Why Web3 gaming won’t see an uptick in VC activity 

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Venture capital spending may be bouncing back — with an estimated $4.5 billion spent last quarter.

But it doesn’t look like gaming’s getting a piece of that pie.

Earlier this week, Empire noted that VC interest may be going more toward projects with real-world value. This is a symptom of a broader change across the landscape, thanks to institutional interest in the space.

Unfortunately, even with the potential for more raises across the board — from mega deals ($100 million and upwards) to emerging deals (meaning seed or pre-seed) — it doesn’t look like gaming is getting the love. Not yet, anyway.

I asked PitchBook’s Eric Bellomo — senior analyst on emerging technology — about gaming raises, but he wasn’t too optimistic.

“While deal value increased substantially YoY, outsized deals like the Disney/Epic Games round inflated top-line figures. Deal volume continued to slide, falling 9.5% to 649 deals, in-line with 2018-2019 figures. Further, the number of investors actively investing in content developers continued its step deceleration since 2021.

“Capital is still available, but we view the current environment as a new steady state, rather than a resurgence,” he told me.

Part of this is fairly obvious, right? A lot of money went into this gaming subsector — but not a whole lot of successes came out.

“Enthusiasm has waned in the market broadly, as many well-funded startups have yet to produce breakout hits or venture-scale outcomes. A game’s underlying technology is far removed from the most important factor: Is the game fun and retentive?” Bellomo said.