Why AA PC Gaming Is the Bright Spot, And Why We Bet On It

Andrew Sheppard
4 days ago
7 min read

PC and console gaming are diverging, and most of the industry is pricing them the same. Newzoo's full-year 2025 data makes the split hard to ignore: PC rewards new creators, console rewards incumbent franchises. That asymmetry has direct implications for where early-stage capital should go.

The Data: PC Welcomes New IP

Look at the PC top 10 revenue list for 2025 releases.

Source: Newzoo, The PC and Console Games Market in 2025

ARC Raiders, a co-op extraction shooter from Embark Studios (ex-DICE/Battlefield veterans), generated $500M+ in revenue on 12.4M units sold, claiming the #2 spot through sustained word-of-mouth and a 92% Steam review score. Schedule I, a first-person business simulation, claimed #3. Clair Obscur: Expedition 33 broke into the top 10 at #9, selling 5M+ copies by October and earning critical acclaim that drove post-Game Awards momentum. The Elder Scrolls IV: Oblivion Remastered landed at #8, demonstrating that modernized legacy IP can compete without the marketing weight of a new franchise.

Now compare console.

Source: Newzoo, The PC and Console Games Market in 2025

Five of the top 10 were annualized sports franchises: EA Sports FC 26 at #1, NBA 2K26 at #2, Madden NFL 26 at #4, MLB The Show 25 at #5, and College Football 26 at #7. The console revenue charts reward predictability, brand depth, and habitual purchase cycles.

This pattern has held for the past three years. PC gamers seek novelty. Console gamers — at least as measured by revenue — reward familiarity.

Why This Matters for Studios

AAA development economics have become increasingly challenging. Budgets for tentpole releases now regularly exceed $200M. Development cycles stretch beyond five years. The margin for error has collapsed: underperformance on a single title can destabilize an entire publisher, as we saw with several high-profile releases in 2024-2025.

The math is unforgiving: a $200M game with $100M in marketing needs to generate roughly $400-500M in net revenue to break even after platform fees. At $45 net per unit (accounting for regional pricing, discounts, and platform cuts), that's 9-11M units sold. That's a narrow target for any new IP.

The alternative, what we define as AA development, offers a different equation. AA means $15-40M development budgets, teams of 30-80 people, and 2-3 year cycles. The economics work differently at this scale. A $25M game with $5M in marketing needs roughly $40M in net revenue to break even, around 1.3M units at $30 net. That's achievable for a well-positioned title with strong community support. Development cycles run 2-3 years instead of 5+, which means teams can respond to market shifts within a single console generation. And Steam's discovery mechanics reward quality over marketing spend: wishlist-driven launches, Early Access, and organic Discord amplification systematically favor smaller studios that can't outspend incumbents on paid acquisition.

PC's receptivity to new IP connects directly to AA viability: lower customer acquisition costs, community-driven discovery, and the ability to build audience before full launch through Early Access.

The Counterpoint: Discovery Is Brutal

We should acknowledge the bear case. Steam is crowded: over 14,000 games released in 2025. Visibility is a power-law distribution; most titles never find an audience. Even on PC, paid UA costs have risen. And AA budgets still require meaningful capital that can be lost entirely.

But the data also shows it can be done. Brain Jar Games' Dead as Disco, a rhythm-based brawler in our portfolio, has built 650K+ Steam wishlists and surpassed 1M demo players with zero paid marketing. That traction came from community-first development: a compelling demo that earned 98% positive Steam reviews, authentic creator engagement that drove 55M+ TikTok views, and a Discord community that grew to 60K+ organically. Discovery is brutal, but it rewards teams who build for an audience rather than buying one.

Our mitigation: founder selection and operational support. We back teams with proven track records, creators who've already built audiences and understand community-first development. We support portfolio companies on go-to-market strategy, milestone discipline, and publisher relationships. The AA opportunity is real, but execution risk remains high. Portfolio construction accounts for this.

How We've Positioned: Our PC/Console Portfolio

This thesis isn't theoretical for us. We've deployed meaningful capital into PC-first, cross-platform studios across Fund I and II.

Ruckus Games (Fund II, Seed lead): The founding team shipped Borderlands 3, Elder Scrolls Online, and Ultima Online, with additional experience at Riot Games, Spry Fox, and Zenimax. They're building The Holdouts, a session-based co-op survival shooter. Early traction: 107K+ social followers built organically, 95% playtest enjoyment rate, 89% willingness to pay.
Gardens (Fund I, Seed lead): Chris Bell was lead designer on What Remains of Edith Finch (BAFTA Best Game 2017) and Journey (Game of the Year at DICE, GDC, and BAFTA). Stephen Bell co-created Blaseball. Lexie Dostal created Dustforce. They're building a PvPvE fantasy ARPG that applies lessons from those social experiments to a higher-stakes, persistent world. Lightspeed and Krafton co-led the Series A.
Midsummer Studios (Fund II, Seed lead): Jake Solomon spent 25 years at Firaxis and created XCOM: Enemy Unknown (90+ Metacritic), XCOM 2, and Marvel's Midnight Suns. He's building a life simulation game in a genre that's been a near-monopoly for two decades.
Methodical Games (Fund II): Adam Bellefeuil spent 15 years at Epic, was on the original Fortnite prototype team, and designed Gears of War 2 & 3 (22M units). Richard Baker spent 10 years as Technical Director at Respawn and directed Apex Legends engineering ($1B+ annual revenue). Jason West, co-creator of Call of Duty and co-founder of Infinity Ward and Respawn, advises. They're building Frey, a fantasy melee PvPvE extraction game.
Treehouse Games (Fund I): Michael Chu was monetization lead on League of Legends for 7 years. Ryan Sullivan co-founded Sirvo, creators of Threes. They're building Voyagers of Nera, a 10-player co-op survival-crafting game, now live on Steam Early Access with 85% positive reviews.
Brain Jar Games (Fund II, Seed co-lead): Founded by veterans from Trion Worlds, EA, Super Evil Mega Corp, Netflix, and Rovio. Dead as Disco, a rhythm-based brawler, has generated exceptional organic traction: 650K+ Steam wishlists, 55M+ TikTok views, 98% positive reviews across 1M+ demo players, and a 60K+ Discord community, all with zero paid marketing.
Roboto Games (Fund II): Curt Bererton and Mathilde Pignol bring experience from EA, PopCap, Space Ape, Disney, and Microsoft, with prior games generating $100M+ revenue and 65M+ players. They're building Stormforge, a cross-platform MMO positioned as "Minecraft meets Genshin Impact," targeting Early Access in Q1 2026.

These are teams with exceptional pedigrees building original IP for PC/console, targeting the exact market segment the data shows is working.

The AI Accelerant

The economic viability of AA isn't just about market receptivity. It's about production costs falling while capability rises.

Here's what we observe in our portfolio: AI tooling is compressing specific production workflows. Asset generation, code assistance, QA automation, localization, documentation. Tasks that once required dedicated headcount are increasingly handled by smaller teams augmented with AI tools. One portfolio studio reduced build-to-build QA cycle time by 40% after implementing AI-assisted testing. Another cut localization turnaround from weeks to days.

The result: the cost floor for a given scope is dropping. Studios can achieve production values that would have required larger teams three years ago.

But the quality ceiling remains human. Creative direction, player psychology, "fun" assessment, strategic product decisions — these require gaming expertise that current AI cannot replicate. This distinction matters: we invest in "Games x AI" rather than "AI x Games." The difference isn't semantic. An AI-first studio asks "what can this technology build?" A games-first studio asks "what does the player need?" and then selects AI tools that serve that answer. Gaming expertise doesn't add to AI value; it multiplies it, because a veteran creative director knows which of the fifty AI-generated assets actually ships. That judgment is the bottleneck, not the generation.

Large publishers, in theory, should capture these same gains. In practice, they rarely do. BCG's research shows 74% of companies fail to realize AI productivity gains, hamstrung by legacy pipelines, technical debt, and organizational resistance. The studios we back don't face that friction. They're designing workflows around the tools from day one, not retrofitting AI into processes built for hundred-person teams.

Why We Remain Committed

The market timing is favorable. Series A valuations have declined meaningfully from 2021 peaks. Seasoned developers who shipped the last decade's hits are now building their own studios, bringing hard-won expertise to smaller, more focused teams.

Looking ahead, the pipeline cancellations of 2024-2025 have created what we see as a content gap emerging in 2027-2028. Ubisoft shelved multiple titles, Sony shuttered Firewalk and other studios, Microsoft closed four Bethesda studios. Games cancelled in 2024 won't ship in 2027. That supply vacuum is structural, not cyclical. Global publishers facing that gap will have a choice: miss earnings or acquire proven AA IP to fill release schedules. We're positioning our portfolio to be attractive solutions to that scarcity.

PC gaming's structural openness to new IP, combined with AI-enabled productivity gains for smaller teams, creates a compelling opportunity for AA studios. We've been building toward this thesis for five years. The data continues to support the bet.

About the Author

Andrew is Managing Director at Transcend. A gaming executive with over 20 years of operational experience, he has built consumer businesses generating over $6 billion in revenue across console, PC, and mobile. Previously, Andrew was President of Studios at Kabam, where he scaled the company to $400M in annual revenue and a $1B+ exit. He also served as CEO of GREE International and Head of Strategy at EA Maxis. Andrew holds an MBA from UC Berkeley Haas and currently serves on the boards of GDEV (NASDAQ), Ruckus Games, Fun Country, and Eggscape.

About Transcend

Transcend is an early-stage gaming VC investing in the next generation of interactive entertainment. In a $250B+ industry, we back AI-native studios building games, complemented by tools and technology that amplify our content portfolio. With 70+ years of operator experience and $10B+ in lifetime revenue, we partner with exceptional founders from pre-seed through Series A. Learn more at transcend.fund.