In the first half of 2023 worsening macroeconomic conditions, slowing growth in the games market and the crypto winter undermined investment activity in the games sector significantly. In H1 2022 $106bn was spent across 280 deals, and this dropped to just $8bn (-93%) and 213 (-44%) in H1 2023. It is worth noting that Microsoft’s huge Activision Blizzard acquisition was announced in H1 2022 and included in that data. 

The downward trend observed in Q1 2023 continued in Q2, with the overall volume of investments dropping to 92, down 24% quarter-on-quarter, the most significant downturn observed since Q1 2022. Despite this, investment value actually saw a sharp rise of 577% from $1bn in Q1 2023 to $7bn in Q2 2023 with 73% of this attributed to Savvy Games Group’s acquisition of Scopely for $4.9bn.

Savvy Games Group bucks investment trend with acquisition of Scopely

Funded and wholly owned by Saudi Arabia’s Public Investment Fund (PIF), Savvy Games Group is one of the biggest investors in the game sector today. The PIF is a sovereign wealth fund managed by the state and a significant share of Saudi Arabia’s wealth is tied to oil; it therefore comes as no surprise that Savvy Games Group is largely unaffected by the economic challenges faced by the broader games industry.

Savvy Games Group has invested around $7.2bn across four deals since January 2022, with its latest being a $4.9bn acquisition of US mobile game developer Scopely in April 2023, the sixth largest by value in the industry to date. Scopely is Savvy’s first acquisition specifically targeting mobile. The company is well established and has proven success on the platform, with several notable titles to its name - including Stumble Guys, Scrabble Go, and Marvel Strike Force. The acquisition will bring expertise and development capacity to the recently established Savvy Games Group and strengthen its global position, while lending Scopely aid in cross-platform expansion to segments like PC and console.

Investments in artificial intelligence continued to accelerate in Q2 2023

Artificial intelligence (AI) is confirmed as one of 2023’s key trends, with the number of companies interested in the sector rising - in Q2 2023 eight companies using AI were targets of investments or acquisitions. User-generated content is emerging as a key application of AI technology, making content creation more accessible. This is attractive to developers and consumers alike, with Ampere Games – Consumer finding that 39% of respondents agreed that creating their own in-game content it is important to them (Q2 2023).

In late June 2023, Scriptic raised $5.7m in a seed funding round. The company develops interactive media with one of its titles, Scriptic: Crime Stories, being featured in Netflix’s gaming catalogue. The investment will go to toward onboarding writers to its AI-led creator service that allows users to create, share and monetise their own stories. Generative AI is also being applied throughout the game development process, collaborating with human creatives.

AI offers opportunities to innovate and promising solutions to challenges faced within the industry but there are unanswered questions surrounding the technology; including the the protection of IP to train models and the ethics of using AI resources to create art. This scepticism has impacted the adoption of AI, particularly within larger companies, with Valve reportedly banning games with AI art assets if the creator cannot prove that they have the rights for the training material.