DDM & InvestGame shared the investment climate status in the gaming industry in Q2’23 and H1’23 (not good); Remnant II is the best-selling game in the US; Baldur’s Gate III easily passed 5M copies.
This week:
- data.ai: Pokemon GO is #4 in the list of the most downloaded mobile games in the USA
- Belgian Embassy in China: Baldur’s Gate III sales reached 5.2M copies
- DDM: Gaming investment market overview in Q2 2023 & H1 2023
- GSD: Sales of PC and console games in Europe grew by 34% in July
- Circana: Remnant II tops the US game sales in July 2023
- InvestGame: The gaming investment market in H1 2023
- Sensor Tower: Honkai: Star Rail reaches $500 million in revenue on Mobile
Subscribe to the GameDev Reports newsletter to receive gaming market updates every day.
data.ai: Pokemon GO is #4 in the list of the most downloaded mobile games in the USA
- The game has been downloaded 678 million times worldwide. This is the 18th-highest figure in history.
- Currently, the game is ranked 16th worldwide by Monthly Active Users (MAU).
- In the USA, the game has been downloaded by 164 million people. Only three games in history have more downloads – Subway Surfers, Candy Crush Saga, and Roblox. In terms of MAU, Pokemon GO is third in the USA.
- However, since 2019, the game has lost 52% of its user engagement time. In the first half of 2019, on average, people played it for 13 hours and 30 minutes each month; in the first half of 2023, this figure dropped to 6 hours and 27 minutes.
- There are several reasons for this decline: the end of the pandemic, increased competition (especially from Roblox). It’s quite possible that some updates have also impacted user engagement as they forced backlash from the community.
Belgian Embassy in China: Baldur’s Gate III sales reached 5.2M copies
- The embassy disclosed the total sales of the game – as of August 16, 2023, they reached 5.2 million copies. This refers to Steam sales only.
- Previously, Bloomberg reported that early access sales of the game amounted to 2.5 million copies. Thus, within two weeks after the release, Larian Studios sold 2.7 million copies of Baldur’s Gate III.
❗️Larian Studios itself, however, has not yet confirmed this information.
- Baldur’s Gate III is currently the highest-rated game of this year; a bestseller on Steam; a leader on Steam in terms of engagement, and it ranks in the top 10 for peak CCU (875 thousand concurrent users) in history.
DDM: Gaming investment market overview in Q2 2023 & H1 2023
General Data
- The most money in Q2 2023 was invested in technology gaming companies (24%); eSports (19%); mobile (19%).
- The largest private investment deals in Q2 2023 were Everdome ($50M – blockchain game and metaverse development); Anzu ($48M – in-game native advertising); Mythical Games ($37M – blockchain-powered MMO development).
❗️However, there’s a nuance – Everdome raised funds through token sales for $50M. This isn’t a traditional fundraise in exchange for company equity.
- By the number of transactions in Q2 2023, mobile games lead (30 transactions); technology companies (22 transactions); and PC/console games (11 transactions).
- Polygon (6 investments); BITKRAFT Ventures (5 investments); Animoca Brands (4 investments) are the most active in Q2 2023.
- VRFabric had the only IPO of the quarter. It was listed on the Polish NewConnect exchange with a market capitalization of $11.4 million.
Comparison with Q1 2023
- In the second quarter of 2023, there were 127 deals totaling $676 million. This is 33.7% less in volume compared to the first quarter (147 deals totaling $1 billion).
- The number of M&A deals in the second quarter decreased from 41 (Q1 2023) to 31. The volume dropped from $565 million (Q1 2023) to $108.4 million.
- Only one gaming IPO of $10 million happened in the second quarter of 2023. In the first quarter, there were 4, totaling $450 million.
Comparison with H1 2022
- In the first half of 2023, there were 274 investment deals totaling $1.7 billion. This is 83% less in volume ($9.8 billion) and 53% less in number (583 deals) compared to the first half of 2022.
- In H1 2023, the total volume of M&A deals was $673.4M with 72 transactions. This is 98% less in volume ($29 billion) and 55% less in number (160 transactions) compared to H1 2022.
❗️Deals involving SEGA and Rovio; Scopely and Savvy Games Group (Steer Studios); Microsoft and Activision Blizzard are expected in the second half of 2023, barring unforeseen events.
Mergers and Acquisitions (M&A)
- The second quarter of 2023 ranks third from the bottom in terms of volume. Only the second quarters of 2010 and 2013 were weaker.
- DDM notes that companies tend to “hold back” money.
- The largest disclosed deals of the quarter were the acquisition of Wargraphs ($53.6 million – analytical service); Night Dive Studios ($19.5 million – developer); Hardsuit Labs (developer and service provider).
Blockchain and Web3
- Investments in crypto projects continue to decline. In Q2 2023, they decreased by 38% in volume (from $390.7 million to $243 million) and 34% in number (from 68 transactions to 45).
- 46% of transactions by volume were from the USA; 25% from the Middle East; 19% from Europe.
GSD: Sales of PC and console games in Europe grew by 34% in July
GSD reports only on actual sales figures obtained directly from partners. Major publishers like Nintendo do not share information about digital copy sales, for example.
Games
- 11.6 million console and PC games were sold in Europe in July. This is 34% more than in July 2022.
- 7.9 million copies were digital (a growth of 60% YoY). 3.75 million were physical copies (also a growth of 0.2%).
- Grand Theft Auto V was the best-selling game of July in Europe. FIFA 23 was in second place, and Red Dead Redemption 2 was in third. Rockstar Games titles were heavily discounted through the whole of July, which helped them to reach top positions.
- Among new games, the highest position was achieved by Pikmin 4, a Nintendo exclusive, which reached the 11th spot.
Hardware and Accessories
- 493,000 consoles were sold in Europe in July. This is 62.5% more than in 2022, but 2% less than in June 2023. GSD does not account for sales in Germany.
- PS5 led the sales. The number of systems sold increased by 244% compared to July of the previous year. Thanks to discounts, PS5 sold 24% better in July than in June of this year.
- At the current point in 2023, PlayStation 5 sales are 203% higher than the same period last year.
- Nintendo Switch sales fell by 9% in July when compared to the previous year. However, the sales figures in 2023 so far are on par with the results of 2022.
Circana: Remnant II tops the US game sales in July 2023
Games
- The total revenue of the gaming industry in the U.S. reached $4.187 billion in July, marking a 1% increase compared to the previous year.
- U.S. residents spent $3.722 billion on games, showing a 2% increase from the previous year.
- Gearbox Publishing’s Remnant II emerged as the best-selling game of July in the U.S. It also secured the 18th position on the chart of the best-selling games of the year.
- Among other newcomers in the July chart, Pikmin 4 ranked 6th, and Exoprimal secured the 16th spot.
- Due to the restoration of multiplayer in older CoD games on Xbox, Call of Duty: Black Ops II returned to the top 20 in sales for the first time since April 2017. Sales of Call of Duty: Black Ops III also increased.
- Royal Match, MONOPOLY GO!, and Roblox led the American mobile market in revenue for July 2023.
- Royal Match managed to increase revenue by 21% compared to June 2023. The results for MONOPOLY GO! were even more impressive, with the game’s revenue growing by 83% MoM in July 2023.
Hardware and Accessories
- Sales of gaming hardware dropped by 19% in July 2023, totaling $292 million. This decline affected all platforms.
- PlayStation 5 continued to be the most successful system in 2023, both in terms of sales volume and revenue.
- Gaming console sales in the U.S. for 2023 have reached $2.9 billion, a 17% increase from the previous year.
- Accessories sales grew by 8% in July, reaching $173 million.
2023 results so far
- As of the end of July, the total revenue of the U.S. gaming industry reached $30.682 billion, representing a 1% increase compared to the same period in 2022.
- Game sales remained at the same level, totaling $26.516 billion.
- Console sales increased by 17% to $2.919 billion.
- Accessories sales were 1% lower than in 2022, with a combined sales volume of $1.247 billion by the end of July.
- Hogwarts Legacy, The Legend of Zelda: Tears of the Kingdom (excluding digital sales), and Diablo IV are the best-selling games of 2023 up to the current moment.
InvestGame: The gaming investment market in H1 2023
Key Figures
- The volume of private investments decreased by 81% compared to the previous year, from $7.6 billion to $1.5 billion. The number of deals decreased from 316 in the first half of 2022 to 239.
- M&A deals dropped by 97%, from $28.7 billion to $0.9 billion. It’s worth noting that neither the deal with Scopely, nor the deal with Rovio, nor the deal with Activision Blizzard (if it ever closes) are included in the first half of this year.
- The size of IPO deals decreased by 49%, from $3.4 billion in the first half of 2022 to $1.7 billion.
Private Investments
- In the first half of 2023, 90 deals were made with gaming companies or publishers totaling $300 million. This is 90% less than the previous year.
- The volume of early-stage deals (pre-seed or seed) decreased threefold compared to the first half of 2022 (from $2.7 billion to $904 million). The number of these deals also decreased by 22%.
- Investors are increasingly preferring to support additional rounds for their existing portfolio companies rather than investing in new ventures.
- The situation with deals at later stages is even more challenging. In the first half of 2023, 12 deals were closed, totaling $500 million. In a similar period in 2022, there were 27 deals totaling $2.6 billion.
- Despite venture funds having capital, obtaining investments has become more difficult. Experienced managers have better chances.
- a16z, games, BITKRAFT Ventures, Makers Fund, and Gem Capital are the leaders in the number of deals in the first half of 2023.
- a16z, BITKRAFT Ventures, Makers Fund, Lightspeed Ventures, and Griffin Gaming Partners lead in deal volume for the first half of 2023.
- North America, Western Europe, Asia, and the Middle East are leaders in business investment activity in gaming.
M&A
- The first half of 2023 resulted in $300 million and 46 deals when it comes to gaming companies and publishers. This represents a 99% decrease compared to the previous year.
- InvestGame notes that in volatile economic conditions, strategic investors prefer internal investments over external ones.
- Companies are also reevaluating their portfolios and optimizing their workforce (as seen with Embracer Group).
IPO
- Gaming product companies accounted for 13 deals and $1.3 billion. This is 57% worse than the previous year.
- Private companies are delaying listings due to the unfavorable market climate. Those already on the market are implementing stock buyback programs.
- The American stock market shows early signs of recovery, but Europe is struggling.
Investments in AI in Gaming
- In the first half of 2023, 19 deals were made totaling $214.1 million.
- The same demand that once existed for Web3 is not observed.
Sensor Tower: Honkai: Star Rail reaches $500 million in revenue on Mobile
- This impressive milestone was achieved on July 25th. It took the game 3 months to reach $500 million in revenue.
- The majority of the revenue came from China (41.1%); Japan (23.9%); the United States (12%); and South Korea (7%).
- Japan leads in RPD (Revenue per Download) with $60. In China, it’s $41; in South Korea, $37; in the United States, $17.
- During this time, the game has been downloaded over 19 million times.
- Honkai: Star Rail is the only non-MMORPG in the top 5 for revenue in the South Korean market. The game earned around $34 million in the country in 3 months.
- In terms of revenue dynamics, Honkai: Star Rail is only 5% weaker than Genshin Impact.
- After its release, Honkai: Star Rail captured a significant share of miHoYo’s revenue – 65.3%. Genshin Impact accounted for 30.6%, while Honkai Impact 3rd had 2.8%.
