A gaming venture capital fund has released its latest report detailing the current state of financing in the industry. Enterprise capital funding has seen a modest quarterly increase of around 1%, while growth-stage funding has experienced a more significant surge. The overall diversity of offerings has decreased quarter-over-quarter.
According to Konvoy’s research, the video games industry is expected to reach a staggering $188 billion valuation by 2024, with growth forecasts suggesting it will more than double to a massive $223 billion market by 2029. Personal funding for video games in Q3 2024 reached a total of $811 million, a remarkable 15% increase from the previous quarter. Despite the notable surge in personal funding for three-quarters of the year, driven primarily by Disney’s significant investment in Epic Games to the tune of $1.5 billion, the current total still lags behind 2023’s overall quarterly average.
For this quarter, the total number of venture capital (VC) offers in the gaming industry was 92, representing a 14% decrease from the previous quarter. Development-stage funding, totalling $262 million for Sequences B through D, significantly surpassed the 2023 average of $159 million. Early-stage funding, including pre-seed and Series A rounds, remains at a decade-low since Q1 2020.
According to Jason Chapman, managing associate at Konvoy, “Despite macroeconomic hurdles, we’re witnessing a positive trend towards normalization in gaming venture capital funding over the past six quarters.” Despite trends and fads, the gaming industry remains a stalwart in the world of entertainment, consistently commanding and demanding people’s attention. Despite the surge in AI-powered gaming opportunities, traditional content studios are grappling with reduced venture capital investment. At present, the content material lacks sufficient substance to justify investment from corporate backers.
Konvoy’s report: AI-based funding
According to Konvoy’s report, a notable trend has emerged: funding for gaming companies connected to or incorporating artificial intelligence (AI) is on the upswing. In the third quarter, 22 percent of our funding was allocated to partner with renowned companies, amounting to a substantial $113 million. Up from 10% and $52 million in the previous quarter, that represents a significant increase. Two of the most significant investments in AI corporations during Q3 were a $10 million Series A round by Sequence Leisure and a $28 million investment in another company.
According to Chapman, there is a strong interest from venture capitalists in AI-driven gaming startups, particularly those focused on developing digital characters that enhance player engagement. Significant investment momentum exists in startups that support recreational studios streamline their content production and editing processes, with particular focus on time-consuming aspects such as art and video creation, accounting for a substantial chunk of overall costs. AI-powered instruments are revolutionizing recreational development, piquing the interest of investors.
The Konvoy Corporation’s comprehensive Gaming Trade Report, featuring in-depth regional analysis, is now available for viewing on the company’s website.
