Appmagic reports a shift in investor focus from quantity to quality
The game industry of 2023 grappled with challenges stemming from the lasting impact of COVID-19. Witnessing a significant downturn, the market size decreased, leading to job losses and a recalibration after a period of rapid expansion.
This transformation isn’t merely a challenge but an opportunity for the game industry. It undergoes a market shift, aligning with the enduring needs of its audience. As the industry evolves, it transitions from a frantic growth pace to a more stable stage, guided by visionary leaders committed to sustainable progress—essential for the industry’s lasting vitality and creativity.
In 2023, the game industry faced a challenging investment climate. Unlike the past, where impressive pitches secured funding, investors now demand concrete numbers and results. For new studios, proving their worth is essential, while established ones require fruitful partnerships and a track record of notable successes. Investors, especially those new to the industry, have become more selective, emphasizing quality over quantity. While the investment climate cooled, private investments and M&A, backed by savvy and long-term investors, remained active.
Large studios embraced a shift from hyper-casual to a hybrid-casual model in 2023. This model combines simple hyper-casual mechanics with the more involved meta-elements of casual games. The evolution of hyper-casual games from simple, low-cost productions to more complex titles poses challenges for smaller studios. The emphasis is now on the blue ocean strategy and the high quality of new games.
The industry witnessed a shift from separate monetization models to a hybrid approach in 2023. Hyper-casual games incorporated in-app purchases (iAPs), while mid-core and casual games introduced advertising elements like rewarded videos. This hybrid model proves effective, offering a versatile revenue stream that caters to various player preferences. A notable example is War Robots, initially iAP-focused, which successfully integrated rewarded video ads, significantly boosting its revenue.
As the game industry heads into 2024, it’s transitioning to a more normalized state after delays and a surge of releases due to the pandemic. Console games maintained dominance in 2023, but mobile and cross-platform games are gaining popularity. The industry anticipates improved investment and user acquisition.
AI technology plays a pivotal role in game development, streamlining studio operations and excelling in simple 2D tasks. While its application in complex 3D game creation is evolving, it holds the potential to empower smaller studios to create impactful titles more efficiently and affordably.
In a noteworthy case, MY.GAMES’ creation of Rush Royale exemplifies the industry’s ability to scale from scratch, reaching $150 million in earnings and growing the team from 3 to over 200 people—all from the comfort of home.
Source: adapted from an article by Kürşat Zaman, Writer for Mobidictum.