As VCs slow gaming investments, Frost Giant turns to community for fresh capital

techcrunch.com:

Video games haven’t been a niche hobby for ages now, but the scale of the industry built around gaming is still not as well known as it deserves. Revenue from video games totaled some $39.4 billion in the United States during the first three quarters of 2023. Meanwhile, the box office for films in the United States was worth a comparatively modest $9 billion in all of last year.

Big, global revenue numbers have not saved the video game industry from layoffs, but people around the world are still spending on new titles and hardware. It’s a great time to be a gamer, but is it as good a time to be a gaming studio? One gaming startup is shaking up its fundraising approach in a way that could chart a new path for studios who are seeing reduced appetite from traditional, private investors.

Frost Giant, a venture-backed startup building a real-time strategy (RTS) game called Stormgate, is turning to its community to top up its coffers ahead of the game’s launch this year. The company’s decision to test the waters for an equity crowdfunding round comes after it sold millions of dollars worth of goodies to supporters on Kickstarter earlier this year.

TechCrunch caught up with Frost Giant’s CEO and production director, Tim Morten, about the company’s choice to pursue community capital, which they said could bring more marketing and operating capital.

It’s not hard to see the logic behind the choice to raise more funding before returning to venture capitalists. The venture capital market for gaming companies has retreated sharply since Frost Giant last raised money (a $25 million Series A back in 2022). And with Stormgate expected to launch this year (an early access launch is pegged for Q3 2024), more funds could give the company enough leeway to launch its game and collect early revenue from its release. That may even be enough to entice another tranche of traditional venture funding for its enterprise.

Esports has received much press over the last decade, often centered around