Gaming Industry Report - Q2 2024

Konvoy Gaming Industry Report - Q2 2024

Our gaming market analysis in Q2 2024 covers industry-specific trends in private market funding, public market data, and key industry themes that our team is monitoring. To view our Konvoy Gaming Industry Report for Q2 2024, download here.

Overview: Gaming saw a 20% decrease in venture funding between Q1 2024 and Q2 2024, declining to $492m for Pre-Seed through Series E+ venture capital investments across 104 deals. Note, that while this is a drop from Q1 2024 ($601m across 134 deals), this is reflective of seasonal quarter-over-quarter (QoQ) changes. This is similar to the trend we saw from Q1 2023 to Q2 2023. However, this is still a decline YoY - $529m of capital was invested across 118 Pre-Seed through Series E+ gaming deals in Q2 2023. This is a 7% decrease in funding and a 12% decrease in the number of deals done.

Despite this decline, there is very promising activity and growth at the early-stage (Pre-Seed through Series A). Q2 saw the highest amount of early-stage funding in the last 12 months. Additionally, while in 2020 and 2021, we saw strong deal funding volume, around 80-85% of overall funding was invested in the early-stage vs ~90% today.

By deal count, while growth and late-stage investment activity is depressed and almost non-existent, early-stage activity remains resilient. This is key. As we wrote in our newsletter last week, we are very bullish on the unlock of growth equity investments in 2025, as the 3-5 year time horizon will be well timed with lower valuations in gaming alongside visibility on improved exit environments on the midrange horizon.

Last quarter, there was a significant swing in deal funding back toward companies focused on content development. This was primarily driven by investments in Build a Rocket Boy ($110m Series D) and Second Dinner ($100m Series B). However, in Q2, VC investment activity was dominated by gaming technology, infrastructure, and platform deals. There was a 175% QoQ increase in funding into the “picks and shovels” of gaming, spearheaded by a $140m Series A into Zentry (formerly GuildFi) and a $45m Series A into k-ID (a Konvoy portfolio company). While AI deals dominated global VC funding in Q2 ($18.3b, 28% of all invested dollars), only two of the largest technology and platform deals in Q2 2024 were AI-related. As a firm, Konvoy is excited to continue to invest in gaming infrastructure technology, tools, and platforms.

Gaming VC activity by region: Asia has continued to be the most active region of investment this quarter in terms of number of deals executed (39) and funding ($283m).

Gaming Report (Q2 2024): here is a high-level overview of what you can expect in the report:

• Gaming market size to reach $189.3b in 2024 (+2.9% YoY)
• Gaming VC funding: $492m in Q2 2024, -20% QoQ
  • Despite lagging growth and late-stage deal activity, early-stage funding is continuing to surge back - Q2 2024 saw the highest early-stage deal funding since Q4 2020 ($480m)
  • With the exception of Q4 2023, ~90% or more of all Gaming VC funding has been invested into early-stage deals since Q4 2022
• Gaming VC deal volume: 104 deals completed in Q2 2024, -22% QoQ
  • Includes regional breakdown across North America, Europe, Asia, Africa, South America, and Australia
• Public market performance of top gaming ETFs performing up to 19.7% since the start of 2024 (vs S&P 500, +15.1%)
• Cash balances held by public market-leading gaming ($33.4b) and big tech companies ($223.9b)
• Trends and current events to watch:
  • YouTube, LinkedIn introduce game strategy
  • Introducing the Olympic Esports Games
  • Epic Games Store, Fortnite coming to iOS in EU and Japan
  • Apple to potentially face $1b in daily fines
  • Voodoo acquires BeReal (€500m)
  • TikTok faces a ban in the US
• Top gaming industry conferences / events in 2024

Our team is excited to continue publishing this Konvoy Gaming Industry Report each quarter (in addition to our weekly newsletter). Here’s the link to download the report.