16 February 2024

Video Game Startups: VC's Hope in 2024 Despite Industry Setbacks

Despite a decline in venture funding for gaming companies, VCs remain positive about video game startups' potential in 2024, looking towards AI and cross-platform trends.

Media & Entertainment: Video Game Startups and VC Investment Trends in 2024

In the face of a challenging economic climate, video game startups may offer a glimmer of hope for venture capitalists (VCs) in 2024. With the video game industry generating substantial revenue, surpassing even movies and music combined, the sector is poised for continued growth despite recent downturns.

Fundraising and the Market Shift

After experiencing a reduction in venture funding to a five-year low in 2023, the industry is showing signs of recovery with positive milestones and a projected industry growth to $229 billion by the end of the decade. With the industry moving away from mobile games due to App Store fee controversies and towards cross-platform games, video game startups are embracing new trends and technologies, such as AI, which is still in its early stages but expected to make a significant impact this year.

The Venture Capital Perspective

VCs remain optimistic, noting that while general startup exits are not expected to normalize until at least 2025, video games might prove to be an exception. With layoffs providing a surplus of developer talent and lower compensation rates, startups could attract top talent more easily. Furthermore, corporates have remained active in early-stage investing, countering broader venture space trends. AI is a particular point of interest, with the potential to lower production costs and create games that are more personalized and interactive, paving the way for innovative developments in the sector.

Despite challenges, investors see substantial opportunities for growth and innovation within the gaming industry and are closely monitoring AI developments, early-stage investments by corporates, and upcoming big releases which indicate a promising year for video game startups.

VC, video game startups, 2024, AI in gaming, cross-platform games, Konvoy Ventures, gaming industry growth

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