The global video game industry has faced its share of challenges in recent years, with venture funding hitting a five-year low in 2023. However, there is optimism among venture capitalists that 2024 could bring a turnaround, particularly for gaming startups.
Key Takeaway
Despite a challenging year for fundraising, 2024 holds promise for gaming startups, with shifting industry trends and the emergence of AI presenting new opportunities for growth and innovation.
Positive Milestones in 2023
Despite the setbacks, there were several positive milestones for the gaming sector in 2023. Notably, multiple titles such as Baldur’s Gate 3 and Hogwarts Legacy achieved significant success, each selling more than 22 million copies. While the overall industry experienced a flat year for growth, video games are still projected to grow into a $229 billion industry by the end of the decade.
Shifting Trends and Opportunities
The gaming industry is undergoing significant changes, creating opportunities for startups to capitalize on new trends. As the focus shifts away from mobile games towards cross-platform games, which are more expensive to develop but also more lucrative, startups have the chance to launch alongside these emerging trends. Additionally, the early stages of AI in video games are expected to make an impact this year, potentially reducing the costs associated with game creation.
Industry Outlook
Josh Chapman, co-founder and managing partner at Konvoy, anticipates a return to normal growth in 2024, as the industry moves past the influx of tourist investors and crypto-related activities that characterized the previous year. Ilya Eremeev, managing and general partner at The Games Fund, also expresses excitement about the potential for gaming startups, citing the availability of developer talent and increased corporate participation in the early stages.
The Rise of AI in Gaming
One of the most significant trends to watch in the gaming industry this year is the integration of AI. This technology has the potential to lower barriers to entry for certain areas of gaming and reduce the costs associated with game development. Investors and industry experts are closely monitoring the impact of AI on game creation and its implications for the future of gaming startups.
Looking Ahead
As the gaming industry navigates the challenges of the current landscape, the emergence of AI and shifting industry dynamics offer promising opportunities for startups. With the potential for lower barriers to entry and reduced development costs, 2024 may indeed prove to be a bright spot for video game startups.
