TLDR:
- Private funding and M&A activity in the gaming industry slowed down significantly in 2023, with a decline of 75% in corporate and venture capital funding compared to the previous year.
- The total funding for 2023 was $2.7 billion, with 403 deals, compared to $10.7 billion and 551 deals in 2022.
- The average deal size also decreased from $19.4 million in 2022 to $6.7 million in 2023.
- Early stage companies outperformed late stage companies in fundraising, with early stage companies raising $511 million across 136 deals, while late stage companies raised $367 million across 12 deals.
- M&A activity was mostly driven by Microsoft’s acquisition of Activision Blizzard, which accounted for 88% of the total deal value in 2023. Excluding this outlier, M&A deal value fell 75% to $9.5 billion.
- Public offerings, on the other hand, showed signs of improvement, with a 16% increase in value to $4.2 billion and 87% increase in count to 43.
- The full report by InvestGame provides more details on industry sectors, geography, and investment trends.
Private funding and M&A activity in the gaming industry experienced a significant slowdown in 2023, with a 75% decline in corporate and venture capital funding compared to the previous year. According to InvestGame’s latest report, the total funding for the gaming industry in 2023 amounted to $2.7 billion, a drastic decrease from the $10.7 billion funding total in 2022. Despite the decline in funding, the number of deals only decreased by 21%, indicating that there were still opportunities for investment in the industry. However, the average deal size was reduced by a third, falling from $19.4 million in 2022 to $6.7 million in 2023.
InvestGame attributes this reduced market activity to a correction in the inflated funding levels seen during the pandemic. While deal volume remained higher than pre-Covid levels, there were fewer late-stage deals, which ultimately impacted the overall funding value. In terms of fundraising stages, early stage gaming companies outperformed their late stage counterparts in 2023. Early stage companies raised $511 million across 136 deals, representing a 41% year-on-year decrease in funding but a 23% increase in the number of deals. In comparison, late stage companies secured $367 million across 12 deals, indicating a 58% year-on-year decrease in funding and a 29% decrease in the number of deals. Investors also showed a preference for seed rounds, with a 2% year-on-year increase, compared to Series A startups, which saw a 61% year-on-year decrease in funding.
In terms of exit strategies, M&A activity faced challenges in the gaming industry, particularly for late stage companies. While the total M&A deal value in 2023 appeared promising at $78.2 billion, it was largely driven by Microsoft’s acquisition of Activision Blizzard, which accounted for 88% of the total deal value. Excluding this outlier, M&A deal value fell 75% to $9.5 billion and the number of deals was cut in half. However, public offerings showed signs of improvement, with a 16% increase in value to $4.2 billion and an 87% increase in count to 43. The industry also saw a notable investment from Disney, who invested $1.5 billion into Epic.
Overall, while the gaming industry experienced a significant decline in funding and M&A activity in 2023, there are signs of potential recovery through public offerings and investments from major players in the industry. The full report by InvestGame provides more comprehensive details on industry sectors, geography, and investment trends in the gaming industry.
