Microtransactions and DLCs make up 75% of the total annual spending on games, says analyst

Q: How did Daniel Ahmad calculate that microtransactions and DLC make up 75% of annual game software spending?

Daniel Ahmad used the industry total of about $195 billion in annual game software revenue and estimated that only 25 percent of that comes from new game purchases and subscription services combined, leaving the remaining 75 percent attributable to in-game spending such as cosmetics, battle passes, loot boxes, and paid expansions. He also notes PC microtransactions were 58 percent of PC revenue in 2024, which supports the idea that the share from microtransactions and DLC has grown to about 75 percent.

Q: What is the total annual revenue figure Ahmad cites for the video game software sector?

Daniel Ahmad says the video game software sector grosses about $195 billion annually. This figure is cited in the primary article.

Q: Which types of in-game purchases are included in the 75% share mentioned in the article?

The article says the 75% comes from in-game spending such as cosmetics, battle passes, loot boxes, or paid expansions.

Q: What example does the article provide of a publisher defending microtransactions, and where can I read more on that?

The article cites Ubisoft as an example, noting the publisher argued that microtransactions "make their games more fun." You can read more in the linked piece titled "Ubisoft actually believes microtransactions make their games more fun."

Analyst Daniel Ahmad says microtransactions and DLC make up 75 percent of the $195 billion the game software industry grosses each year.

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Hassam Nasir

Tech Reporter

Published Aug 26, 2026 3:45 PM CDT

1 minute & 15 seconds read time

TL;DR: Analyst Daniel Ahmad reports microtransactions and DLC represent 75% of the video game software market's roughly $195 billion annual revenue, leaving 25% to game sales and subscriptions; live-service monetization-cosmetics, battle passes, loot boxes, expansions-drives most industry income and is likely to grow absent regulation or major backlash.

Voice: Hassam NasirSpeed

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Niko Partners analyst Daniel Ahmad says microtransactions and DLC now account for 75% of everything gamers spend on game software each year, dwarfing what people pay for the games themselves.

According to Ahmad, the video game software sector grosses about $195 billion annually, and only 25% of that comes from new game purchases and subscription services combined. The remaining three-quarters comes from in-game spending, whether that's cosmetics, battle passes, loot boxes, or paid expansions.

Microtransactions and DLCs make up 75% of the total annual spending on games, says analyst 1

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PC gaming microtransactions alone made up 58% of PC revenue back in 2024, according to earlier industry data, so a 75% figure across the whole software market suggests the shift toward live service monetization has only accelerated since then. That makes sense, given the popularity of microtransactions and how effective they have been over the past decade in gaming.

It's worth pointing out that most developers do not seem thrilled about any of this. Surveys have repeatedly shown a large majority of developers pushing back against microtransactions in AAA games, even as publishers keep leaning further into the model. Ubisoft in particular has taken heat recently for essentially arguing that microtransactions make games more fun, which has not gone over well with players.

Microtransactions and DLCs make up 75% of the total annual spending on games, says analyst 3

The uncomfortable reality is that this system persists because it works. If a majority of gamers are still spending on in-game purchases every year, publishers have little reason to walk away from a revenue stream that dwarfs what full-price games alone bring in.

Microtransactions and DLCs make up 75% of the total annual spending on games, says analyst 4

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Question #1

How did Daniel Ahmad calculate that microtransactions and DLC make up 75% of annual game software spending?

Question #2

What is the total annual revenue figure Ahmad cites for the video game software sector?

Question #3

Which types of in-game purchases are included in the 75% share mentioned in the article?

Question #4

What example does the article provide of a publisher defending microtransactions, and where can I read more on that?

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Expect this share to keep climbing rather than shrink, unless regulators or player backlash actually force a change, and there's no strong sign of either happening yet.