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Venture capital funding for video games continued to stagnate in Q2 2023 in keeping with PitchBook’s newest market report. While the full worth of offers was up 12% from the primary quarter (totaling $1.1 billion), the variety of closed offers declined 29% to 110.
Both figures fell dramatically in comparison with 2022, with deal worth down 80% and the variety of offers falling 57.5% year-on-year. Notably, VC deal values in gaming peaked in Q2 2022 which partially explains the steep drop-off.
PitchBook famous that deal worth was concentrated in additional late-stage corporations than in previous quarters. These extra mature corporations introduced in $611 million or 55.5% the quarter’s funding whole. However, early-stage and angel and seed offers accounted for 71.8% of VC video games funding in Q2 2023. While undisclosed deal totals are impacting this hole, the info means that VC funds are being extra selective with their sources amid financial uncertainty.
Moreover, PitchBook notes that VC exits have been few and much between in 2023. In the primary half of the yr, 19 exits closed for a complete deal worth of $200 million. While Atari’s $776.2 million acquisition of Angry Birds developer Rovio will increase the annual whole, 2023 is on tempo to be the slowest yr for exits since 2012’s $1.5 billion. Macroeconomic headwinds are probably miserable the marketplace for potential exits.
VC funding developments in gaming
Over the final yr, gaming content material and growth startups have attracted essentially the most enterprise capital funding. Development corporations embody sport engines, developer instruments and expertise providers. Content covers sport publishers, studios, builders and platforms in addition to playing suppliers.
According to PitchBook’s information, 328 gaming content material corporations raised $2.89 billion in funding from Q3 2022 to Q2 2023. Meanwhile, growth startups introduced in $1.7 billion throughout 108 offers. While extra capital has flowed to content material corporations, the typical deal dimension for growth corporations ($15.8 million) was 1.8-times bigger than the typical deal closed by content material corporations ($8.8 million).
PitchBook notes that growth startups benefitted from from tailwinds in generative AI and person generated content material. Monetization & financing startups are additionally gaining extra traction, largely within the type of advert tech platforms. Meanwhile, esports expertise, teaching and coaching startups all struggled.
Geographically, North America continues to command the vast majority of VC funding. In the primary half of 2023, North American gaming corporations introduced in $1.3 billion in funding, outpacing counterparts in each Asia ($400 million) and Europe ($300 million).
While macroeconomic developments proceed to dampen VC funding for gaming startups, PitchBook highlights each UGC and Cloud gaming as vital rising alternatives.
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