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I won't consider video games saturated until developers can create faster than "content locusts" want to consume. Currently games that provide a lot of playtime relative to developer time still have significant gaps between major deployments. Path of Exile for example had approximately three minor and one major release per year. Given that most players play 1-2 weeks after a release this produces 4-8 weeks of player time per year of development time. If you're into a more niche genre you might be looking at one or two good titles per decade.
Some people might argue that we already quietly hit this point well before the current AI craze. The struggles of the modern gaming industry and the indie scene are partly because it's (perceived as) hard to peel chronic Minecraft/Fortnite/COD/etc. players away from their comfort games.
That might be what people say but the real issue is that the games are mediocre trash. As soon as anything decent actually is released people flock to that game.
All this is (almost) only cope for bad developers.
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Even if you're in a major genre like RPGs you might still only get a good game once every couple of years. That there is a sea of uninspired and boring shit out there doesn't really matter.
The only parts of the market that really are closing in on being saturated are the ones where the playtime is essentially infinite, like competitive multiplayer games.
What is happening is perhaps comparable to the book market. Does there being practically no barrier to entry mean that the market is saturated? No, it means the market for mediocre slop is saturated, which is of so low quality that the vast majority of prospective consumers have negative interest in it, or only use it as a sort of background noise to fill time. Some might even argue that there are less worthwhile books to read despite there being more words written than ever before.
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