O games marketdespite surpassing cinema and music in terms of profitability, has attracted less attention from investors in recent years.
A PitchBook study revealed that, in 2023, investments allocated to this sector reached the US$700 million mark, the lowest value since the second quarter of 2020.
This representative drop, compared to previous years, signals a change in perspective among investors.
Investments in the games market register a drop
Over the two-year period, investors allocated more than US$2 billion each quarter to the gaming industry, reaching its peak in the second quarter of 2022 with a record investment of US$5.2 billion.
However, since then, interest appears to have waned, leaving the industry searching for answers.
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This decrease in investments can be attributed to several factors. The increase in development costs, both for large studios and independent developers, is one of the main reasons.
The gaming market faces significant challenges not only in title development, but in distribution and marketing, making it riskier than ever.
Furthermore, the decline in interest in the gaming world among the public, after a peak during the pandemic Covid-19, also contributed to the current scenario. Society’s priorities and interests have evolved, leading to a reduction in enthusiasm for gaming.
PitchBook analysis points out that the slowdown in investments in the games market is related to the decrease in excitement in emerging sectors, such as Web3 and blockchain.
These promising technologies had their moment, but the instability and uncertainty surrounding them has led many investors to adopt a more cautious stance.
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The challenges don’t stop there. The gaming industry has faced layoffs at several companies, along with project delays and cancellations.
Big names in the industry, including Telltale, Riot, Unity, Riot Games, Crystal Dynamics, BioWare, MicrosoftTeam17, Sega and Striking Distance, have announced staff cuts and the interruption of several projects in recent months.
Analyst Eric Bellomo highlights investors’ growing perception that game development is a risky endeavor.
While a small set of successful games can provide substantial returns, the difficulty of predicting which titles will be successful at the early stage makes investing uncertain and challenging.
In that sense, even though 2023 has seen the release of high-profile games such as “Baldur’s Gate 3” and “The Legend of Zelda: Tears of the Kingdom”, the year was also marked by significant staff reductions and canceled projects.
These turmoil and uncertainties in the gaming market continue to shape the investment landscape, requiring investors to adopt a more cautious and strategic approach as the industry evolves.
