Why it's become harder to raise investments in mobile game development in 2024

gamesindustry.biz:

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During the pandemic, the margins in the mobile games market continued to grow, surpassing expectations. Even after the initial surge, the market remained attractive despite a slight decline in growth, enabling high margins or significant returns when selling a share.

However, the current situation is more nuanced. Game development professionals often regarded other business niches with disdain, citing superior financial metrics as the reason.

And now, everything has changed.

Without resorting to the usual doomsaying about the hypercasual market, it still represents a massive portion of global installs, accounting for 26% of all mobile games in 2023. A few years ago, almost every project had the potential to soar. But currently, out of a thousand new games, there might not be a single hit.

The majority of installs continue to cluster around older projects, which publishers have developed and supported for years using a model akin to games-as-a-service. Yes, working in this market is both possible and necessary (our corporate group alone garnered more than two billion installs last year), but it's also essential to realistically assess the profitability of this sector.

The casual market has witnessed a similar shift. Previously, it was feasible to secure funding for a prototype without any metrics, primarily because the success rate among such projects was about one in 10-15. Nowadays, it's rare for companies to invest in projects without preliminary metrics. Exceptions exist for teams with an impressive background, but this doesn't mitigate the extremely high competition in the market. This all implies that it's nearly impossible for a small, young team to launch a successful project. There are success stories in the market, but focusing on them would be to fall for the classic survivor bias. Market growth has slowed, advertising effectiveness has decreased, and margins have normalized.

To develop