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If startup funding reflected the time people spend on an activity, then gaming would be way up there.

Today, an estimated 61% of Americans play digital games for at least an hour a week, per an . Globally, members of the youthful Generation Alpha play the , spending an average of more than five hours per week on games.

Startup investors apparently aren’t impressed. Per °µÍø³Ô¹Ï , gaming hasn’t been one of the larger areas for venture investment lately. Startups in the space pulled in around $2.4 billion in 2024, down 12% from the prior year.

Overall, gaming-related startup funding has been falling each year since the 2021 peak. To illustrate, we charted out investment for the past six years below.

We’re not seeing sequential quarterly improvement either. In fact, the most robust funding period of the past five quarters was Q1 2024, as illustrated below.

This year is off to a slow start as well, with just $144 million invested across 24 global rounds. The largest financing was a $30 million January for Turkish mobile games developer , led by .

It’s not just gaming startup funding that’s contracting

The pattern of falling investment isn’t isolated to the gaming industry. Most consumer-facing sectors, including e-commerce, consumer products and consumer electronics, have seen reduced funding in the past few years.

The contraction has continued even as overall startup funding has been growing. That’s mostly because much of the investment is concentrated in mega-rounds for hot AI names.

It doesn’t help that gaming is also dealing with industry-specific woes, including mass layoffs that began in 2022 and continued into 2024. In the past year, an estimated 1 in 10 developers said they’ve been laid off, per a on the industry early this year.

Developers of big-budget titles made the largest cuts, including Sweden’s , , and . Studios also canceled a slew of titles in development, following underperformance of a number of new releases.

So, who did get funded?

Given this suboptimal backdrop, you might be wondering: Which startups did manage to secure capital in this tough fundraising environment?

The largest round of 2024 went to Edinburgh-based , which raised more than $110 million in in January. The company is working on an immersive gaming platform, a high-end game series, and a set of design tools for user-generated content.

Irvine, California-headquartered was a close second, securing $100 million in Series B funding led by . The game development studio is behind the popular game Marvel Snap.

Other larger rounds included:

• , a Korean media and games startup spun out of entertainment company , raised $80 million in an August funding round led by .
• , a maker of voice-controlled games for connected TVs and smart speakers, landed $55 million in a July Series C led by and Microsoft’s .
• , a Turkish mobile games development studio, picked up $50 million in a May Series A backed by .

Tiny sums for a huge industry

Considering the size of the gaming industry and the valuations of leading players, it’s easy to walk away thinking that startup funding to the space is rather paltry in comparison.

After all, four of the largest publicly traded brands — , , and Electronic Arts — have a collective market value of more than $200 billion. And just 16 months ago, Microsoft acquired for $75 billion.

Humans, meanwhile, are more addicted to their devices than ever before. And while the top game franchises have demonstrated staying power, there’s also a persistent appetite for the kinds of novel experiences that startups have historically delivered.

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