At GDC (the Games Developer Conference) this March in San Francisco, there was a bit of an elephant in the room. All the usual cocktail parties, dinners and events were taking place as normal, but a lot of the discussions were not about gaming. With the exception of Savvy Games, owner of Scopely, buying Pokemon Go from Niantic, there have been relatively few and smaller deals. A16Z Speedrun, the Ycombinator for gaming, announced it will expand beyond gaming to cover a much wider slice of entertainment, consumer tech and AI automation. But gaming is far from dead. It’s still the #1 form of entertainment for anyone 12 and above. So what gives?
In this post, I tried to collate the latest reports on the gaming industry from Sensor Tower, Konvoy Ventures and Aream&Co. If you’re a founder or VC investor in the gaming space, there’s some valuable takeaways at the end.
Market Snapshot: The Evolving Gaming Landscape
The global gaming market is projected to reach $186 billion by 2026 (4.7% annual growth) with approximately 3.4 billion gamers worldwide.
Private investments in gaming startups hit a five year low in Q1 2025 with $400M in recorded investments. Rounds are still happening, but investors are being highly selective.
VC funding is rebounding with $373M raised across 77 deals in Q1’25 (+35% QoQ), with total private financings reaching ~$700M (+23% vs. Q4’24). Growth-stage rounds surged 125% for Series B–D, while North America led with $198M in total investment. Strategic M&A is picking up with notable deals including Scopely’s acquisition of Niantic and MTG purchasing Plarium.
On the M&A front, the quarter’s growth was mostly attributed to the Pokemon Go deal, but is largely driven by mobile gaming studios.
The volume of medium and large deals—those with upfront payments over $100 million—has now exceeded pre-pandemic levels.
The growth rates of the industry have slowed down from the times of the pandemic, but nevertheless gaming is expected to continue to grow and reach $221 billion in revenue per year by 2030.
AI + Gaming is attracting funding
According to a new report by Investgame, AI + Gaming startups attracted $1.8 billion in funding during 2020-2024 period.
Today, AI is being utilised to generate expansive game worlds, enhance non-player character (NPC) behaviours, and provide real-time analytics for personalised player experiences.
While most companies remain at the ‘application layer’, a few startups like Playo.ai (full disclosure: we are investors with Remagine Ventures) developed a proprietary gameplay AI foundation model that generates unlimited, personalised 3D gaming experiences in under a minute. This has the potential to dramatically change the cost structure of the industry.
Platform Dynamics & Distribution Revolution
Mobile game spending +4% YoY in 2024 despite fewer downloads and releases, according to Bloomberg report. But only 399 new games achieved that threshold, and there were 43% fewer games released overall in 2024.
The mobile gaming market is returning to growth, with in-app purchase revenue increasing by 4% YoY to $82 billion, time spent by 7.9%, and sessions by 12% YoY in 2024 compared to 2023. A significant trend is the rising adoption of Hybridcasual monetization, which blends in-app purchases and ad monetization, alongside an increased focus by developers on live services for existing titles to boost retention and engagement in a privacy-aware environment.
In terms of genres, Casual games showed the largest absolute IAP revenue gain in the West despite download declines, while Strategy and RPGs led global consumer spending, and Shooters and Strategy dominated global time spent.
While overall downloads have plateaued, growth is being fuelled by higher spending per payer, and new game launches continue to drive substantial popularity and revenue, particularly within the Action & Strategy category.
Perhaps the most significant development is the erosion of Apple’s App Store monopoly. With regulatory pressure finally forcing open the iOS ecosystem, third-party app stores and direct payment options are now reality. This shift is already reducing the effective “Apple tax” from 30% to 15-20% for many developers, potentially unlocking billions in additional developer revenue. Studios with direct-to-consumer relationships stand to benefit most from this structural change.
Regional Growth Hotspots
Regionally, North America experienced the most absolute growth in IAP revenue, although Asia saw a decline.
American gamers were once again among the world’s most valuable, as they spent an average of $6.43 per download, across iPhone and Android devices, more than four times the global average of $1.52 per download.
Despite Asia-Pacific hosting 53% of players, the U.S. and China generate over 50% of industry revenue while representing only 27% of gamers. American players spend roughly 3.1× more per capita than their Chinese counterparts – a spending disparity reflected in venture funding, where U.S. gaming startups have raised approximately 7.6× more than Chinese ones.
The most compelling story for investors is the acceleration in previously underserved markets:
| Region | Mobile IAP (2024) | YoY Growth |
|---|---|---|
| North America | $28B | +9% |
| Europe | $12B | +14% |
| Latin America | $1.5B | +13% |
| Middle East | $1.2B | +18% |
| Asia | $38B | -3% |
Playbook for Gaming Founders
It’s a bit tough out there for gaming fundraising (on the content side). This is what founders can do to navigate this period:
- Embrace Direct Monetisation: With app store monopolies breaking down, invest in direct payment infrastructure and customer relationships. The companies who move quickly to capitalize on new distribution options will capture outsized value.
- Hybrid Revenue Models: Mix IAP with advertising for superior results. Test rewarded video ads alongside premium offerings rather than committing to a single revenue stream.
- Retention Over Acquisition: With downloads declining, focus on extending player lifetime through robust live-service operations.
- Geographic Expansion: Target high-growth regions (Brazil, Turkey, MENA) while optimising premium offerings for high-LTV players in mature markets.
- Distribution Innovation: TikTok saw 67% increase in game ad impressions, while Applovin jumped 397%. Master platform-specific content dynamics before competitors.
Follow the money: Where VCs Are Placing Bets
- Alternative Distribution & Payment Infrastructure: Companies enabling developers to bypass traditional app stores or optimise within the new multi-store ecosystem are positioned for significant growth.
- Live-Service Infrastructure: Tools that help studios manage, monetize, and extend game lifetime as the industry shifts from acquisition to retention.
- Emerging Market Studios: Teams building for high-growth regions with cultural relevance and platform knowledge.
- AI-Enhanced Development: Tools accelerating content creation, QA processes, and personalization that deliver measurable ROI.
- Strategic Acquisition Targets: Well-positioned studios with proven technology or IP becoming attractive M&A targets at reasonable valuations.
What we’re looking for at Remagine Ventures
Gaming in 2025 shows stability alongside significant structural change. The app store monopoly breakdown represents perhaps the biggest opportunity for value creation in a decade. For founders, the message is clear: capitalise on new distribution options, focus on retention, experiment with hybrid monetisation, and think globally from day one.
At Remagine Ventures, we remain bullish on gaming’s trajectory and are actively seeking partners who understand where the puck is heading. If you’re building something that aligns with our thesis, we’d love to hear from you.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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