The hopes of surviving until ’25 may be paying off. During the first quarter of this year, the video games industry saw a second consecutive quarter of growth largely due to investment related AI and blockchain, a new report from DDM Games reveals.
Short for Digital Development Management, DDM is a market analyst firm that regularly conducts surveys of the industry.
During this first quarter, the industry saw a combined $7.8 billion across 245 transactions in investments as well as mergers-and-acquisitions (M&As). This marks the largest growth in a quarter since the fourth quarter of 2023.
“There’s no doubt that ‘survive til 2025’ became a defining mantra for the games industry during recent turbulent years. While DDM anticipates ongoing layoffs, strategic pivots and the divestiture of non-core business offerings throughout 2025, the data reveals genuine signs of recovery with investment and M&A trends moving in the right direction,” Mitchell Reavis, investment review director for DDM Games, said in a statement to press.
The gaming industry saw the most growth when it came to investments, which totaled $4.4 billion across 190 transactions. That’s a 370% increase in value and a 8% decrease in volume compared to the fourth quarter of 2024. Much of this growth can be credited to Sterling Select’s $3 billion investment in Infinite Reality, a technology company that specializes in artificial intelligence (AI) and extended reality (XR), an umbrella term that includes augmented, virtual and mixed reality.
Investments related to game developers increased by 457% in value during the quarter, though the volume decreased by 27% compared to last quarter. Overall, it totaled $4 billion across 103 investments.
But the biggest reasons for growth had to do with investor enthusiasm related to AI and the blockchain. AI investments in the gaming industry saw a 2,288% spike in value and a 14% increase in volume compared to the third quarter of 2024. AI investment totaled $3.1 billion during the quarter. As for blockchain, investments into the decentralized ledger system totaled $372.2 million, marking a 74% increase in value and a 50% decrease in volume.
Though the volume of mergers and acquisitions increased by 53% compared to last quarter, the value of M&A decreased 34%. During this first quarter, a total of $3.3 billion was spent in M&A across 55 transactions. The decline in value was due to the fact that 44 of those transactions were undisclosed. But on the volume side, these numbers represented the highest quarterly figure since 2022.
Game developer M&A totaled $2.1 billion across 26 transactions, a 7% increase in value and a 53% in volume compared to last quarter. Mobile led the segment, encompassing 63% of the market followed by console and PC (36%). Mass community games, such as “Fortnite” and “League of Legends,” encompassed 1% of the market, and eSports were less than 1%.
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