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As with many other industries, the gaming sector has faced its
share of issues this year as startups struggle to secure funding.
Pitchbook has just released its Q3 2023 Gaming Report, looking at VC trends
and emerging opportunities in gaming. It should come as no surprise
that there was a decline in funding; however, there is still
funding going into game studio startups and investments focused on
gaming analytics startups. Foley had the privilege to advise on an
investment into the multiplayer game moderation platform GGWP,
which was announced in July 2023.
Below, we look at some of the highlights from the Pitchbook
report.
Deal Count and Deal Value
Gaming startups saw a decline in the total number of deals and
deal value in Q3. For the quarter, there were 113 deals valued at
$857.0 million, representing a decrease of 10.3% in deal count and
35.3% in deal value. This is a significant decline YoY, with deal
value down 67.5% and deal count off by 50.2%.
Pitchbook points out that despite the QoQ decline, the past four
quarters have generated between $800 million and $1.1 billion in
investment. Gaming investment in 2023 is currently on pace to
narrowly exceed 2019’s $3.7 billion invested.
What Subsets Are Investors Targeting?
Pitchbook’s data shows the content segment had the largest
share of investment activity, with $514.2 million across 66 deals.
The content segment accounted for more than double the next highest
segment, development, with $247.7 million invested. All other
categories totaled only $35 million in investment.
Early vs. Late-Stage Deals
VC investors are currently focused more on early-stage deals,
which totaled $353.0 million, narrowly ahead of late-stage deals
totaling $299.0 million. The report notes that this is a reversal
of the two previous quarters, which saw investors investing more in
late-stage deals.
In Q3, early-stage and seed/pre-seed deals accounted for more
than 70% of all VC deal activity in the gaming sector. Venture
growth deals declined significantly. Such deals accounted for more
than 30% in 2020 and 20% in 2021. However, they represented only
5.8% of deals in 2023. Late-stage deals, meanwhile, showed an
impressive increase, jumping from 23.9% of deals in 2022 to 46.1%
YTD in 2023.
Investment might be down overall in the gaming industry, but
that has been the case with most industries. Over the past two
years, economic conditions have caused investors to pull back on
dealmaking. But there is a lot of dry powder to be deployed in the
gaming space. Pitchbook points out in a recent article that mainstream investors have
“bulked up their gaming presence in recent years,” and
much of the money remains to be invested.
Large recent deals and major exits in the sector, along with
more distribution channels and AI-augmented game development,
leading to more intuitive and less capital-intensive game creation,
are laying the groundwork for renewed investor attention to the
gaming industry.
Gaming is an imaginative and transformative industry at the
forefront of technology adoption, development, and application,
often in unforeseen ways. Investors will no doubt continue to fund
the exciting innovation coming out of the gaming industry, and we
are watching for a return to an increased level of investment as
global economic conditions continue to level out.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from United States
To print this article, all you need is to be registered or login on Mondaq.com.
As with many other industries, the gaming sector has faced its
share of issues this year as startups struggle to secure funding.
Pitchbook has just released its Q3 2023 Gaming Report, looking at VC trends
and emerging opportunities in gaming. It should come as no surprise
that there was a decline in funding; however, there is still
funding going into game studio startups and investments focused on
gaming analytics startups. Foley had the privilege to advise on an
investment into the multiplayer game moderation platform GGWP,
which was announced in July 2023.
Below, we look at some of the highlights from the Pitchbook
report.
Deal Count and Deal Value
Gaming startups saw a decline in the total number of deals and
deal value in Q3. For the quarter, there were 113 deals valued at
$857.0 million, representing a decrease of 10.3% in deal count and
35.3% in deal value. This is a significant decline YoY, with deal
value down 67.5% and deal count off by 50.2%.
Pitchbook points out that despite the QoQ decline, the past four
quarters have generated between $800 million and $1.1 billion in
investment. Gaming investment in 2023 is currently on pace to
narrowly exceed 2019’s $3.7 billion invested.
What Subsets Are Investors Targeting?
Pitchbook’s data shows the content segment had the largest
share of investment activity, with $514.2 million across 66 deals.
The content segment accounted for more than double the next highest
segment, development, with $247.7 million invested. All other
categories totaled only $35 million in investment.
Early vs. Late-Stage Deals
VC investors are currently focused more on early-stage deals,
which totaled $353.0 million, narrowly ahead of late-stage deals
totaling $299.0 million. The report notes that this is a reversal
of the two previous quarters, which saw investors investing more in
late-stage deals.
In Q3, early-stage and seed/pre-seed deals accounted for more
than 70% of all VC deal activity in the gaming sector. Venture
growth deals declined significantly. Such deals accounted for more
than 30% in 2020 and 20% in 2021. However, they represented only
5.8% of deals in 2023. Late-stage deals, meanwhile, showed an
impressive increase, jumping from 23.9% of deals in 2022 to 46.1%
YTD in 2023.
Investment might be down overall in the gaming industry, but
that has been the case with most industries. Over the past two
years, economic conditions have caused investors to pull back on
dealmaking. But there is a lot of dry powder to be deployed in the
gaming space. Pitchbook points out in a recent article that mainstream investors have
“bulked up their gaming presence in recent years,” and
much of the money remains to be invested.
Large recent deals and major exits in the sector, along with
more distribution channels and AI-augmented game development,
leading to more intuitive and less capital-intensive game creation,
are laying the groundwork for renewed investor attention to the
gaming industry.
Gaming is an imaginative and transformative industry at the
forefront of technology adoption, development, and application,
often in unforeseen ways. Investors will no doubt continue to fund
the exciting innovation coming out of the gaming industry, and we
are watching for a return to an increased level of investment as
global economic conditions continue to level out.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from United States
To print this article, all you need is to be registered or login on Mondaq.com.
As with many other industries, the gaming sector has faced its
share of issues this year as startups struggle to secure funding.
Pitchbook has just released its Q3 2023 Gaming Report, looking at VC trends
and emerging opportunities in gaming. It should come as no surprise
that there was a decline in funding; however, there is still
funding going into game studio startups and investments focused on
gaming analytics startups. Foley had the privilege to advise on an
investment into the multiplayer game moderation platform GGWP,
which was announced in July 2023.
Below, we look at some of the highlights from the Pitchbook
report.
Deal Count and Deal Value
Gaming startups saw a decline in the total number of deals and
deal value in Q3. For the quarter, there were 113 deals valued at
$857.0 million, representing a decrease of 10.3% in deal count and
35.3% in deal value. This is a significant decline YoY, with deal
value down 67.5% and deal count off by 50.2%.
Pitchbook points out that despite the QoQ decline, the past four
quarters have generated between $800 million and $1.1 billion in
investment. Gaming investment in 2023 is currently on pace to
narrowly exceed 2019’s $3.7 billion invested.
What Subsets Are Investors Targeting?
Pitchbook’s data shows the content segment had the largest
share of investment activity, with $514.2 million across 66 deals.
The content segment accounted for more than double the next highest
segment, development, with $247.7 million invested. All other
categories totaled only $35 million in investment.
Early vs. Late-Stage Deals
VC investors are currently focused more on early-stage deals,
which totaled $353.0 million, narrowly ahead of late-stage deals
totaling $299.0 million. The report notes that this is a reversal
of the two previous quarters, which saw investors investing more in
late-stage deals.
In Q3, early-stage and seed/pre-seed deals accounted for more
than 70% of all VC deal activity in the gaming sector. Venture
growth deals declined significantly. Such deals accounted for more
than 30% in 2020 and 20% in 2021. However, they represented only
5.8% of deals in 2023. Late-stage deals, meanwhile, showed an
impressive increase, jumping from 23.9% of deals in 2022 to 46.1%
YTD in 2023.
Investment might be down overall in the gaming industry, but
that has been the case with most industries. Over the past two
years, economic conditions have caused investors to pull back on
dealmaking. But there is a lot of dry powder to be deployed in the
gaming space. Pitchbook points out in a recent article that mainstream investors have
“bulked up their gaming presence in recent years,” and
much of the money remains to be invested.
Large recent deals and major exits in the sector, along with
more distribution channels and AI-augmented game development,
leading to more intuitive and less capital-intensive game creation,
are laying the groundwork for renewed investor attention to the
gaming industry.
Gaming is an imaginative and transformative industry at the
forefront of technology adoption, development, and application,
often in unforeseen ways. Investors will no doubt continue to fund
the exciting innovation coming out of the gaming industry, and we
are watching for a return to an increased level of investment as
global economic conditions continue to level out.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from United States
To print this article, all you need is to be registered or login on Mondaq.com.
As with many other industries, the gaming sector has faced its
share of issues this year as startups struggle to secure funding.
Pitchbook has just released its Q3 2023 Gaming Report, looking at VC trends
and emerging opportunities in gaming. It should come as no surprise
that there was a decline in funding; however, there is still
funding going into game studio startups and investments focused on
gaming analytics startups. Foley had the privilege to advise on an
investment into the multiplayer game moderation platform GGWP,
which was announced in July 2023.
Below, we look at some of the highlights from the Pitchbook
report.
Deal Count and Deal Value
Gaming startups saw a decline in the total number of deals and
deal value in Q3. For the quarter, there were 113 deals valued at
$857.0 million, representing a decrease of 10.3% in deal count and
35.3% in deal value. This is a significant decline YoY, with deal
value down 67.5% and deal count off by 50.2%.
Pitchbook points out that despite the QoQ decline, the past four
quarters have generated between $800 million and $1.1 billion in
investment. Gaming investment in 2023 is currently on pace to
narrowly exceed 2019’s $3.7 billion invested.
What Subsets Are Investors Targeting?
Pitchbook’s data shows the content segment had the largest
share of investment activity, with $514.2 million across 66 deals.
The content segment accounted for more than double the next highest
segment, development, with $247.7 million invested. All other
categories totaled only $35 million in investment.
Early vs. Late-Stage Deals
VC investors are currently focused more on early-stage deals,
which totaled $353.0 million, narrowly ahead of late-stage deals
totaling $299.0 million. The report notes that this is a reversal
of the two previous quarters, which saw investors investing more in
late-stage deals.
In Q3, early-stage and seed/pre-seed deals accounted for more
than 70% of all VC deal activity in the gaming sector. Venture
growth deals declined significantly. Such deals accounted for more
than 30% in 2020 and 20% in 2021. However, they represented only
5.8% of deals in 2023. Late-stage deals, meanwhile, showed an
impressive increase, jumping from 23.9% of deals in 2022 to 46.1%
YTD in 2023.
Investment might be down overall in the gaming industry, but
that has been the case with most industries. Over the past two
years, economic conditions have caused investors to pull back on
dealmaking. But there is a lot of dry powder to be deployed in the
gaming space. Pitchbook points out in a recent article that mainstream investors have
“bulked up their gaming presence in recent years,” and
much of the money remains to be invested.
Large recent deals and major exits in the sector, along with
more distribution channels and AI-augmented game development,
leading to more intuitive and less capital-intensive game creation,
are laying the groundwork for renewed investor attention to the
gaming industry.
Gaming is an imaginative and transformative industry at the
forefront of technology adoption, development, and application,
often in unforeseen ways. Investors will no doubt continue to fund
the exciting innovation coming out of the gaming industry, and we
are watching for a return to an increased level of investment as
global economic conditions continue to level out.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Corporate/Commercial Law from United States
