2026 Predictions: Trends in Gen AI, Gaming & Digital Ad Spend

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.

By 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.

Short-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.

U.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.

Social platforms, specifically Meta’s Reels, are shifting advertising budgets away from video toward static, image-based formats.

Short-drama vertical video is narrowing the revenue gap with traditional OTT streaming, reaching 20% of OTT’s IAP share by 2026.