AAA Games Face Challenges as AA Titles Gain Momentum

The landscape of video game development is shifting as AAA studios grapple with the rise of AA games, according to Josef Fares, director of Split Fiction and It Takes Two. In a recent interview with The Game Business, Fares emphasized that while major studios like Naughty Dog, Rockstar Games, and Nintendo are pushing the boundaries of innovation, the overwhelming success of AA titles could pose challenges for the AAA segment.

Fares expressed concern about the implications of AA games such as Clair Obscur: Expedition 33, which dominated the 2025 Game Awards. He noted that the growing popularity of these titles might overshadow traditional AAA productions. “I would not be able to live without a AAA title,” Fares remarked. “I really want to play the blockbuster games.”

The gaming industry has been experiencing significant downsizing, affecting major players like EA, Ubisoft, Take-Two, Xbox, and PlayStation. While the exact connection between this trend and the surge in AA development remains unclear, Fares highlighted an important aspect of the industry dynamics. Developers working with smaller budgets often take greater creative risks, as they do not face the same pressure from investor-backed publishers.

Despite the challenges, Fares praised notable AAA studios for their commitment to innovation. “I would argue that, actually, Naughty Dog is pushing the envelope of innovation with a AAA budget,” he stated. He also pointed to Rockstar and Nintendo as examples of studios that manage to balance large-scale productions with creative experimentation. “You can do a big AAA title but also take innovative risks,” he added.

As the industry continues to evolve, the future of AAA gaming is uncertain. Major upcoming titles like Naughty Dog’s Intergalactic: The Heretic Prophet and Rockstar’s GTA 6 will be pivotal in determining whether these studios can maintain their innovative edge while operating under substantial financial constraints.

Nintendo has consistently demonstrated its unique approach to game development, often prioritizing creativity over conventional market trends. This distinctiveness has helped the company maintain a loyal following and innovate within the AAA space.

Fares’s own studio, Hazelight Studios, is focusing on local multiplayer experiences, recognizing an ongoing demand for couch co-op gaming. “As long as the couch is there, there’s going to be a need for couch co-op,” said Oskar Wolontis, COO of Hazelight Studios.

As the industry navigates these shifting dynamics, the interplay between AAA and AA games will likely shape the future of gaming, impacting both developers and players alike. The balance between financial risk and creative freedom will be crucial as studios seek to capture the evolving tastes of gamers worldwide.