Dynamics of Gaming Deals

Aug, 2024 D
YNAMICS OF

G
AMING

D
EALS

DISCLAIMER: THE ANALYSES AND INSIGHTS PROVIDED IN THIS REPORT ARE FOR INFORMATIONAL PURPOSES ONLY AND ARE NOT INTENDED AS INVESTMENT ADVICE OR RECOMMENDATIONS.

THE CONTENT IS PRESENTED SOLELY FOR CONVENIENCE AND SHOULD NOT BE RELIED UPON FOR MAKING FINANCIAL OR INVESTMENT DECISIONS.

POWERED BY

M
ARKET
S
TAGES

2019
SPARK

$2bn, 117 deals

2020
BOOM

$2.9bn (+45%), 120 deals (+3%)

2021

GROWTH

$5.3bn (+83%), 186 deals (+55%)

2022
SHOCK

$1.8bn (-66%), 126 deals (-47%)

2023
STABILIZATION

$874M (-51%), 148 deals (+17%)

2024
RECOVERY?

Slower than expected but still here

INVESTMENT GROWTH

POST PANDEMIC DECLINE

OPPORTUNITY TIME

The 2019 data in this report, and elsewhere in the document, is an estimate provided by The Games Fund team based on

various open-source reports. The data for 2020-2024 is based on research by the analytical platform investgame.net.

I
NVESTMENTS
V
OLUME

The games industry funding dynamic by deals volume Q1 2019 – Q2 2024

Growth and decline phases show STRONG dynamics

in $ millions

THE GAMES FUND

I
NVESTMENT
D
EALS

The games industry funding dynamic by number of deals Q1 2019 – Q2 2022

Growth and decline phases show significantly CALMER dynamics in comparison to the volume

# of deals

THE GAMES FUND

E
ARLY-STAGE vs
L
ATE-STAGE

When we separate early-stage from growth-stage deals, we see that the dynamics of deal volume are significantly influenced by

large late-stage transactions. In fact, early-stage deals remain relatively stable, while the market is experiencing a decline
primarily

in Series A+ rounds.

Early-stage companies continue to receive funding, possibly through smaller rounds, and even enjoy VC competition as there are

more and more early stage VC firms, there is a substantial shortage of follow-on rounds. Consequently, opportunities to raise

growth capital are scarce. While Series A rounds might be challenging, it also presents opportunities for growth investors.

THE GAMES FUND

I
NVESTMENT
G
ROWTH 2019-2021

GETTING NOTICED

Games Industry begin to get

recognized as a serious business.

“Games are more than movies and

music combined”

ADVANCEMENTS IN UA

Precise targeting tech evolved, along

with the hypercasual games boom,

driving performance UA and

boosting mobile games market.

PANDEMIC GROWTH

Pandemic lockdowns forced people

to try video games and led to the

extreme growth of the userbase.

HYPE: Metaverse, WEB3

New technologies sparked a wave of

enthusiasm, driving investing,

winding up valuations which in turn

attracted more attention and money.

CHEAP CAPITAL

Low interest rates drove investors to

high risk / high reward alternatives.

First gaming VC and strategic

investment departments launched +

rapid influx of “tourist money”.

M&A and IPO BOOM

Big acquisitions and M&A frenzy by

companies like Embracer, Stillfront,

MTG, etc + numerous IPOs,

including Unity, Playtica, Applovin,

Krafton, Huuuge, TinyBuild.

P
OST-PANDEMIC
D
ECLINE: 2022-2023

LOCKDOWNS LIFTED

Lockdowns lifted and many people

stopped playing games. Industry

experienced the “hangover” declining

for the first time in years.

IDFA-pocalypsis

Apple attacked precise performance

marketing by introducing the privacy

control policy – IDFA. Mobile gaming

market struggled a lot.

EXPENSIVE CAPITAL

Due to macroeconomic factors

interest rates grew, making investors

play safe, slowing down economy

and investments.

LACK OF FOLLOW-ONs

Many companies, funded on very

favourable terms during the growth

struggled to find follow on funding

and shrinked or even closed, further

scaring investors.

STRUGGLE

Fail of the first generation of web3

and Metaverse, exodus of tourist

money, AAA crisis and layoffs due to

irresponsible hiring is shaking the

whole gaming industry.

M&A and IPO SLOWDOWN

Due to low multipliers of public

companies, and previous

questionable acquisitions strategic

companies slowed down or even

stopped M&A activities – no exit.

K
EY
I
NSIGHTS FOR 2024

DIVERSE INVESTORS

VC, Strategics, and Publishers

exploring alternative investment

mechanisms and opportunities

including project financing and debt

EMERGING REGIONS

Investors are looking for

cost-efficient teams and regions:

Eastern Europe, SE Asia, China,

South America

ROUND-A CHALLENGE

While there is a plenty of early stage

investors competing for pre-seed

and seed, there are only a few

growth investors

FOCUS ON AA

Investors are looking for smaller

opportunities with shorter return time

and higher ROI.

Good signals from indie dev teams

MOBILE CHALLENGES

While mobile games is still the largest

market and potential return,

marketing challenge remains

unsolved and competition getting

crazy intense – high entry barrier

OPTIMISM

Despite all the challenges, the mood

in 2024 is significantly changed for

good. New funds were announced,

new releases performing extremely

well