For most of the last decade, casual games grew in a simple way. More people got smartphones, more people downloaded games, and revenue followed. That model has run its course. The latest industry reports describe a market where installs keep falling, store revenue is roughly flat, and the games still growing are the ones that get more out of each player instead of finding more players.
This article looks at what the numbers show for 2025 and the first half of 2026, where the money is moving inside casual, and what all of it means for studios making and scaling casual games right now.
Downloads are falling while revenue holds
Mobile games made close to $82 billion from in-app purchases in 2025, up 1.3% from the year before. In the same year, game downloads dropped 7.2% to around 50.4 billion. That was the second year in a row of declining installs. Time spent in games still went up slightly, which means the people who play are playing at least as much as before. There are just fewer new ones arriving.
The first half of 2026 made this gap wider. In-app purchase revenue came in at $40 billion, down 2% compared to the first half of 2025, while downloads fell 12% to 24 billion. Since installs dropped much faster than spending, each download ended up worth about 11% more on average.
Casual games were downloaded 6.34 billion times in the first half of 2026, and hypercasual was the only segment that avoided a download decline in 2025. Every other part of the market, casual included, is getting fewer new installs each year.
There are a few reasons behind this. Smartphone adoption has matured in most big markets, so there is no longer a wave of first-time players to capture. Most people who enjoy casual games already have a few they play regularly, and they are not replacing them often. Buying users is also getting more expensive, which limits how many installs studios can profitably pay for. And players’ attention is spread across more apps than ever.
That last point showed up clearly in the 2025 data. For the first time, people spent more on non-game apps than on games through the app stores: $85.6 billion against $81.8 billion. AI apps had the biggest revenue gains of any category, and short-drama apps and video editing apps also grew fast. A casual game today is competing for the same free ten minutes and the same spare money as ChatGPT, CapCut and short-drama apps, not only against other games.
Where the money is moving
Flat totals hide big shifts underneath. Some parts of casual are growing quickly, while others are shrinking.
Hybrid-casual is the growth segment
Hybrid-casual games combine the quick, easy gameplay of hypercasual with the longer-term systems of traditional casual games: progression, collections, events, upgrades and in-app purchases. Hypercasual games were mainly built to earn from ads over short sessions. Hybrid-casual games keep that easy entry but give players reasons to come back for weeks or months.
It was the only segment that grew in-app purchase revenue in 2025, with around 20% growth. It kept that pace into 2026, growing roughly 23% in the first half of the year to $2.4 billion. Over the same period, casual as a whole held steady at around $16.5 billion.
The reason is mostly retention. The top hybrid-casual games now keep more players on day one than the top hypercasual games, and the difference gets bigger by day seven. When players stay longer, studios have more time to sell them something, so revenue no longer depends only on ad impressions. In a market where each new player is harder to get, that matters a lot.
Puzzle is carrying casual
Puzzle is the strongest genre inside casual. It reached $8.1 billion in the first half of 2026 after close to 20% growth, while several other genres went down. Games like Royal Match and Gossip Harbor were among the titles behind puzzle’s revenue growth in 2025. These games have deep live ops, regular events and well-tuned economies, and they show that a familiar core mechanic can still earn a lot when the layers around it are strong.
At the same time, puzzle has a gap between how many people it reaches and how much it earns. In the first half of 2026, lifestyle and puzzle games together made up 74% of all game installs and 53% of playtime, but only 34% of in-app spending. Strategy and action games did the opposite and earned 49% of spending from just 17% of installs. Puzzle has a huge audience, but most of that audience does not pay, so studios need either strong ad monetization or a small group of paying players who spend consistently.
Ad revenue is harder to grow for established games
Games that earn mainly from ads have had a tougher year. Block Blast! was the top game by ad revenue from January to May 2026 with $127 million, and Vita Mahjong doubled its ad revenue compared to a year earlier and passed Candy Crush Saga. But every casual game in the top 10 by ad revenue earned less during those five months than in the same period of 2025.
The ad revenue growth went to hypercasual games and new releases instead. Pixel Flow! is the best example. It became one of the biggest advertisers inside mobile games, and its developer was acquired by Scopely in February 2026 at a reported $1 billion valuation. Arrow and directional puzzle games are another example. They reached the global download top 10 in mid-2026 because their rules are easy to understand, failing and retrying is fast, and they work well in short video ads.
The pattern here is that new mechanics can scale very quickly, while established ad-driven games struggle to grow further. For studios, a fresh mechanic is one of the few ways to break through, but it also gets copied fast, so the window to take advantage of it is short.
Getting new players costs more
Fewer installs do not mean installs get cheaper. Gaming ad spend grew 8% to $7 billion in the first half of 2026, and the number of ad impressions grew 14% to 1.4 trillion. More money is chasing a shrinking pool of new players, which pushes costs up.
Puzzle is the most competitive genre in this auction. It accounted for 33% of all game ad spend worldwide in the first half of 2026, more than any other genre, and it led spending in the US, UK, Canada and most of Europe. In practice, puzzle games are mostly bidding against other puzzle games for the same audience.
The ad market is also becoming more concentrated. AppLovin and AdMob together handled around 65% of mobile game ad revenue by mid-2026, up from 61% at the start of 2025. Networks like Unity Ads lost share over the same period. When two platforms control most of the market, any change in their pricing, algorithms or policies can affect a studio’s whole growth plan quickly.
What this means for casual studios
Taken together, these trends point to a few practical conclusions.
Depth needs to be part of the plan from the start. Hybrid-casual’s growth shows that a simple core loop still gets people to install, but meta progression, events, and a good in-app economy are what turn those installs into revenue. Adding these systems after soft launch is possible, but it is harder and usually less effective than designing the game around them from the beginning.
User acquisition should be judged on player value rather than install volume. When downloads shrink and costs rise, the useful question is how much it costs to get a player who reaches day seven, makes a first purchase, or completes a key event. A campaign with cheap installs that mostly churn on the first day can look efficient on a dashboard and still lose money.
Acquisition channels are worth diversifying. With most ad revenue going through two networks, testing channels that reach players in a different way reduces risk. Rewarded UA is one example. In rewarded campaigns, players get a reward for installing and playing a game, often for reaching certain milestones or spending a certain amount of time in it. Because the reward is tied to actually playing, these players tend to stay longer than players who install from a regular ad and leave after one session. A newer trend in 2026 is longer rewarded campaigns that run for 60 or 90 days instead of the usual 30, which keeps players engaged well past the first weeks. Rewarded traffic has its own quality and fraud risks, so it should be measured just as carefully as any other channel, based on how many players reach real engagement milestones.
Owning the relationship with paying players is becoming more valuable.
The main takeaway for casual in 2026 is that the audience is not growing anymore. The games that grow are the ones that keep players longer, earn more from each of them, and find those players in a smarter way than their competitors.