Who is to blame for cruel video game industry recession Mass trimming, Studio closureAnd (minor) Decline revenue Since 2022? According to new data from game developer collector (a survey program runs jointly with our partners Omdia), Developers say that investors – especially with expectations are blamed to investors – number one side.
This month’s collective surveyed a panel of developers about the economic condition of the sports industry. Asked what is the “main cause” of the bad market situation in the video game business, 64 percent of the respondents stated that “unfair investors expectations” were the number one reason for the recession.
60 percent of the respondents ranked “mismanagement” as a close second. The next largest variable was “very high growth cost” according to 43 percent of the surveyors.
This is definitely a spicy statistical – but is it a fair feeling? The founder and investors of some studios (who may be slightly biased here) disagree.
“I am not sure this is appropriate,” said Jake Solomon, the founder and CEO of the Midsman. “Venture capital model VC is designed on significant returns on investment.”
“When a VC funds our studio, there is no expectation to share them in revenue, they do not set milestones, they do not determine the operation of day -day operations, and they also pay the entirety of agreeing on funding upfronts, it is a great deal for developers. VC investors can only make money through an acquisition or IPO. The exit incidents for the studio are rare, “he said.
Image through game developer collective.
Griffin gaming partner Jason Dela Rokka also disagreed, saying that this is actually “complete reverse”. “This is the market situation that is running the expectations of the investor,” he wrote to the game developer in a comment. “Developers need to wake up and be compatible with new reality that they can no longer be in sports -making business. They need to be embraced as a fan building business, and understand that the studio value and stability comes from identifying the base of a specific audience/player and feeding them great games.”
Astrobeam founder and CEO Devin Reimer (who did and was also the chief executive owls of VR Powerhouse Owlchemy Labs) scored the dissatisfaction, stating that the investor is carrying on some of the sports industry, looking at the return of “platform funding and the fall of sports publishers.”
“People are often looking for a simple villain to pin things, while not as simple or exciting to talk about reality,” Reimmer said, “said,” the competition increased, increase in development costs, lack of long -term studio funding, and (excess of sports development during Kovid) played a big role.
Reimar was the only one with which we talked about, which said what he said as “mismatch” between investors and game studios. “Successful game studios usually need to launch several games before being a hit. For example, in my previous studios, owls labs, it used to take 4 original IP games before our breakout hit.”
“Game publishers and platform funding works for this model, as they focus on individual sports. So a studio can get funding for many games without giving equity in a company and each deal was judged on the hurdles of the success of the title being funded. In the meantime investors buy a share in the entire company, and traditionally focuses around the company.”
Is it easy to find funding in 2025?
While developers have a lot of reason to find a mistake with investors, some hope that funding for new games and studios may be out in 2025.
This is not a dramatic melting, to be clear. In the last 12 months, the number of developers who reported money in the last 12 months is “almost unchanged”, according to the collective report, 30 percent of the respondents said that their company received money.
But when asked if it was “hard, easy, or the same”, which was to get money in the previous year of this year, a small number of developers reported that it was “difficult” than the year. 50 percent of the respondents announced that it was more difficult, decreasing by 23 percent from 2024.
There is a chance that it can only be to adjust developers to new reality, as the number of developers stated that “no changes” increased from seven percent to 27 percent, a correlated increase. Less developers said that it was “easy” to find funding this year, which fell from 9 percent to 6 percent.
Dela Rokka said that it is part of a trend he called “evidence-based investment”. This follows a pattern of investors who respond well for developers that can quickly prove “recognition of the audience” in the process. “The actual market failure is that there are very limited sources of money for prototypes and verification of the audience,” said the experienced investor.
“, It seems, it seems that 2025 is better than 2024,” Reymer said when the subject was quizzed. “But this is not saying much because 2024 was so bad.”
Solomon warned that a better investment environment at the seed phase may be correct, as it still “understands” for investors is to chip at that level in exchange for a relatively large amounts of equity. But he argued that the 2025 series A is the “worst year” for a funding and beyond. “Valuation probably feels too much, exit incidents are less, and there are no examples of good investment bets in sports. It is sailing out there, and it is a matter of shame, because it is a matter of shame, because many ideas are buying, which are very low -cost and innovative, which are actually our industry needs.”
In a way or any other, the sports industry requires ways to get out of this dirt that is not only cashing on trends and buzzwords. For all investors looking to win on the developer sentiment, Reimer may have a solution to see: investing in two matches at least first two matches from a studio.
“Then you can see the least growth ability and your chances of a hit will increase considerably,” he explained. “The problem is due to the current high growth costs, which means that a huge investment out of the gate is difficult to get at a time where investment is difficult.”
Game developers and Ompdia is the point organization which are under information,
