Report

Gaming Deals Report: 2023

1 January 202424 pages4,554 words

Summary

The 2023 fiscal year marked a period of significant correction and stabilization for the global video game industry following the hyper-inflated deal-making activity of 2020–2022. While total merger and acquisition (M&A) value reached a record $78.2 billion, this figure was heavily skewed by the $68.7 billion closing of the Microsoft-Activision Blizzard deal. Excluding this transaction, M&A activity settled at a modest $9.5 billion, reflecting a sharp decline in deal volume and a cautious approach from strategic investors facing macroeconomic uncertainty and increased regulatory scrutiny. Private investments saw a substantial downturn, falling to $2.7 billion in 2023 from $10.7 billion the previous year. This decline was primarily driven by a collapse in late-stage funding, as high interest rates and a closed IPO window made large-scale venture rounds less attractive. Conversely, early-stage activity remained resilient, supported by over 30 new gaming-focused funds established since 2020. Seed funding maintained momentum as investors sought better entry terms and lower valuations. Geographically, North America led in deal volume and value, followed by Western Europe and Asia, though Asian strategics increasingly shifted toward co-investing with venture capital firms to mitigate risk. The industry is currently navigating several transformative trends, most notably the integration of generative AI. Unlike the speculative "boom and bust" cycle of blockchain gaming, AI is viewed as a long-term tool for production efficiency, despite lingering concerns regarding intellectual property and copyright. Meanwhile, sectors such as Esports and Web3 faced continued struggles, with investment in Web3 falling 4.4 times compared to 2022. Looking toward 2024, there are early signs of a rebound, evidenced by $1.7 billion in fundraising in January alone. Analysts anticipate a potential resurgence in M&A and public offerings as corporate earnings improve and the gap between buyer and seller valuation expectations narrows. However, persistent challenges remain, including the threat of late-stage down rounds, studio shutdowns, and evolving platform policies from major tech entities.

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Gaming Deals Report: 2023

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