Gaming Deals Activity Report Q1-Q3ʼ22
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Executive Summary Q1–Q3’22
$
51.4B
value of 626 deals (closed)
$
124.5B
value of 636 deals (closed + announced)
Total
By Deal Type
Value of Closed Deals*, $m
By Target Sector
Number of Closed Deals*
Note: (*) announced transactions are not included in the charts
and graphs; see Methodology & Glossary (p. 25)
2
Q3’22 has proven to continue the somewhat
lagging results of the previous quarter, further
exacerbating the gaming market cooling
conditions: the current lumpish
macroeconomic situation, post-pandemic user
engagement changes, post-IDFA pressure,
increased regulatory scrutiny, release dates
shifts, supply chain issues, and other factors.
This quarter has experienced weakening across
all investment activity types.
In Q1–Q3’22, we have registered 626 closed
deals with the overall deal value of $51.4B,
or $124.5B, including 10 more announced but
not yet closed deals
—
of course, the lion’s share
of that sum is the yet to be closed $69B
Microsoft Activision Blizzard deal. It’s essential
to understand here, that even though $124.5B
is almost 2x bigger than $62.4B (Q1–Q3’21
closed + announced cumulative deal value),
without the Activision Blizzard potential
acquisition the actual value is lower: $55.5B.
The same is true for closed deals, with $51.4B
vs. $58.8B across 709 deals in Q1–Q3’21. If
the final quarter of 2022 turns out to be as
heavily impacted as the third one, we may
safely say that 2022 will not be as
record-breaking as 2021 was.
Following the contradictory results of
the M&A activity in H1’22, the trend continues in
Q3’22. From the deal value perspective, there is
a 16% growth to $6.7B in Q3’22 (compared
to $5.8B in Q3’21). Meanwhile, the overall deal
count shows a tremendous decline (–31%), from
80 deals in Q3’21 to 55 deals in Q3’22. Looking at
a bigger picture, we see the lowering interest from
strategic investors, with a –25% decline of
the total deal number from 239 in Q1–Q3’21 to
181 in Q1–Q3’22, whereas the total deal value
reached a new high of $37.6B (vs. $28.7B in
Q1–Q3’21), indicating 31% growth.
It seems like the soured macroeconomic situation
has finally caught up with Private Investments as
well: the last quarter showed the weakest result
since Q4’20. 111 deals have presented the total
disclosed value of $1.4B, indicating a sharp
decline from Q2’22 (–69% QoQ). There is a slight
chance some heavy values remained undisclosed
in Q3, but the declining deal number and
the general economic slough suggest otherwise.
Despite the drop, the sum of Q1–Q3 still allows
2022 to so far outrace 2021: it’s $9.3B among
428 deals, against $8.8B among 409 deals
in Q1–Q3’21. We’ll have to see how
the Q4’22 fairs, though.
Executive Summary Q1–Q3’22
3
Gaming Only
$
37.1B
value of 246 deals (closed)
$
105.8B
value of 255 deals (closed + announced)
While the weakness in the investment activity
has been observed throughout the entire gaming
market activity in Q3’22, the most drastic
declines have come from Public Offerings, which
reached its lowest point since the beginning of
2020. On a YTD basis, the total deal value has
shrunk ~5x times vs. 2021, and ~2x times
vs. 2020; meanwhile, the deal count has
declined 3.6x vs. 2021 and 3x vs. 2020, making
2022 the worst year for Public Offerings.
Meanwhile, YTD Strategic Investors got a new
record in terms of the deal value, reaching
$101.4B (vs. 23.4B in Q1–Q3’21), while a total
number of closed deals showed a noticeable
decrease from 134 transactions in Q1–Q3’21 to
only 81 deals YTD (–40%). Embracer took
the first place with 22 deals, with a total amount
of $3.8B. The most notable deals were
the acquisition of Asmodee for $3.1B, six
acquisitions on Aug’22 for $765m, and
acquisition of three studios from Square
Enix
—
Crystal Dynamics, Eidos-Montréal, and
Square Enix Montréal
—
for $300m consideration.
Executive Summary Q1–Q3’22
This time, we’ve split the Top VC list into two
buckets: the traditional Gaming one, and
the Web3 gaming one, the latter being
dedicated solely to the investments into
gaming
projects, platforms, and infrastructure solutions
in
Blockchain, Web3, NFTs, P2E related space.
The traditional Gaming list is yet again led by
BITKRAFT Ventures, which invested $265m
across 21 deals. The Web3 investors’ list leader
is Animoca Brands, which has provided $1.2B
capital across 51 deals.
While Blockchain gaming used to be the driving
force of Early-stage investment activity, Q3’22
is the first quarter with negative growth metrics
in the blockchain-related investments: even
though the total number of deals continued to
grow (up 2.8x YoY; 61 vs. 22), the total deal
value was down –14% YoY ($932m vs $1.09B).
The above showcases continued but slightly
waning investor interest in the potential future
of uniquely enabled business models in
blockchain games. Overall, we observe
the continuation of 2022 market correction, as
mentioned in our previous reports.
4
$
29.4B
value of 118 deals (closed)
$
98.1B
value of 124 deals (closed + announced)
Gaming M&As Only
149 deals), the overall share of the Gaming sector deal value has
decreased from 90% to 78%. Meanwhile, the Other sector (see
Methodology & Glossary, p. 25) with the Asmodee acquisition for
$3.1B, and the Esports sector with the acquisition of ESL Gaming
and Faceit by Savvy Gaming Group for $1.5B, not only both show
tremendous deal value growth
—
10.7x ($4.3B vs. $0.4B) and 10x
($1.98B vs. $0.2B) respectively,
—
but also demonstrate growth in
total ratio. The Other sector contribution has increased from 2%
in Q1–Q3’21 to 12%, while the Esports sector deal value share
has increased from 1% to 5%.
Due to the current bearish market and the unstable economic
situation in the US and Europe, the overall interest from
strategic investors shows a significant decline
. However, with
the latest news from PIF (incl. Savvy Gaming Group),
the Embracer resources, and Tencent increased activity, we still
have a strong believe that the M&A activity will continue, with
more huge deals to come.
deals value
Looking at a bigger picture, we see the lowering
interest from strategic investors, with a –25%
decline of the deal count from 239 in Q1–Q3’21
to 181 in Q1–Q3’22, whereas the total deal
value reached a new high of $37.6B (vs. $28.7B
in Q1–Q3’21), indicating 31% growth.
For Q1–Q3’22, top 5 deals contributed almost
65% of the deal value: Zynga
—
Take-Two
Interactive ($12.7B); Bungie
—
Sony ($3.6B);
Asmodee
—
Embracer Group ($3.1B); Saudi
Arabia’s Public Investment Fund (PIF) purchase
of a minority stake in Nintendo ($2.7B); and
Joffre Capital purchase of a minority stake in
Playtika ($2.2B).
Even despite the total deal value 14% growth
($29.4B across 118 deals vs. $25.8B across
M&A Activity
Closed M&As in the Video
Games Industry, $m
5
number
of deals
Following the contradictory results of
the M&A activity in H1’22, the trend continues
in Q3’22. In terms of the deal value, there’s
16% growth to $6.7B in Q3’22 (vs. $5.8B in
Q3’21). Meanwhile, the overall deal count
shows a tremendous decline (–31%), from 80
deals in Q3’21 to 55 deals in Q3’22. However,
even with total value growing, it’s worth
mentioning 54% of the total value in Q3’22
comes from a single mega-deal: Bungie
acquisition by Sony. In comparison, the biggest
deal in Q3’21
—
Electronic Arts buying
Playdemic
—
contributed only 24% of the total
value.
As for the Late-stage VC deals, those account
for 35% of the total deal value ($3.2B) across
43 deals. With no disclosed deals of epic sizes
(pun intended) this year (like Epic’s $1.5B
round back in 2020, or again Epic’s $1B round
of 2021), it’s understandable why the category
share is declining from 70% in Q1–Q3’21
($6.2B), and 76% in Q1–Q3’20 ($3.6B).
The biggest Late–stage VC transaction of Q3’22
was the $200m Series B+ round of Limit Break.
In a stark contrast to the Q2’22, which saw
a crazy $2B Corporate round by Epic, Q3’22
saw just 9 deals with the total disclosed value
of $17.4m, including NetEase investing $13.2m
into Something Wicked Games.
As we have now passed the Q3 of 2022, it
seems like the
soured macroeconomic
situation has finally caught up with Private
Investments: the last quarter showed
the weakest result since Q4’20. 111 deals
have presented the total disclosed value of
$1.4B
, indicating a sharp decline from Q2’22
(–69% QoQ). There is a slight chance some
heavy values remained undisclosed in Q3, but
the declining deal number and the general
economic slough suggest otherwise.
Despite the drop, the sum of Q1–Q3 still allows
2022 to so far outrace 2021: it’s $9.3B among
428 deals, against $8.8B among 409 deals in
deals value
Q1–Q3’21. We’ll have to see how the Q4’22
fairs, though.
Throughout Q1–Q3’22, Early-stage VC deals
now occupy 41% of the total deal value ($3.8B)
across 343 deals (up from 38% in Q1–Q2),
meaning Early-stage VC placements are gaining
more and more momentum among Gaming
investors – compare this to 20% in Q1–Q3’21
($1.8B) and 16% in Q1–Q3’20 ($744m).
However, the biggest Early-stage VC deal of
Q3’22 was the $55m Series a of Jot Art,
noticeably lower than the record-breaking
rounds of Q1–Q2’22.
Private Investments in the Video
Games Industry, $m
Private Investment Activity
number
of deals
6
While the weakness in the investment activity
has been observed throughout the entire
gaming market activity in Q3’22,
the most
drastic declines have come from Public
Offerings, which reached its lowest point since
the beginning of 2020
.
On a YTD basis, the total deal value has shrunk
~5x times vs. 2021, and ~2x times vs. 2020;
meanwhile, the deal count has declined 3.6x
vs. 2021 and 3x vs. 2020, making 2022
the worst year for Public Offerings.
deals value
Public listings have come to a nearly full stop over the last 3 months,
with the most notable stories being:
—
FaZe Clan (via SPAC)
—
a professional Esports and entertainment
organization, currently trading at –70% discount to its listing price;
—
Technicolor Creative Studios (TCHS)
—
a provider of creative visual art
services, spinning out of its parent company, and going public at a $1B+
valuation;
—
Valofe (via SPAC)
—
a developer and publisher of online PC and Mobile
games, going public at a $3.5B+ valuation.
Public Offerings in the Video
Games Industry, $m
Public Offerings Activity
number
of deals
7
Rank*
Venture Capital Fund
# of Deals
Total Deal Value**, $m
# of Leading Deals
Lead Deals Value**, $m
Selected Lead Deals
1
BITKRAFT Ventures
21
265
11
23
Lightforge Games, GGWP, Sprocket Games
2
Makers Fund
10
489
2
62
Theorycraft Games, Alta
3
Galaxy Interactive
15
210
2
16
Nekcom, Gadsme
4
Griffin Gaming Partners
10
162
2
63
Spyke, coherence ApS
5
Andreessen Horowitz
9
194
6
118
Ready Player Me, Carry1st, PahdoLabs
6
Hiro Capital
8
197
5
119
FRVR, Incredibuild, Machinations
7
Konvoy
9
125
6
44
Solsten, Sanlo, Pok Pok, Cognitive3D
8
Sisu Games Ventures
14
60
5
4
Roleverse, Extra Dimension Games
9
vgames
10
19
9
12
Candivore, InnPlay, Octoplay, Day2 Games
10
1Up Ventures
10
57
2
6
Stratosphere Games, Atom Switch
11
Index Ventures
3
300
3
300
Dream Games, Backbone, Bit Odd
12
GEM Capital
9
17
9
17
HypeMasters, Game Garden, Vestan
13
The Games Fund
7
17
7
17
HypeMasters, Made on Earth Games
14
Lumikai
4
51
2
2
CloudFeather, Supernova
15
London Venture
Partners
6
28
1
4
Pnkfrg
VC Gaming Funds
Note: (*) based on the internal weighted average ranking system (see p.23); (**) based
on
gaming investments with the disclosed deal value (no Web3 gaming deals included)
8
Sony, with the acquisition of Bungie for
$3.6B,
participation in Epic Games’ $2B round, and
the other 9 deals, took third place.
Tencent, the most active Strategic Investor in
2021, took up the fourth place, with 14 deals
for a total amount of $2B, including
the acquisition of Sumo Group for $1.26B.
The continued bearish trend on public
markets, alongside increasing inflation in
the US and Europe, will probably continue to
affect the overall activity of the Strategic
Investors in Q4’22.
On the other hand,
with the aforementioned
announcement from Savvy Gaming Group, as
well as Tencent and NetEase interest in
the Western gaming companies, plus
the strong cash position of Embracer, we still
can expect more big deals happening in
Q4’22
.
Rank**
Strategic
Investor
# of deals
Disclosed
Value, $m
Deal Type
Investment
Focus
1
Embracer
Group
22
4 611
M&As
PC & Console,
Mobile, Board
2
Saudi PIF (incl.
Savvy Gaming
Group)
7
6 435
M&As,
Corporate
PC & Console,
Esports
3
Sony
11
5 700
M&As,
Corporate
PC & Console,
Tech
4
Tencent incl.
subsidiaries
14
2 006
M&As,
Corporate
PC & Console,
Mobile
5
Microsoft
1
68 700
M&As
PC & Console
6
Take-Two
Interactive
1
12 700
M&As,
Corporate
PC & Console,
Mobile
7
AppLovin
2
1 050
M&As
Tech, Mobile
8
Team 17
3
217
M&As
PC & Console
9
Kakao Games
3
132
Corporate
PC & Console,
Mobile
10
Nexters
3
125
M&As
Mobile
11
Krafton
5
89
M&As,
Corporate
Mobile, Tech
12
Overwolf
3
33
M&As,
Corporate
P2E, Tech
13
Ubisoft
3
24
Corporate
PC & Console,
P2E
14
Stillfront
Group
1
301
M&As
Mobile,
PC & Console
15
Nacon
2
61
M&As,
PC & Console
YTD Strategic Investors got a new record in
terms of the deal value, reaching $101.4B
(vs. 23.4B in Q1–Q3’21), while a total number
of closed deals showed a noticeable decrease
from 134 transactions in Q1–Q3’21 to only
81 deals YTD (–40%).
Embracer took the first place with 22 deals,
with a total amount of $3.8B. The most
notable deals were the acquisition of
Asmodee for $3.1B, six acquisitions on
Aug’22 for $765m, and acquisition of three
studios from Square Enix
—
Crystal Dynamics,
Eidos-Montréal, and Square Enix
Montréal
—
for $300m consideration.
Saudi Arabia’s Public Investment Fund (PIF),
with its subsidiary Savvy Gaming Group, took
the second place with 7 deals, including
purchasing of shares of 5 public gaming
companies (incl. Embracer). Furthermore, on
Sep’22, Savvy Gaming Group announced its
plan to spend $37B for investing in
the gaming market, including the acquisition
of one of the major publishers for $13B.
Strategic Investors*
9
Note: (*) including recently announced and unclosed
transactions; (**) based on the internal weighted average
ranking system, this list reflects most active strategics, thus
the deal value alone does not guarantee the top
spot
—
the number of deals is substantial too
$4.4B
+
Q3’22 Largest Announced / Closed M&A Transactions
$3.6B
+
10
30.37% stake
$925m
+
$642m
+
$470m
+
49.9% stake
€300m
+
$246m
9.39% stake
12.16% stake
Alexander
Chachava
Compare this to the 2022 YTD: so far, 89% of
the companies are male-led (511), with
mixed-led occupying 9% (52), and women-led
the same 2% (12). We’ll have to see how things
change in Q4’22, but it’s unlikely the balance
will shift significantly.
There’s, however, a noticeable change in
the sectors balance among women- and
mixed-led companies, with Platform & Tech
now leading with 55% (35 companies), leaving
Gaming second (43%, 28 companies). Back in
2021, Gaming dominated other sectors with
54% (40 companies).
Gender Breakdown*
Gender Diversity
11
11
41% of all companies with mixed and women-only leaders are from
the US, while UK-based and Canada-based companies gave 8% each
(5 companies per country). Turkey takes third place with 4
companies
(6%).
The biggest deals for the mixed-founded/led companies in 2022 YTD
are the $450m Seed round of Yuga Labs (with Nicole Muniz as CEO),
Embracer Group acquisition of Crystal Dynamics for $300m, and
SciPlay buying Alictus for $300m. The biggest deal for women-led
companies is the $12.5m Seed round by Turkey-based Turnip.
*To our best knowledge, no companies that closed gaming investment
deals as targets in FY 2021 and Q1–Q3’22 were led by non-binary, or
gender-neutral founders, or by person of other genders. If we did
make
a mistake, however, please let us know at
digest@investgame.net
.
In the
last Report
for the first time ever we
introduced the gender diversity data on
the founders and leaders of the gaming
companies that closed gaming investment
deals as targets. That data spanned only the
period of H1’22; this time we provide a wider
rage, including data for the FY 2021 too, which
hopefully helps us see a bigger picture.
On the whole, the YoY balance has practically
not changed: in 2021, 90% of all companies
were led by men (713), with mixed-led ones
coming in second (60). Women-led entities
represented just 2% (14).
Together with
White Label PR
, we have
collected the most media covered deals,
ranking them by the number of mentions on
websites with 5 000+ MAU.
To make the data as objective as possible, we
did not consider duplicate articles and only
used the deals with disclosed transaction value
in this methodology.
Rank
Target
Lead Investors/Buyers
Type of the deal
Sum of the deal, $m
Number of mentions
1
Bungie
Sony Interactive Entertainment
Acquisition
3600
4985
2
Crystal Dynamics
Embracer Group
Acquisition
300
2256
3
FromSoftware
Tencent, Sony
Minority Acquisition
246, undisclosed
992
4
Ready Player Me
Andreessen Horowitz (lead)
Series B
56
371
5
Animoca Brands
Temasek, Boyu Capital, GGV Capital
Late-stage VC
110
286
6
Hadean
Molten Ventures
Series A
30
183
7
Planetarium Labs
Animoca Brands
Series A
32
171
8
Limit Break
Buckley Ventures
Late-stage VC
200
159
9
ZEBEDEE
Kingsway Capital
Series B
35
159
10
ReKTGlobal
Infinite Reality
Acquisition
470
106
11
MY.GAMES
Alexandr Chаchava
Acquisition
642
100
12
Inworld AI
Section 32, Intel Capital
Series
50
100
13
Xterio
FunPlus, Makers, FTX Ventures, XPLA
Seed Round
40
99
14
Animoca Brands
True Global Ventures
Late-stage VC
21
83
15
Iskra
Krust, Wemade, Netmarble, Line Studio
Series A
40
75
Top-15 Deals with the Biggest Global Media Coverage
12
Gaming Companies
Only the Corporate section shows a 4x increase,
with a total value of $2.2B in 23 deals (–65%
YoY), main contributor being Epic Games $2B
round (92%).
Even though Gaming VCs are still sitting on high
levels of dry powder, what with the current
situation on public markets, as well as higher
interest rates, investors have started to be way
more careful in their choices regarding potential
investments.
Contrary to the robust activity in H1’22 in terms
of the deal value,
in Q3’22 the investment
activity witnessed a dramatic decline, with
only 32 closed deals (vs. 73 in Q3’21), and
a total value of $147m (vs. $2B in Q3’21)
.
A decline in most of categories in Q1–Q3’22 is
notable: Early-stage VC deals showing
a decrease of –37% in the total deal count, with
81 closed deals of $0.9B total value (–9% YoY);
and Late-stage VC deals with a total value of
$0.7B (–77% YoY) across 13 deals (–43% YoY).
deals value
Gaming: Investment Activity
Q1–Q3’22: Deal Value, $m
Investment Activity* in
the Gaming Sector, $m
Note: (*) Investment Activity includes Private
Investments and PIPE, Other
number
of deals
14
Hence, with such low performance in Q3’22,
we can assume that it will be hard for investment activity to
achieve the results of 2021.
In Q1–Q3’22, investment focus is shifting more to
the Multiplatform segment, with only 20 closed deals within
the segment contributing almost 71% of the total deal value
(vs. 61% in Q1–Q3’21); the Mobile segment still holds second
place, with 18% (vs. 21 in Q1–Q3’21) across 53 deals. PC &
Console took up the third place, with the total deal value
contribution declining from 12% to 9%.
As for the regional split, in Q1–Q3’22 the US continues to be
the most active market, with 37 closed deals. The UK, with 15
closed deals, holds up the second place. Turkey continues to
hold the third place, with 11 closed deals.
With silence reigning on bearish public markets
and the recession pending, the declining trend
in both the M&A transaction value ($6.1B in
Q3’22 vs. $8.9B in Q3’21) and the number of
deals (39 in Q3’22 vs. 52 in Q3’21) pursues.
Moreover, almost 59% of the total deal value in
Q3’22 was contributed solely by Sony
Interactive acquisition of Bungie, while in
Q3’21, the biggest transaction
—
Krafton IPO of
$3.7B
—
contributed 42%.
A lack of Public Offerings also persists, though
one significant Public Offering did happen:
deals value
number
of deals
Gaming: M&A and Exits Activity
Exits* in the Gaming Sector, $m
Note: (*) Exits include M&As, direct listings, SPACs, and IPOs
15
across 55 deals), with a total share of 57%. Showing a slight
decrease in the overall share (29% vs. 33% in Q1–Q3’21),
the PC & Console segment remains second, with 43 deals
(vs. 69 deals) and a total value of $8.6B (vs. $11.6B).
The Multiplatform segment deals, with a total value of $3.9B
(vs. $5.3B) across 25 deals (vs. 22 deals), contributes 13%
(vs. 15%).
Overall,
we notice a significant decrease in the investors
activity on the M&A market, which can be explained by
the current economic situation, the lack of large independent
gaming companies, and lower multiples, due to the bearish
market
. However, with the latest announcements from such
companies as Embracer, PIF, and the latest deals of
the Chinese
gaming companies (Tencent, NetEase) we can still expect to
witness several huge deals in Q4’22, which in turn could
dramatically change the overall picture of 2022 performance.
Technicolor Creative Studios spinning out of its
parent company Vantiva.
The top-5 deals contribution has increased
significantly from 55% in Q1–Q3’21 to 76% in
Q1–Q3’22, with such deals as
Zynga
—
Take-Two ($12.7B), Bungie
—
Sony
($3.6B), Nintendo shares purchase by PIF
($2.7B), Playtika shares purchase by Joffre
Capital ($2.2B), and Sumo Group
—
Tencent
($1.26B). Furthermore, only one of these top-5
deals occurred in Q3’22.
In Q1–Q3’22, the Mobile segment continues
holding its leading position as the main
contributor in the deal value, with a total
amount of $16.9B across 39 deals (vs. $17.9B
Gaming:
Closed
Control M&A
Targets
Geo
16
Ongoing uncertainty around the future
performance of the gaming industry,
the disconnection between the seller-buyer
valuation range, and continued public market
volatility
—
all this only adds fuel to the fire; we
can expect Late-stage VC activity to remain low
for the next few quarters.
On the other hand, well-equipped large strategic
investors with strong cash flows and balance
sheets remain active dealmakers, closing 6-10
deals per quarter. Deteriorating valuations and
more favorable terms for investors only support
The number of Late-stage VC and Corporate
rounds continues to decline since the end of
2021, with Q3’22 being the lowest point with
only 4 Late-stage VC and 6 Corporate rounds.
The same goes for the disclosed deal value.
Both Q2’22 and Q3’22 have indeed been
challenging quarters for Late-stage VC rounds.
The activity tumbled, as financial investors
paused to reassess the potential exit
opportunities, with valuations being adjusted
across the sector in both public and private
markets
.
late-stage
number
of deals
Gaming: Late-stage VC & Corporate
Most notable rounds of Q3’22 include:
—
Theorycraft Games studio raising $50m in Series
B round, led by Makers Fund with participation from
NEA and a16z;
—
NetEase leading the rounds for Something Random
(VR game studio) and Something Wicked Games
(AAA-game development studio).
Q1–Q3’22: Deals Value, $m
Late-stage VC & Corporate Activity in the Gaming Sector, $m
corporate
17
Average checks have also risen YoY: 14% for
Seed rounds ($4.2m vs. $3.7m), and 43% for
Series a rounds ($28.7m vs. $20.1m).
44% of all deal value in Q1–Q3’22 has been
occupied by the PC & Console segment ($381m
across 21 deals), vs. 33% in Q1–Q3’21 ($316m
through 28 deals). Mobile comes in second
(29%), with 35 deals of $255m total value
(vs. 59 deals of $319m value, or 34$).
Multiplatform takes up third place with 22%
($188m across 14 deals), vs. 26% in Q1–Q3’21.
As mentioned earlier, in Q1–Q3’22 Early-stage
VC Gaming placements have accumulated
the total value of $865m across 81 deals, which
represents a –8% decline in the deal value and
a –37% decline in the deal count against
Q1–Q3’21 ($945m across 131 deals). This
constitutes 23% of the total Private Gaming
deals value ($3.8B) vs. 20% in Q1–Q3’21, and
69% of the total deal count (119) vs. 60% for
the same period of the last year, meaning
the concentration of Early-stage VC
investments
rising YoY within the Private category.
deals value
number
of deals
Gaming: Early-stage VC
Early-stage Investment Activity in the Gaming Sector, in $m
18
Region-wise, US-based companies are again at the first
place, with $494m raised across 27 deals. Turkey comes
in second, with $71m raised across 10 deals, while
UK-based companies amassed $44m throughout 9 deals.
The third quarter of 2022 is noticeably one of
the weakest periods in the recent Early-stage VC Gaming
placements timeline, with only 22 deals of $65m
disclosed value. This is yet another sign of the current
‘safe access’ approach investors have been recently
showing for gaming investments
. The biggest deal of
Q3’22 is the $12m Series a round of Netspeak (led by
Lakestar and Project A), followed by the $8m Series A,
raised by Nekcom (led by Galaxy Interactive), and a $8m
Seed round, raised by Gym Class, a VR app (led by a16z).
Blockchain
Gaming
While Blockchain gaming used to be the driving
force of Early-stage investment activity, Q3’22
is the first quarter with negative growth metrics
in the blockchain-related investments: even
though the total number of deals continued to
grow (up 2.8x YoY; 61 vs. 22), the total deal
value was down –14% YoY ($932m vs $1.09B).
The above showcases continued but slightly
waning investor interest in the potential future
of uniquely enabled business models in
blockchain games. Overall, we observe
Brands $110m Series B+ (led by Temasek,
Boyu
Capital and GGV Capital), and Jot Art $55m
Series a (led by Psalms Capital, KaJ Labs and
ACP). Deal sizes more broadly are also slowly
dropping.*
deals value
the continuation of 2022 market correction, as
mentioned in our previous reports.
The total number of deals for Q3’22 was down
–23% QoQ (61 vs. 79), while the total deal
value was down –13% QoQ ($932m
vs. $1.08B). Both metrics have been down two
quarters in a row now.
The biggest Q3’22 deals were Limit Break
$200m Series B+ (led by Buckley Ventures,
Paradigm and FTX, amongst others), Animoca
Blockchain Gaming Deals
Blockchain Gaming Deals in
the Video Game Industry, $m**
number
of deals
Note: (*) this analysis has been provided by Naavik consulting firm, based on
the InvestGame data; (**) only closed deals are reflected in the graphs
20
Animoca Brands $110m Series B+ was mostly
a strategic round, with new investment coming
from Temasek, Boyu Capital and GGV Capital as
the blockchain specialist issued convertible
notes to a small number of institutional
investors at a conversion price of $3.10.
Returning investors Mirae Asset Management
and True Global Ventures (TGV) also increased
their backing of the Hong-Kong based
metaverse and blockchain gaming firm.
Animoca Brands confirmed the new investment
will help fund strategic acquisitions,
investments, product development, obtaining
licenses for intellectual property, and expand
further into the metaverse space. Read more
about the broader ecosystem strategy Animoca
Brands is building towards on
Naavik Pro
.*
The hottest deal of the quarter was by far Limit
Break. We first learned of Machine Zone
co-founder and former CEO Gabriel Leydon’s
new initiative with Limit Break during his
interview on Invest Like
the
Best
almost a year
ago. The company has been in stealth mode for
quite a while until they recently announced
a $200m raise at a reported $1.8B valuation!
The latest fundraising announcement included
details about Leydon’s ‘new’ take on Web3
gaming
—
Free-to-Own. The killer feature of F2O
is the simple fact that it dramatically lowers
barriers to entry by offering NFTs for free and
not gating game access with sometimes
absorbently high NFT (of multiple NFTs)
purchase prices. This could be an important
catalyst for accelerating the mass market
adoption of blockchain gaming. Read our take
on how Limit Break fits into the three eras of
crypto-gaming and various product evolution
cycles
here
.
Over Q3’22, 67% of the deal count was
concentrated in Seed round investments, while
94% of the deal value was pretty equally split
between Seed, Series a and Series B+ rounds
($873m). Average Seed round check sizes have
actually grown a bit ($9m in Q3’22 vs. $7m in
Q2’22), what with a smaller deal count, but
bigger values. The biggest Seed round of
the quarter is $45m raise of Animoca Brands
Japan at $500m valuation (led by its parent
company Animoca Brands).
1/4 of all Seed round deals were higher than
the $9m/deal average, with Animoca Brands
Japan, Klang Games, and Xterio seeing Seed
check sizes bigger than or equal to $40m, and
Meta World raising $30m. 4 of all Series a deals
were higher than the average size of $25m per
deal, with Jot Art, Gunzilla Games, Iskra seeing
Series a check sizes bigger than or equal to
$40m (with Iskra following up their Seed round
of $34m back in April), and Planetarium Labs
raising $32m.
Blockchain Gaming Deals
21
Note: (*) this analysis has been provided by Naavik
consulting firm, based on InvestGame data
Web3 gaming guilds continue to be under
criticism, as most first-wave crypto games were
built for a speculation-driven bull market, and
a large majority of guilds mainly focused on
Axie Infinity
. With that in mind, guilds existed
primarily to earn yield on in-game assets (while
sharing the proceeds with participants, usually
in developing countries). This theoretically only
works in P2E games, but if P2E games are
fundamentally broken and unsustainable, so
are the guilds that buy-in. For super guilds,
such as Yield Guild Games, not only has that
led
to falling new scholar numbers, but also to
dropping distributable revenue to scholars. And
since now nearly all of the first-wave
blockchain
games have been in downward spirals, it means
most guilds don’t really have a valid reason to
exist. Read our expanded thoughts and
predictions on how the guilds business model
will evolve
here
.
One interesting company that raised a $55m
Series a was Jot Art. Their mission is ‘to provide
an ecosystem for everyone to create amazing,
distributed virtual experiences with community
and player-owned economies’. The Jot Art
Metaverse is Lithosphere’s cross-chain NFT
Platform, and the vision within the Jot Art
Metaverse is for objects and characters from
other networks to interact freely on
the Lithosphere blockchain. Unfortunately, this
isn’t a very unique vision in the broader race
towards interoperability solutions, but not all
companies focused on interoperability have
secured such a Series a funding either. Further,
their litepaper
is ‘light’ on details, which makes
it hard to instill confidence from a third person
point of view. But they do have two games lined
up, which will be interesting to watch.
Blockchain Gaming Deals
Note: (*) this analysis has been provided by Naavik
consulting firm, based on InvestGame data
22
Overall, it seems like the blockchain gaming deal
market continues to mature into its second stage,
wherein the companies garnering most of the funding
attention are no longer the ones building platform
layers on which future blockchain games could live;
but rather the blockchain gaming studios themselves
that can produce engaging content that makes use of
blockchain gaming infrastructure are. This doesn’t
mean that investors have lost their appetite for
infrastructure companies, but just that there aren’t
too many more infrastructure opportunities hitting
the market. Lines have likely been drawn in the sand
across current infrastructure competitors, and
the fight for market share has begun.
All that said, both the deal number and the deal
value have further slowed down over the last
quarter. And if Q3’22 performance is any indicator,
deal activity will continue to normalize to realistic
levels over 2022 and going into 2023
. Crypto winter
performed a massive market clean up, investors are
getting smarter with their bets, and builders continue
to build. But continued blows to the broader crypto
market (such as
FTX’s latest news
) isn’t doing
the space any favors either.*
Get a
Naavik Pro
trial for more alpha on Financial Markets,
F2P Mobile and Blockchain Gaming every week! Make sure to
mention
I
N
V
E
S
T
G
A
M
E
sent you for –10% off.
Since funds do not usually disclose publicly
their individual participation in a particular
round (even if some occasionally do), we do not
take into account the exact cuts. We prioritise
the overall number and the sum of the deals
while still placing importance on the value and
the count of lead deals.
Rank*
Venture Capital Fund
# of Deals
Total Deal Value**, $m
# of Leading Deals
Lead Deals Value**, $m
Selected Lead Deals
1
Animoca Brands
51
1 229
24
292
Klang Games, Fan Controlled Football
2
BITKRAFT
23
228
12
91
Studio 369, MetaKing Studios, Magicave
3
Andreessen Horowitz
9
875
7
713
Yuga Labs, Improbable Worlds
4
Griffin Gaming Partners
13
224
5
94
N3TWORK, UnCaged, SuperTeam Games
5
Polygon Ventures
18
179
3
9
Turnt Gaming, BovineVerse, Kapital DAO
6
Shima capital
18
150
3
11
Mech, Spellfire, Neo Fantasy
7
FTX Ventures
9
776
2
65
Xterio, MetaMagnet
8
Jump Crypto
12
175
3
49
MetaMagnet, double jump.tokyo, Hike
9
Delphi Digital
9
113
4
74
Fan Controlled Football, Directive Games
10
Huobi
10
127
2
10
Land of Conquest, GameSpace
Note: (*) including recently announced and unclosed transactions; (**) based on the internal
weighted average ranking system, this list reflects most active strategics, thus the deal value
alone does not guarantee the top spot
—
the number of deals is substantial too.
Web3 Gaming Investors
Note: (*) based on the internal weighted average ranking system, see below; (**)
based on investments with the disclosed deal value
23
For both Gaming and Web3 Gaming Investors
lists, we prioritize as follows:
40%
—
number of deals;
30%
—
total value of deals;
10%
—
number of lead deals;
20%
—
total value of lead deals.
This means that even if we aren’t aware of
the size of the round, we can still say that
the fund plays a significant role in the process
of financing. However, we often see that
pre-Seed and Seed focused funds usually lead
a lot of smaller rounds, which is why lead deals
play a lesser role in our overall methodology.
Appendix
The private data contained in this report
is based on information from sources believed
to be reliable, but accuracy and completeness
cannot be guaranteed. Sources include public
media, our business partners, data provider
S&P Capital IQ, and market insights.
InvestGame tracks closed transactions (unless
otherwise noted) in the Video Games industry,
with target companies having core business
operations related to the Video Games market.
Please note that we do not track pure
gambling, betting, and non-gaming
blockchain/Web3 companies.
Methodology & Glossary
Private
Investments
Late-stage VC
Corporate
Early-stage VC
Public
Offerings
Fixed income
IPO, SPAC
PIPE, other
Deal Types Overview
Control
Minority
M&As
—
Control M&As
—
mergers and acquisitions
resulting in the change of control
(50%+ ownership)
—
Minority M&As
—
sale of a minority stake
in the business
—
Early-stage VC
—
pre-Seed, Seed, and Series
a rounds with a lead VC fund
—
Late-stage VC
—
Series B, Series C,
and later-lettered venture rounds
—
Corporate Investments
—
investments with
a lead investor being corporation
—
IPOs
—
the process of company going public
including IPOs, SPACs, and direct listings
—
Fixed-income
—
debt-related instrument
with fixed payments and interest payments
—
PIPE, other
—
private investment in public
equity, direct share issue, and other
transactions with publicly traded stock
Deal Type Terms Glossary
Target’s Sector Overview
Other
Hardware
Other
Cash-related
Gaming
PC & Сonsole
Multiplatform
Mobile
Outsourcing
VR/AR
Esports
Platform
& Tech
Platform
Tech
VR/AR
Blockchain-powered
The information, opinions, estimates, and
forecasts contained herein are as of the date
hereof and are subject to change without
prior notification. We seek to update our
research as appropriate.
25
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The free version of this report includes general + Gaming data. To get
more specific data, please contact us at
digest@investgame.net
.
26
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Disclaimer
27
Abhimanyu Kumar
Co-founder at Naavik
Endorsements
28
Very insightful research which gives
comprehensive overview of the state of
the gaming investment market. That’s
definitely a must-read report for any
games-focused investment professional
or founder raising capital.
Kirill Gurskiy, CFA
Head of Games & Entertainment
Investments at GEM Capital
Ilya Eremeev
Co-Founder and Managing
Partner at the Games Fund
InvestGame is a fantastic source of information and
insights on the gaming deals market for the Games
Fund. We are big fans of data-driven decisions, and
InvestGames is one the biggest contributors to
the Video Games industry’s transparency and
definitely changed it for the better.
Kirill Perevozchikov
CEO of White Label PR
Each time they prepare a new report,
InvestGame team gets in touch to verify data
with our clients. This speaks volumes about
their dedication to providing the most
accurate information on the market.
It’s always a pleasure to collaborate with
InvestGame on these quarterly reports! With
the high quality data they track, it’s a great
way to quantify and provide context to a side
of the gaming industry that should be looked
at by the numbers more often.
Benedikt Hübenthal
Investment Team, BITKRAFT
InvestGame’s reports are a valuable
resource for us as they provide useful
information about the state of the gaming
industry and related deal activity and
thereby help us make better decisions.
InvestGame team proudly presents Global Gaming Deals Activity Reports:
the
recent H1’22
, the quarterly
Q1’22
, the annual
FY’21
, the one covering
Q1–Q3’21
, etc. You can find others
here
. We also make weekly email
digests,
covering all the latest gaming deals (
subscribe
!). If you like what we do,
please
support us on Patreon
.
We would love to thank our dear friends at
Hiro Capital
for supporting this
Report.
Please note that this support did not in any way affect the integrity
or fairness of the data, and the analysis presented
.
We would also like to extend thanks to our friends at
Naavik
for covering
the Blockchain Gaming part of this report.
And a special thank you to
White Label PR
agency for connecting us with top
tier media outlets.
Thank you for reading!
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to Readers
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