Gaming mergers and acquisitions were down 3% to $11.5 billion in 2024, but fundraising doubled, according to a report by Quantum Tech Partners, an M&A advisory firm.
And when it comes to 2025, the winds are shifting in a generally favorable direction, said Alina Soltys, a partner at Quantum Tech Partners, in an interview with GamesBeat.
Gaming M&A was flat and carried forward mostly by some large deals, like EQT’s purchase of Keywords Studios for $2.8 billion and Playtika’s acquisition of SuperPlay for up to $1.95 billion. The totals for 2024 and 2023 translate to a couple of flat years after the burst during the pandemic in an era of zero percent interest rates that spurred deals.
M&A and fundraising are positive indicators for an industry’s growth, as they signify capital flowing into the industry and veterans cashing out. But it’s not always “good news.”
It’s a case where the financial winds of the industry didn’t blow in the same direction as employment trends. Deal activity in fundraising was up, for instance, but layoffs during 2024 topped 15,000. In total, an estimated 34,000 jobs were lost in the past 2.5 years, and only this month is hiring starting to match the rate of layoffs, said Amir Satvat, game job resource champion, this week. In short, while 2024 was a terrible year for job losses and studio closures, it was a better year than the one before for investments.
“We are expecting subtle growth in 2025 and there’s a couple of factors there. I think the factors are, the balance sheets across the board are so much healthier. There’s a lot of cash both from focusing on the right projects, downsizing teams, and divesting things that probably didn’t make sense in the first place,” Soltys said.
The companies holding cash have scale and revenue, and they are likely to look to acquire. Quantum Tech Partners is one of multiple companies reporting financial results for 2024 in games, and the data doesn’t always line up as different firms count deals in different ways. Others who have published 2024 reports are Drake Star Partners, Konvoy Ventures and Hiro Capital.
“We’ve had a significant pickup in conversations from buyers who are looking for high quality assets that have revenue and have profit. So it’s back to basics in terms of quality companies attract quality attention, and how to figure out how to build a quality company.”
A better outlook for finances
The strategic reasons for doing deals are getting better, and that’s a trend that could contribute to the industry’s momentum, Soltys said. Growth has become the motivator, though some are done for reasons like payouts to key people.
“For 2025, we see improving activity on M&A and fundraising,” Soltys said. “The big drivers include the Switch 2 coming out and Grand Theft Auto VI launching hopefully at some point this year. That is going to bring broader attention.”
In 2024, there were 996 fundraising deals. The average raise per deal was $27 million, about double from last year. In 2024, the average quarterly funding total was $4.3 billion, better than $2 billion in 2023 and $4 billion in 2022. Over the last five years, more than $93 billion has been raised in the past five years. The biggest investment in 2024 was Disney pouring $1.5 billion into Epic Games.
“As far as investments go, investments are up generally, but it doesn’t feel like it. If you talk to anybody in the industry, everybody is struggling with fundraising. VCs are much slower at moving. Publishers are much slower to deploy. They’re deploying smaller check sizes, but the data shows that we’re up double in total fundraising from early to growth to late stage,” Soltys said.
She added, “What you see is the average raise per deal is also doubled. And so we’ve gone from a place where most of the deals were about $12 million last year on average, now they’re $27 million and the quarterly activity has been consistently double in 2024 versus 2023. If you think about that, that’s not what you hear day to day in conversations, at least with early stage companies.”
One explanation for this: in 2023, about 25% of all funding went to early-stage game startups. This year, there’s been a pickup but only 15% went to the early-stage deals. So the biggest pickup has been in the late-stage deals, Soltys said.
In 2024, much of the M&A activity was driven by Embracer’s unraveling, where it has been selling off divisions to pay down its debt. For instance, Embracer Group sold the Easy Brain division to Tencent’s Miniclip for $1.2 billion — about 10% of the deal activity in 2024.
About $1.76 billion was raised by Web3 companies in 2024 across 325 deals. The transaction value was up 52% and deal count was up 17%. The biggest raises were $350 million for Infinite Reality, $140 million for Zentry, $80 million for iD Planet, $50 million for SPFweb3Meta, and $43 million for Azra Games.
“Infinite Reality had a massive round in January as well ($3 billion raised),” Soltys said. “They’re using that capital to buy to build a big metaverse platform.”
Public valuations
Quantum Tech Partners also calculates a Global Gaming Index based on the valuations of some of the public game companies.
The companies are trading at a health three times revenues and 13.2 times EBITDA (earnings before interest, taxes, depreciation and amortization), a measure of profitability. The companies have more than $60 billion in cash on hand.
“The public peer group for gaming is healthy. It’s in a healthy place. It’s up year over year. It’s a broad group of companies that include Western and Eastern developers, as well as some of the engine companies. And so it’s, it’s been tracking nicely,” Soltys said. “I think the important piece here is the cash on the balance sheets. About $20 billion of that $60 billion is from Tencent alone.”
Quantum Tech Partners doesn’t include the gaming revenues or cash on hand at companies like Apple, Google and Microsoft. The bottom for the market was around October 2022, though things are still below the crazy peaks during the pandemic in 2021 and 2020.
“That should lead to more activity. I think the revenue multiple three times is healthy. EBITDA certainly is healthy at 13.2 times. And the devil is really in the details of each individual business and the growth story. But from an overall lens perspective, it’s in a healthy place.”
Indie dev successes
While there are many more games being published now, there are some indies that stand out as winners.
The successes for small-budget games that hit big fan bases included Animal Well (one developer selling over a million copies), Chained Together (one dev, 5.6 million copies), Dark and Darker (25 devs, three million copies), Balatro (one dev, five million copies), Manor Lords (one dev, 2.7 million copies), and Palworld (10 devs, 100 million copies).
“Being an indie means that your budget is smaller, and today we need to have smaller budget games being built and coming out and just delighting audiences. How do you delight an audience. Well, you don’t need to have photorealistic raytracing and open worlds that are bigger than our Earth to get attention.”
Emerging opportunities in games
Eastern content like Black Myth: Wukong sold well, as did remasters of games that gamers played in the 1990s. Another bright spot was Roblox, which has 89 million daily active players, as well as Fortnite, which had 110 million monthly active users. Roblox had $864 million in LTM developer exchange fees and Fortnite paid out $352 million in developer payouts. The combined total of Roblox and Fortnite was $1.2 billion paid out to developers in 2024.
“As we look at where does the industry grow, there are still a lot of blue oceans there, and the alternative platforms largely represent those opportunities, like Roblox, UEFN, and HTML5 games,” Soltys said.
And Telegram, which has 950 million crypto-savvy players, came out of nowhere as a massive force in Web3 gaming. Gaming grew from 1% of Telegram’s audience in 2023 to 20% in 2024. Discord is also about 90% gamers and that is another 200 million players, she said.
Distribution is still important in gaming and game companies are struggling to reach players through alternative app stores, given the grip of Apple and Android stores. That means 30% of game dev revenue goes to paying the big platforms. That’s a big impact and the game companies haven’t escaped it, despite antitrust litigation from Epic Games and governments around the world.
Geopolitically, one of the big shifts that Soltys sees is the growth of publishing decisions and funding decisions made in both South Korea and Japan. Sony, for instances, has shifted a lot of financial decisions back to Japan. Those types of companies tend to continue to invest throughout tough or good times. China could see continuing struggles given the nature of its market, and tariff wars aren’t going to help.
“One of the things that has been surprising to us is the slowness of using AI in gaming, where usually you see gaming as being on the forefront of technology,” Soltys said. “AI feels like it’s moving so fast all around gaming, and there’s a major resistance. I understand why from certain perspectives.”
