Game Industry Dealmaking Tops $7.8 Billion In Best Quarter Since 2023

Forbes

09-05-2025

The frigid investment and M&A climate for the video game industry continued to thaw in the first quarter of 2025, topping $7.8 billion in the most active quarter since late 2023. Initial public offerings also spiked, to $2.2 billion, according to the DDM Games Investment Review's latest quarterly report
'There's no doubt that 'survive til 2025' became a defining mantra for the games industry during recent turbulent years," said Mitchell Reavis, the report's director. "While DDM anticipates ongoing layoffs, strategic pivots, and the divestiture of non-core business offerings throughout 2025, the data reveals genuine signs of recovery with investment and M&A trends moving in the right direction.'
A mixed first quarter produced a strong uptick in investments and IPOs in the game industry, ... More according to DDM Games Investment Review
The most consequential contributor to the latest improving numbers was a 370% increase, to $4.4 billion, in 190 investments in the quarter, according to DDM While mergers & acquisitions dropped more than a third, 55 such deals still generated $3.3 billion.
As with Hollywood's media companies – where a brutal 2024 was filled with layoffs, restructuring and the impacts of a fading theatrical exhibition business and an epochal shift from traditional cable and television to online streaming video – the game industry faced different but equally serious challenges.
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The game industry's blues were driven by a post-pandemic hangover, as people who'd flocked into games of many kinds during the lockdown and afterward began doing nearly everything else they used to do. Premium AAA titles became increasingly high-risk, several-year, nine-figure bets that could fail quickly, as happened with Warner Interactive's Suicide Squad title a year ago.
Mobile games, another big driver of revenues, faced an oversaturated market where relatively few of the 1.4 million games in app stores were able to stick out and truly thrive. No surprise, then, as interest rates rose and the cost of money increased, investors backed off the game sector for lower-risk alternatives.
Now, that seems to be easing, amid a shifting interest-rate environment and new approaches to game-making, as numerous speakers at the recent Los Angeles Games Conference detailed. Artificial intelligence tools and much more modest approaches are helping smaller companies compete, and find needed funding.
'As the industry trudged through 2024, we saw positive signs, and with one quarter in the books, it certainly seems that things are trending in the right direction,' according to the report.
One sign of the improving climate: 'a major surge' in announcements of new investment funds, totally a whopping $21.8 billion across 43 funds, up more than double the last quarter of 2024 in value. It was the biggest quarter for new fund announcements since mid-2022, when capital had come rushing into the sector.
The biggest drivers of investor enthusiasm continue to be companies providing blockchain- and particularly AI-based tools to game developers, the latter generating $3.1 billion across 32 deals.
Only one IPO, Grand Centrex's SPAC-based reverse merger, happened during the quarter. DDM's figures track only the amount raised in the deal, in this case $2.2 billion, and not the company's resulting enterprise value.
One major question for the industry was answered in recent weeks: will the long-awaited next version of Grand Theft Auto arrive later this year, in what is widely expected to be the single most lucrative release in the history of entertainment of any kind.
The answer: No. Publisher Take-Two Interactive finally acknowledged what was becoming obvious, delaying the GTA VI release from sometime this fall into early next year. That should open up opportunities for other major publishers during the holiday season, traditionally the biggest business period of the year.
DDM's methodology includes only Western investments in game development, publishing and tech, and only those that have officially closed. Parent organization Digital Development Management provides consulting, development and publishing services.