$189 billion gaming boom: why Israel is becoming the industry's next powerhouse

Once viewed as a niche form of entertainment, video games have become the world's largest entertainment industry, generating an estimated $189 billion in annual revenue—surpassing the film and music industries combined.

The sector's rapid growth has been fueled by blockbuster franchises such as Mario, with more than 900 million copies sold, Pokémon, which has surpassed 500 million sales, and Call of Duty, another franchise that has crossed the 500 million mark. But behind these global successes are companies that most players have never heard of.

One of those companies is Xsolla, a U.S.-based gaming technology firm that has quietly become a key part of the global gaming ecosystem. Operating in more than 200 countries, Xsolla provides developers with the infrastructure needed to sell, distribute, promote and monetize games worldwide.

"Our company provides the infrastructure for your game—from payment solutions to promotional activities through our partner networks, influencer channels and advertising monetization," a company representative said. "We're a service provider working behind the scenes. It's all about supporting game development and the gaming ecosystem."

According to the company, its technology is now used by 60% of the world's 100 highest-grossing games.

As part of its global expansion, Xsolla has selected Tel Aviv as the location for its first-ever Xsolla Club, a 500-square-meter community hub designed to support game developers, entrepreneurs and creators.

The venue hosts daily events, including lectures, networking sessions, workshops and meetups aimed at helping both aspiring and established developers grow their businesses.

"Every day the club offers something different," a local manager said. "People come together to discuss the future of the gaming industry, whether they're looking to join an existing company or launch their own gaming startup. It's a place where everything comes together."

According to the Israel Game Developers Association, the country's gaming sector employs more than 15,000 people and generates approximately €10 billion in annual revenue.

While Japan is known for gaming giants such as Nintendo and Sega, the United States for blockbuster studios including Rockstar Games, and France for franchises like Assassin's Creed and Far Cry, Israel has carved out a strong reputation in mobile gaming.

Among its biggest success stories is Tel Aviv-based Moon Active, creator of the hit mobile game Coin Master, which has been downloaded more than 300 million times worldwide.

Industry leaders say Israel's strength lies in combining creativity with technical expertise.

"Gaming combines two things that are very characteristic of Israelis," one industry executive said. "It's artistic creativity on one hand and technology and data on the other. It's the perfect combination between art and numbers. People here have both the imagination to build great games and the technical skills to turn those ideas into successful businesses."

The country's gaming expertise is also finding applications beyond entertainment.

One example is Digital Combat Academy, an Israeli startup developing game-based military training technology. Its platform allows soldiers and tactical units to conduct virtual mission rehearsals in immersive environments similar to commercial first-person shooter games.

Founder and CEO, a former tank company commander with two decades of military experience who has also worked as a game designer at companies including Playtika and SuperPlay, said the goal is to improve battlefield readiness while reducing costs and risk.

"I wanted a product that could train soldiers without sending them into the field, wasting ammunition or risking injuries," he said. "The system analyzes everything they do—from decision-making to communication—and provides feedback to help them improve."

For many developers, access to funding, mentorship and industry connections can be just as important as having a strong idea.

The Xsolla Club aims to fill that gap by creating a collaborative workspace where developers can exchange feedback and expertise.

"It's like a co-working space, but everyone here develops games," one developer explained. "You can walk over to someone, ask them to look at your game, get advice, and then see your progress over time. That kind of feedback is incredibly valuable. Gaming is a unique field, and people here understand the challenges because they work in the same industry."

The Tel Aviv hub is only the beginning of what Xsolla hopes will become an international network of gaming communities.

"The vision is global," a company executive said. "Imagine a social network with physical locations attached to it. Developers connect online, then meet in person. If you're a member in Tel Aviv and later travel to New York, you can visit the club there and immediately connect with the local gaming community. Wherever you go, you'll know where to find people in the industry."

The company says additional locations are already in development and expects to announce further expansions in the coming years.

As Israel continues to strengthen its reputation as the "Startup Nation," gaming is emerging as one of its fastest-growing sectors. Supported by a combination of technological expertise, entrepreneurial culture and a growing collaborative ecosystem, the country's developers are increasingly positioning themselves to create the next generation of global gaming successes.