How are investors feeling about video games today?

gamesindustry.biz:

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Over the last five years, the digital pages of GamesIndustry.biz have been awash with stories of games studios being set-up, floated, expanded significantly, and getting bought.

The level of investment in the games industry has been incredible, and only accelerated during the pandemic, leading to three multi-billion-dollar acquisition announcements in January 2022.

But today the games market is in a tricky spot. The post-pandemic lull, combined with deep economic uncertainty caused by rising energy costs (plus other challenges), have seen games giants announce lower-than-expected results. Sales of games, at least for some, have declined. Mobile revenue is stagnating. And costs are rising.

So what does that mean for all those investors who had been so eager to inject huge sums of money into the sector?

"The investment landscape has been wild," says Spike Laurie, partner at games VC fund Hiro Capital.

"It is still the second-best time ever to set-up a games studio and do games"

"The last two years has been the golden time for founders. If you have a PowerPoint presentation, and you're making a blockchain or metaverse game, you'll get $5 million, a $25 million valuation, and nobody asks any questions. And it's created a monster. The money people are asking for and the valuations... it's been bananas."

He continues: "Everybody who had seen [the success of] Unity and Supercell thought 'games, it's the place to invest'. You just had all this money looking for game studios. So anyone who ever worked at Riot or Blizzard or King, in any kind of role... they would go 'I have an idea for a game, I need $5 million'. And then [investors] were like