InvestGame team is pleased to present our Global Gaming Deals Activity Report for Q1-Q3’23. This report analyzed a significant shift in the gaming industry’s investment landscape, characterized by reduced dealmaking activity and a challenging environment for early- and late-stage investments.
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- Decrease in Dealmaking Activity: The year-to-date (YTD) 2023 has seen a significant downturn in dealmaking activity in the gaming industry, falling from the record heights experienced during 2021-22. The capital raised by gaming companies in YTD 2023 was four times lower than the average of 2021-22 during the same period, with the number of deals shrinking by approximately 23%.
- Mergers and Acquisitions (M&As): Beginning in 2023, there was a noticeable decrease in M&A activity, with a total exit value approaching $8.5B, 3.8x below the average amount of the previous two years. Notable acquisitions include Scopely by Savvy Games Group for $4.9B and a public takeover of Rovio by SEGA for approximately $0.8B.
- Public Offerings: Public offerings in the gaming industry have remained quiet, with the IPO window essentially closed. The sector has seen a roughly 29% year-over-year decline in Q1–Q3 2023, making it on track to be the worst year amid increasingly harsh conditions. This includes higher interest rates and mixed performance of recent US-listed IPOs.
- Early-stage Gaming Investment: Early-stage investment activity in gaming still needs to catch up to the 2021-22 levels in value and volume. However, it shows a positive dynamic compared to the pre-COVID period. Pre-seed and Seed rounds have remained steadfast, while Series A deals have decreased.
- Late-stage Gaming Investment: The late-stage gaming investment sector reached its lowest point in 2023, with roughly $300m capital raised across eight transactions. The prolonged macro volatility and liquidity crunch are expected to decrease the chances of consequent fundraising for newcomers, potentially leading to down rounds, premature M&As, or bankruptcies.
- We see a significant increase in AI-related deals in 2023, particularly in Q3, with 21 deals totaling $268.1m. AI’s impact is rising in gaming, primarily in production, though less rapidly than the previous blockchain gaming boom; the industry closely monitors AI’s evolving role, indicating a potential emerging trend in gaming’s future.