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DENVER, April 16, 2025 — Konvoy, a venture capital firm focused on investing in the future of gaming, has published its Q1 2025 Gaming Industry Report, indicating a cautiously optimistic outlook for the sector. With projections showing the global gaming market reaching $186 billion by 2026 (a 4.7% year-over-year increase) and gaming ETFs performing better than the S&P 500 (ESPO: +4.8%, HERO: +6.2% vs. S&P: -5.4% year-to-date), investor confidence is starting to recover.
“We are observing a stable and consistent funding landscape in gaming, as investment groups are becoming more selective and strategic,” stated Josh Chapman, Managing Partner at Konvoy. “The next generation of successful companies will be built by founders who are innovating around the evolving areas of distribution, regulation, and tooling.”
Venture capital funding in the gaming industry increased by 35% from the previous quarter, totaling $373 million across 77 transactions. While this represents a positive shift, funding is still down 41% compared to the same period last year, suggesting an initial return of capital to the industry.
Konvoy’s report highlights a significant difference between the U.S. and China: U.S. gamers accounted for only 6.4% of the global player base, but generated 26% of global gaming revenue in 2024 and spent over three times more per person than their Chinese counterparts. U.S.-based startups also received 7.6 times more venture funding and completed five times more VC-backed deals than those in China.
The quarter also saw a resurgence in mergers and acquisitions, including Scopely’s acquisition of Niantic and MTG’s purchase of Plarium. Konvoy interprets these actions as major publishers concentrating on their primary strengths.
Meanwhile, increased U.S. scrutiny of gaming platforms owned by China continues. Although a total ban of TikTok is considered unlikely, President Trump’s consistent extensions to ByteDance highlight a wider regulatory emphasis on algorithm management and U.S. data ownership. Konvoy anticipates that this scrutiny will broaden to include significant entities like Riot Games, Epic Games, and Lilith Games, which could impact global publishing, distribution, and M&A activities.
Ubisoft’s ongoing partnership with Tencent also garnered attention. With its stock price dropping 87% from its high in 2021, the French publisher seems to be depending on Tencent to stabilize key intellectual property without pursuing complete privatization.
The report also examines the initial effects of AI on game development. Microsoft’s MUSE and NVIDIA’s ACE are significant advancements in generative AI and autonomous agents. However, Konvoy believes that their immediate impact will be mostly limited to early-stage concept development and iteration, rather than fundamental gameplay innovation – at least for now.
Looking forward, Konvoy predicts limited enthusiasm for upcoming hardware releases. The Switch 2 is projected to perform below the original Switch by 25–40%, while nostalgia-fueled handheld devices such as the Atari Gamestation Go will appeal to a specific audience rather than revolutionizing the broader console market.
The complete Konvoy Gaming Industry Report Q1 2025 is now available. To read the report, please visit () .
SOURCE Konvoy