Regular .zip or .7z files, with the file extension renamed. Really.
If so, what is the encryption method that's commonly used in popular games especially First-Person Shooter games?
When you play online, the hash of important assets is compared with the server to check if they've been modified. Of course, you could hack the exe to make it lie about the hashes, so they then need 3rd party cheat detectors like PunkBuster/VAC to ensure the exe isn't modified, and then the anti-cheat programs need clever mechanisms to ensure the anti-cheat hasn't been cheated, and so on.