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Pixel P&L: 87% of Game Studios Now Using AI to Cut Costs

Pixel P&L: 87% of Game Studios Now Using AI to Cut Costs

AFK Gaming Editorial
August 19, 2025

Welcome to another Pixel P&L edition. This issue takes 4 minutes to read. If you only have one, here are the 5 most important things:

87% of game developers are now using AI to cut costs amid industry-wide layoffs and spiraling budgets.
India reportedly considers a massive 40% tax hike on online gaming platforms, treating them like tobacco and luxury goods.
Ved "Beelzeboy" Bamb becomes India's first esports world champion, taking home $20,000 at the Pokémon GO World Championship.
Roblox shares plummet to two-month lows as fresh child safety lawsuits pile pressure on the gaming giant.
Twitch CEO Dan Clancy and Ubisoft's Yves Guillemot headline the Esports World Cup's Global Sport Conference 2025.

Let's get into it.

Game Developers Embrace AI to Cut Costs Amid Industry Downturn

Nearly nine in 10 videogame developers are deploying artificial intelligence to automate tasks and reduce costs, according to a new Google Cloud survey, as the industry grapples with widespread layoffs and ballooning development expenses.

The study of 615 developers across the U.S., South Korea, and Nordic countries found 87% are using AI agents to streamline repetitive work, allowing creative teams to focus on higher-value activities. About 44% employ AI to rapidly optimize content including text, voice, and video.

Gaming companies are turning to automation as development costs spiral and creation cycles extend due to intense competition and rising fan expectations. More than 10,000 industry workers lost jobs last year amid studio closures.

While 94% of developers expect AI to reduce long-term costs, concerns persist. Roughly 63% worry about data ownership rights as legal frameworks around AI-generated content remain unclear. The contentious technology has already sparked labor disputes, including last year's SAG-AFTRA videogame performers' strike.

India Weighs 40% Tax on Online Gaming Amid Revenue Surge

India is reportedly considering a 40% goods and services tax on online gaming platforms, including fantasy sports and real money gaming sites, by classifying them as "sin and demerit goods" alongside tobacco and luxury vehicles, government sources told the Indian Express. The report does not specify whether traditional video games without monetary stakes would face the same tax.

The proposed hike reflects policymaker concerns over Indians' gaming expenditure, which recently crossed INR 10,000 crore ($1.2 billion) monthly. The sector has demonstrated resilient demand despite previous increases, with GST revenues from online gaming surging 412% to INR 6,909 crore ($792 million) in six months after the uniform 28% levy began in October 2023.

Over 155 million Indians participated in real-money gaming in 2024, engaging in fantasy sports, rummy and poker. The industry generated $2.7 billion in revenue last year, according to FICCI and EY data.

Officials justify the potential increase by citing excessive user spending and automatic payment deductions, arguing online gaming warrants similar treatment to traditional vice industries. The tax hike could significantly impact gaming companies while boosting government revenues from this rapidly expanding digital entertainment sector.

⚡️Quick Bytes

Indian Gamer Makes History at Pokémon World Championship

Ved "Beelzeboy" Bamb became India's first esports world champion Sunday, defeating Spain's Leo "P4T0M4N" Marín 3-2 in the Pokémon GO World Championship finals in Anaheim. The Nagpur native earned $20,000 after a dramatic comeback from the lower bracket, requiring two consecutive victories to claim the title.

Roblox Shares Fall to Two-Month Low After Child Safety Lawsuits

Roblox Corp. shares dropped 6% Thursday to $117.34, hitting their lowest level since mid-July, as fresh lawsuits accusing the gaming platform of inadequate child protection weighed on investor sentiment. The decline erased gains from the stock's recent July 31 peak of $137.79, its highest since late 2021. Seven suits spanning multiple states allege the company fails to safeguard users as young as eight from predators.

Twitch, Ubisoft Chiefs to Speak at Esports World Cup’s Global Sport Conference 2025

The Esports World Cup Foundation announced Friday it has added Twitch CEO Dan Clancy, Ubisoft CEO Yves Guillemot, and filmmaker Nicolas Winding Refn to its New Global Sport Conference 2025 speaker lineup. The Aug. 23-24 Riyadh event will feature "The Foundry" stage for exclusive masterclasses and a new studio for live content. The foundation teased a "major update" during the conference.

⚔️Side Quest

Credits: TheBeevsComics

📺 Watch: Watch this fascinating deep dive with John Romero, the legendary creator behind Doom, Quake, and Wolfenstein 3D. He shares incredible behind-the-scenes stories from gaming's wild early days, from making 13 games in 1991 to the pivotal 1 AM decision that launched the FPS genre.

🎮 Play: The RPG Maker classic OFF just received a thoughtful remake that both honors and refreshes the original's surreal nightmare. Enhanced combat mechanics add strategic depth, while polished visuals and UI improvements modernize the experience. Perfect for newcomers and a worthy revisit for veterans.

📚 Read: Payment processors and credit card companies are forcing Steam and Itch.io to remove adult content after pressure from activist groups. Rock Paper Shotgun’s Edwin Evans-Thirlwell explores the complex web of financial regulations, moral policing, and how a few powerful companies can effectively censor content through economic pressure rather than legal action.

💡Did You Know

Activision holds a patent for a sophisticated matchmaking system designed to boost microtransaction sales by psychologically manipulating player experiences. Filed in 2015 and granted in 2017, the system would strategically pair players to encourage spending - for example, matching novice players with skilled "marquee" players using premium items, hoping the beginners will purchase those same weapons or skins to emulate their opponents. The patent even describes matching players into lobbies where their recently purchased items perform exceptionally well, creating positive reinforcement for future spending.

📜 Quote of the Day

“ If we lived forever, maybe we'd have time to understand things. But as it is, I think the best we can do is try to open our eyes, and appreciate how strange and brief all of this is.”