Game Industry Report Q4 2024
Gaming industry: at a glance In gaming •2024 market size:$188bn (+2.1% YoY)•Public markets:leading public gaming ETFs grewup to 50% in 2024 (vs S&P 500 = 24.5%)•Venture funding in Q4-24:$286m across 83 deals Key trends •US vs Google (potentially divest Chrome, Android)•TikTok loses bid to overturn US ban•Google announces Android XR•Switch becomes the most sold console in the US Gaming funding: private markets overview Private market funding in gaming grew 58% from 2023-2024 (driven by Disney <> Epic) Gaming VC funding: $286m (-47% QoQ) in Q4-24 Lowest funding quarter in 5+ years; Majority of funding decline came from growth-stage Gaming VC deals: 83 (-25% QoQ) in Q4-24 Despite flat early-stage funding, the number of early-stage deals continues to decrease Gaming VC: Drop in graduation to Series A Cohorts with a drastic decline in graduation ratesCohorts that positively outperformed Comments: •Since Q1 2018, 11.5% of Gamingstartups that raised a Seed roundraised a Series A round within 2 years(vs 20-30% of all startups)•Graduation has steeply declinedwithin the last 3 years–only 4% ofGaming startups that raised a Seedsince Q4 2021 have raised a Series A•The Q4 2019 cohort was a significantoutlier and included Dream Games($467m total raised) and ProbablyMonsters ($270m total raised); Note:Q3 and Q4 2021 were the two highestquarters for gaming funding in the last5 years Gaming VC: AI funding (10% of funding in 2024) There has been an increasing proportion of funding going into gaming x AI since 2020 Gaming in the public markets ESPO outperformed the S&P 500 this year by 25.9% Public gaming companies hold $33bn in cashand equivalents; a healthy M&A environment Gaming M&A: 24 transactions in Q4-24 Gaming M&A deal count-7% from 2023 to 2024 Largest gaming tech & platform VC deals Largest game content VC deals Regional Breakdown Gaming deals globally: at a glance NA: flat funding (-1%) from 2023-2024 Asia: funding drops-33% from 2023-2024 Europe: funding +10% from 2023-2024 South America: 1 deal1done in Q4 Africa: no deals1done in Q4 Australia: no deals1done in H2 2024 1US vs Google: Google to potentially divest Chrome, Android Trends + Current Events Google to potentially divest Chrome, Android1 Context:The US Department of Justice (DOJ) filed anantitrust lawsuit against Google, accusing them ofmonopolizing the online search market. In August 2024, In tandem, the DOJ has a separate antitrustlawsuit against Google over their monopoly overdigital advertising. A ruling is expected in early2025. In November 2024, the DOJ asked the federal court to: 1.Force Google to sell Chrome, its web browser2.Either sell Android, its smartphone operating system (OS),or be barred from making Google services mandatory onphones that utilize Android3.Stop Google from entering into paid agreements withApple1and others to be automatically set as the defaultsearch engine for smartphones and browsers4.Force Google to shed any stake in artificial intelligence(AI) companies that could compete with search engines.Google is an investor in Anthropic (developer of ChatGPT Konvoy perspective:While Google owns >70% of the mobile OS market and 90% of the searchmarket, a divestiture is highly unlikely. Weexpect a lengthy legal battle with a resolutionthat leaves Google intact but strips away its monopolistic capabilities. This may be achievedthrough forcing Google to share the data itcollects and barring it from paid agreements tobecome the default search engine for mobile. In Judge Mehta is expected to issue a ruling by August 2025. TikTok loses bid to overturn US ban2 Context:Early in 2024, President Biden signedthe Protecting Americans From Foreign Adversary Controlled Applications Act due to concernsaround national security and data privacy. TikTok petitioned to overturn the law, which wasunanimously denied by the US Court of Appeals,upholding the previous decision in April 2024 thatrequires TikTok owner, ByteDance, to sell the app While the law was upheld in the lower courts, theSupreme Court heard out ByteDance’s arguments Konvoy perspective:We expect the Supreme Court will furtherdelay the ban's enforcement to allow for more time to considerthe case given the ~170m+ affected US users. Once in office, webelieve the Trump administration will likely work at an attempt toundo the ban, either through a convoluted sale (that includes In tandem, in December 2024, attorneysrepresenting President-elect Donald Trump haveasked the Supreme Court to pause on enacting Google announces Android XR3 •In December 2024, Google announced Android XR, an operating system(OS) for extended reality (XR) devices such as headsets and glasses1 •The OS will include Gemini, a context-aware companion that understandssurroundings and user intentions, initially introduced in December 2023•Android XR was built in collaboration with Samsung and will first launch ona Samsung headset (ProjectMoohan) Konvoy perspective:This is