A recent PitchBook report suggests that the global video game market will experience a decline in 2023, but there will be new investment opportunities in areas like virtual reality, augmented reality, the metaverse, and the potential application of generative artificial intelligence to game development.
The gaming industry’s developments are covered in PitchBook‘s quarterly analyst report, which also makes forecasts about the future of venture capital investments in video games until 2023. This is PitchBook’s inaugural study on the video gaming industry as a whole.
PitchBook Predicts the Oncoming Activities
In the 4th quarter of 2022, the amount of venture capital invested in the games business fell significantly, PitchBook reports, with 62% fewer transactions and 82% lower growth year over year. Notwithstanding that decline, the market will still be substantially larger in 2022 (13.3 billion in transaction value) than it was in 2019 (3.9 billion).
The 2022 slowdown is attributed by the research to “macroeconomic uncertainty, and regulatory scrutiny,” such as the varying degrees of opposition Microsoft has seen over its Activision Blizzard merger. The investment environment is complicated, as shown by the VC activity in 2022, according to PitchBook analyst Eric Bellomo. Every aspect of the sector saw a step-function growth in 2021, from server usage to microtransactions, and VC action was no exception.
The Increase in VC Investments Suggested Opportunities
Following a sharp increase in VC gaming investment in 2021, the decline in investment in 2022 can be viewed as a minor market correction. According to data from PitchBook, worldwide VC transaction volume in the video game industry increased by more than twofold between 2020 and 2021, from $7.4 billion to $16.6 billion.
That also fits into a narrative that has been going on about how resilient the video game sector is supposed to economic downturns. This dates back to the Great Recession of 2008, during which the games sector didn’t appear to suffer as much as analysts had predicted. There was a claim made at the time that, despite having a high entrance barrier, video games may be an incredibly effective way for customers to spend their entertainment dollars per hour.
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