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But they predict that it'll get better by 2025.
Image credit: Eidos Montreal, Deus Ex: Mankind Divided
As you all perfectly know, the game industry has been facing hard times, massive layoffs and closures become part of our daily lives. We always know what developers have to say about the whole situation, but what's happening on the investors' side?
Recently, GamesIndustry.biz featured a report discussing investors' perspectives on the current challenges in the industry, and here's what we've learned.
The current challenges stem from the lasting effects of COVID-19, with investments in new studios, employees, and game development not yielding expected returns. By 2023, a global economic crisis further heightened investor caution in allocating funds.
"This might be one of the hardest times that the game industry has known," shared COO of Wings Eliana Oikawa. "The conjunction of the end of the COVID bubble, the crisis, the inflation, and high-interest rates have led to a macroeconomic situation where investors and publishers are extremely cautious."
This period is marked by layoffs, project cancellations, and studio closures, prompting investors to seek more than just ideas, asking for tangible progress and an established fan base. As one investor noticed, even companies like Team17 and Devolver are feeling the impact, with Devolver likely to weather the difficulties.
Image credit: Team17/Ghost Town Games, Overcooked
As for now, it seems that investors value startups that connect with their community, make cost-effective decisions, and distinguish their games from others because these are seen as more likely to succeed. While the industry faces challenges, investors believe in a bright future, predicting a better situation by 2025.
"In this environment, those companies that remain lean and validate from users or the market early and often, are best-placed to achieve this. It gives them more chances to learn, adjust their product, and find the hit they're after," shared one of the investors. "Within our portfolio, we've seen Proxima, a small team of five people experimenting with AI gameplay, release multiple prototypes and games in quick succession, going viral with their latest game, Suck Up."
"There's certainly hope that the situation will improve in 2025," added another investor. "The only thing that everyone seems to agree on is that it is not a crisis that will be resolved quickly."
"I think in 2025 we will start to see green shoots of new opportunities. Until then, people will need to focus on business essentials, which is: Can you make more money than you can spend?" concluded investor Spike Laurie.
Read the full report on GamesIndustry.biz and join our 80 Level Talent platform and our Telegram channel, follow us on Instagram, Twitter, and LinkedIn, where we share breakdowns, the latest news, awesome artworks, and more.
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