Konvoy Ventures: Investments in the Gaming Industry in Q1'24
Finally, some uplifting news about the gaming investment landscape.
Market Overview
The volume of private investments in gaming companies in Q1’24 reached a nearly two-year high - $2.197 billion. $1.5 billion of this amount is attributed to a deal between Epic Games and Disney.
VC investments reached a one-year high, totaling $594 million. This represents a 94% increase compared to the previous quarter in terms of deal volume. A total of 124 deals were made (+28% compared to the previous quarter) - the highest in the past year since Q1’23.
In Q1’24, 80% of the total financing volume was accounted for by 23% of the deals. This is higher than in 2022 (19%); 2021 (12%); and 2020 (13%). This indicates a healthier situation in the investment market.
In terms of capital distribution at early stages (from pre-seed to Series A), the situation is even better - 80% of allocated funds were distributed among 31% of companies. This is the best performance since 2020.
In the first quarter of 2024, the ESPO (MVIS Global Video Gaming & eSports index) grew by 12.8%; the S&P 500 for the same period increased by 10.8%.
Public gaming companies have $35.3 billion in cash reserves. This is excluding the $267.2 billion held by technology companies with gaming divisions (Tencent; Sony; Microsoft).
The number of M&A deals in Q1’24 remained unchanged from the previous quarter - 40 transactions.
Deals
The largest VC deals of the quarter with technology gaming companies are Splash Sports ($14.1M - Series A); W4 Games ($14.1M - Series A); Elixir Games ($14M - Seed).
The largest deals with content producers are Build a Rocket Boy ($110M - Series D); Second Dinner ($100M - Series B); Parallel ($35M - Series B).
VC Investment Distribution by Region
In terms of volume, $318 million went to North America; $160 million to Europe; $85 million to Asia; $32 million to Australia.
GameDev Reports Newsletter offers promotion opportunities to gaming companies. Reach out to learn more.
In terms of the number of deals, Asia leads (54 transactions), followed by North America (47 deals); Europe (19 deals); and Australia (3 deals). There was also one deal in Africa.
The volume of deals in North America reached an annual high (increasing by 111% compared to the previous quarter). The number of deals also increased.
In Europe, the situation is similar - reaching an annual high and a 113% increase in deal volume compared to the previous quarter. The number of deals increased by a quarter.
The number of deals in Asia is the highest since Q4’22, but the volume is $85 million (only lower in Q2’20). This is due to the fact that the size of most transactions was not disclosed.
74% of Australia's total investment volume in 2023 occurred in Q1’24. The number of deals (3) is the highest since Q3’22. This is due to deals with
Halfbrick Studiosand Illuvium.
❗️Thanks to my friends from InvestGame.net, need to note that Halfbrick Studios’ investment never happened. It’s a fully fabricated story.
There have been no announced VC deals in South America since Q2’23.
In Africa, there was 1 VC deal in Q1’24 - Carry1st raised funds from the Sony Innovation Fund; however, the deal size was not disclosed.
Q1’24 trends
There are increasing candidates for IPOs in the market. The main candidates are Epic Games; Discord; Improbable; Niantic; Dream Games.
The possible ban of TikTok in the USA. If it happens, it will significantly affect the advertising market and the trust of companies in the USA.
Major brands are actively investing in games. Disney invested in Epic Games; Mattel launched its publishing; Warner Bros. plans to release several GAAS projects.
Apple continues to face pressure from governmental bodies of various countries demanding to allow third-party stores on iOS.
Apple Vision Pro did not revolutionize the VR/AR market.
Small developers are successfully showcasing themselves in the market. Examples include Palworld; Last Epoch; Lethal Company; Enshrouded.