, the deal represents an opportunity to strengthen its portfolio outside of midcore and strategy genres, capturing a proven developer in the casual space. Regardless of the transaction outcome, the deal shows how heavy debt can reduce a company’s flexibility, even when it owns valuable assets.

• Israeli gaming fund Vgames has secured $500M, backed by Phoenix, to launch a growth financing platform for gaming and consumer companies. The model is designed for businesses that have moved beyond product development and need capital to fund user acquisition and international expansion without selling more equity. Instead of following a fixed repayment schedule, repayments are tied to revenue generated by the user cohorts financed through the platform. Vgames, which has invested in more than 50 companies since 2020, is working with General Catalyst to identify and assess potential recipients and plans to provide more than $500M in additional financing over the coming years.

• Revenue-linked financing gives established studios another way to scale profitable campaigns while preserving ownership, although it still depends on reliable forecasting and disciplined unit economics. Vgames’ move also reflects a broader shift toward specialized financing products for mature games businesses that need growth capital rather than another traditional venture round. Keep in mind that traditional venture funding in video games has plummeted as investors have found better-fitting (and more risk-controlled) ways to invest in games rather than the equity of the companies that make them. Although we expect game financing to continue growing, increasing competition for top-tier opportunities will likely compress margins, push funds beyond gaming, and gradually loosen underwriting standards.

• Unity will release Unity 7 in Q1 2027, following an early beta in December 2026. Unity promises that the new engine will serve as a direct continuation of Unity 6, ensuring no project rebuilds, new programming languages, or breaking transitions. Built on a modernized CoreCLR foundation, it will deliver near-instant Play Mode, reload only modified code, and decrease shader build times by up to 90%. Unity 7 will also introduce real-time global illumination that scales from high-end PCs to mobile, alongside a new command-line interface, public API, and free MCP server that lets external tools and coding agents interact more directly with Unity projects.

• For mobile developers, Unity 7 combines production improvements with a more integrated growth stack. Native direct-to-consumer purchases, no-code webshops, and unified product catalogs will feed transaction data into Vector, Unity’s AI-driven advertising system. This could make it easier for studios to operate web stores and use first-party purchase data to improve user acquisition, while reducing dependence on platform payments. The faster Editor and agent integrations may also shorten iteration cycles for smaller teams, but much will depend on whether Unity delivers these features reliably and maintains compatibility across existing projects. After several years of product and pricing disruption, a smooth upgrade may matter as much as the technical improvements.

• The European Commission has fined Google €890M for two breaches of the Digital Markets Act. A €430M penalty covers Play Store rules that restricted developers from promoting cheaper purchases on websites or alternative app stores, while a separate €460M fine addresses Google’s favoring its own shopping, hotel, transport, and sports services in Search. The Commission found that Google’s steering fees were too high and lasted too long to comply with the DMA, although platforms may charge for helping developers acquire new customers. Google has been ordered to end both breaches and has 60 days to comply before risking recurring penalties of up to 5% of its worldwide turnover.

• For mobile game publishers, the important outcome is the EU finding that Google restricted app developers from promoting cheaper offers and completing transactions through web stores or alternative app stores. This directly affects mobile gaming publishers because games generate substantial in-app spending and increasingly use direct-to-consumer stores to reduce platform fees and own the customer relationship. The likely outcome is a narrower fee structure that makes webstore purchases more attractive, although Google will probably continue seeking compensation for users acquired through Play.

• Roblox Brings Prompt-Based Game Creation to Mobile

• Ukie welcomes UK government’s IP-backed lending plans for games studios

• MTG reports strong Q2 results driven by D2C growth

• Wemade controlling stake sold for $593m

• Pokémon Go revenue skyrockets towards a record high during Go Fest 2026: Global

• Royal Kingdom surpasses $750m with 42% of all revenue made in H1 2026

• Netflix kids’ mobile engagement rises 600%

• India’s State of Play (Naavik, MIXI): “India has emerged as one of the world’s most compelling gaming markets. Its gaming market is maturing, with mobile gaming alone (excluding Real Money Gaming) generating $1.1B through 2025 and projected to reach $2.4B by 2029. India’s long-established scale is now being matched by rising player spending and a widening mix of genres”

• Gaming Deep Dive: Ad Monetization Report (Sensor Tower): “Navigating this market requires understanding its uneven distribution. Mobile ad revenue is highly concentrated across a few specific genres, networks, and product strategies. Puzzle games remain the primary driver of the ad economy, and your choice of ad network can dictate your genre’s access to the right audience. For hybrid-casual titles, deciding to prioritize ads versus in-app purchases (IAP) is a fundamental business decision that defines your ultimate revenue potential.”

• The Winning Portfolio Strategies of 2026 With Two and a Half Gamers (PocketGamer.biz): “At PGC Barcelona, Jakub Remiar broke down the portfolio strategies quietly winning the casual market, from templatisation to knowing exactly when to copy.”

• Google on its new Play Store fees and that new Level Up program (Mobilegamer.biz): “As we’ve said before, the policy changes aren’t the decisive victory Epic claims they are, but they still represent progress. Developers can now claw back a little more of what was a flat 30% IAP cut if they use another payment provider, and from players making installs from now onwards. Devs can get further discounts if they join Google’s Level Up program, though that requires developers to jump through a new set of compliance and technical hoops.”

• Learn all about China’s games industry in our free region report (Pocketgamer.biz): “The report is free to download with insights from industry experts on the state of the sector, data exploring consumer spending in the mobile games space, as well as our newly unveiled Top 30 China Game Makers 2026 list.”

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