ReportSensor Tower
2026 Predictions: Trends in Gen AI, Gaming & Digital Ad Spend
1 Jan 202626 pages~19 min full read
Generative AI apps will become a top-five category by 2026, generating over $10 billion in IAP revenue, 7.2 billion downloads, and 43 billion hours of usage, representing an 82% year-over-year growth.
See it on page 21By the end of 2026, generative AI traffic will surpass paid sources on more than 50% of the top 1,000 U.S. websites, up from 37% in late 2025.
See it on page 21Short-drama vertical video is projected to overtake traditional OTT streaming in download volume, capturing roughly 80% of total downloads with rapid adoption in India, Indonesia, and Brazil.
See it on page 21U.S. digital ad spend will reach $20 billion in 2026, with image-based creatives growing at 35% year-over-year, significantly outpacing the 15% growth rate of video formats.
See it on page 21Social platforms, specifically Meta’s Reels, are shifting advertising budgets away from video toward static, image-based formats.
See it on page 21Short-drama vertical video is narrowing the revenue gap with traditional OTT streaming, reaching 20% of OTT’s IAP share by 2026.
See it on page 21The forecast outlines how generative‑AI, short‑form video and evolving ad formats will reshape the digital economy by 2026. It argues that AI‑driven applications will move from a niche category to a core revenue engine, rivaling traditional paid‑media traffic and reshaping user‑acquisition dynamics across mobile, web and gaming. The analysis draws on Sensor Tower’s app‑store, advertising and web‑traffic datasets, applying its App IQ and Game IQ taxonomies to the top publishers, the 1,000 most‑visited U.S. sites and the leading Steam releases, with historical data through December 2025 and forward projections to 2026.
Generative‑AI apps are projected to generate more than $10 billion in worldwide in‑app‑purchase revenue, achieve 7.2 billion downloads and capture 43 billion hours of usage in 2026—an 82 % year‑over‑year increase that will place the genre among the top five for downloads, revenue and engagement. Short‑drama vertical video is forecast to overtake traditional OTT streaming in download volume, securing roughly 80 % of downloads and closing the IAP gap to 20 % of OTT’s share, driven by rapid adoption in markets such as India, Indonesia and Brazil. Meanwhile, U.S. digital ad spend will total $20 billion, with image‑based creatives outpacing video growth (35 % versus 15 % YoY) as social platforms, especially Meta’s Reels, shift budgets toward static formats.
On the web, generative‑AI traffic will surpass paid sources on more than half of the top 1,000 U.S. sites by the end of 2026, up from 37 % in late 2025,
