TLDR:
- PitchBook expects a continuation of muted venture capital funding in the gaming industry into 2024.
- Content developers received the most closed funding deals, while development startups had the highest median pre-money valuation.
Summary:
PitchBook recently released a deep dive into gaming VC trends and predictions for 2024 based on their Gaming VC market report. The report forecasts that the venture capital funding levels in the gaming industry, which were significantly lower in 2023 compared to 2022, will continue to be subdued in 2024. However, the types of startups receiving funding and the sources of investment are evolving.
Over the last twelve months, the majority of closed funding deals went to content developers, with developer tools and services following closely behind. The report revealed that development startups had the highest median pre-money valuation, indicating a head-start in building enterprise value. Additionally, technology services had the highest median pre-money valuation among subsegments.
PitchBook expects the fundraising gap between content and development startups to narrow in the future due to changes in the investor landscape. The report highlights that nonendemic investors, attracted by Web3 and Metaverse hype in previous years, are now re-evaluating their exposure to the gaming industry. Meanwhile, corporate VC investments have faced challenges, with regulatory hurdles impacting historically active firms.
Looking ahead, PitchBook predicts a moderate uptick in M&A and corporate VC activity in 2024, as funding for startups remains challenging. Founders may also experience a growing number of down rounds as valuations reset in response to market conditions.
