The game industry continues to show both resilience with rising acquisitions as well as weakness with stalled private game investments in Q2, according to Aream & Co.
Add to that the announcements of new layoffs — likely in the thousands — at Microsoft’s Xbox game studios this week — and you’re likely to be confused about the direction the game industry is heading.
“The layoffs are terrible for all those teams and the people there,” said Micha Katz, managing director at Aream & Co., an investment bank and M&A adviser in the game industry.
The crosscurrents were at war with each again during the second quarter. There were sounds of industry health with strong public market gains and acquisitions that reached $6.2 billion thanks to two mega deals, said Katz.
But private investment activity stagnated at $400 million deployed across 83 deals — marketing the second consecutive quarter at five-year lows, said Sergei Evdokimov, investment banker at Aream & Co. and cofounder of InvestGame, in an interview with GamesBeat.
Strong M&A and public market growth
The mega-deals in the quarter were Scopely’s (Savvy-backed) $3.5 billion acquisition of Niantic’s gaming division and a newly announced private-equity-led investment in Dream Games.
Mobile games continued to dominate transaction headlines while PC/Console activity remained subdued. The first half of 2025 delivered the highest half-year deal count since the pandemic with 82 transactions totaling $9.5 billion — a 144% increase from a year ago.
Capital markets sustained strong momentum with $4.2 billion raised through public offerings, led by GameStop’s $2.3 billion in convertible notes and Take-Two’s $1.0 billion stock issuance.
Gaming equities delivered strong year-to-date performance despite macro headwinds, with many names trading near 52-week highs. Valuation divergence accelerated as diversified publishers and PC/console stocks trade at 15x+ forward EBITDA multiples, while mobile peers remain near historic lows.
Private game investments
Private investment activity stagnated at $400 million deployed across 83 deals — marking the second consecutive quarter at five-year lows. Despite the downturn, emerging trends signal potential recovery: AI-powered gaming startups have attracted $2 billion+ in cumulative funding and continue gaining momentum, Turkey solidified its position as a leading mobile gaming hub, and cohort financing models now provide non-dilutive growth capital to mobile studios navigating a challenging Series A environment.
On the consumer front, mobile gaming revenue stabilized at ~$20 billion quarterly, though downloads continued declining. PC gaming pressed full ‘steam’ ahead with last twelve months revenue surging 20% YoY to $16.8 billion, fueled by indie breakouts and peak concurrent users hitting 40.5m. Console dynamics shifted with Nintendo’s Switch 2 posting record-breaking sales within days of launch, while GTA VI’s delay to May 2026 opened a significant revenue window for publishers to capitalize on.
Aream & Co. combined with InvestGame to produce the report. InvestGame has been doing the report since 2020 and now Aream is adding more context to the report from its experience as a leading investment bank, Katz said.
Other companies reporting data on game deals include Drake Star Partners, DDM, Konvoy Ventures and perhaps others. Each company has its own take on when to include deals — when they are announced or closed — and each also has varying degrees of knowledge about the value of the various game deals. Aream tends to include the deals when they are closed. The Niantic deal was announced in Q1 2025 but it closed in Q2 2025, and so it was included in the Aream numbers in Q2, Evdokimov said.
There is a lag between when a trend hits the biggest game companies and when it also affects the smallest companies. When the public markets are strong, as they were in Q2, the value of game companies rises. The value of M&A deals on the highest level also rises. That creates more wealth across game investing, and eventually that wealth filters down to the venture capitalists, who can raise more funding and invest more money in game studios. But there haven’t been enough home runs by VCs since the investments really started happening in the last six years, Katz said.
“That’s why the VC activity is down,” he said. “The jury is still out. There are all-time highs for the larger companies and the big platforms. When you look at some of the smaller stocks, it’s a mixed bag. Some have been struggling. For the mobile games, it’s not that great on the multiple side. There haven’t been any big gaming IPOs. There is a funding need, for sure, but the VC activity is down.”
This means that budgets for games are probably coming down and projects are getting smaller. With the acquisition of big companies like Activision Blizzard, there is less for the biggest investors, like pension funds, to invest in, Katz said. The result is there are many fragmented and scattered game companies, and there are fewer solid investment targets.
“We are not sure if AI is really helping the companies or not,” Katz said.
The anomaly is that Sony is in the midst of a strong console cycle with 78 million PlayStation 5 consoles sold, while Microsoft has sold half of that. Nintendo has already sold three million consoles since its early June launch of the Switch 2. But it’s not clear if gamers are so financially shellshocked that they’re buying fewer games right now.
When those players see the price of the new Mario Kart World game on the Switch 2, they can get sticker shock, Katz said.
“I think a generation of players is being priced out of the market,” Katz said. “It’s a worry.”
Gaming does perform better than other industries during a recession, but it’s unclear what effect the tariffs and layoffs will have on the economy.
“The industry is macro driven, and it is the disposable income and spend that is being affected here,” he said.
Mobile games, once the driver of the industry, have also had a harder time as Apple prioritized privacy over targeted ads. The mobile game industry has not fully recovered from that.
Meanwhile, “You will see that launching a game and scaling the game has become even more difficult. So only if you have certain size and scale can you compete” in the biggest sectors of the market, Evdokimov said.
He added, “There is less growth in the space.”
There are some bright spots where private-equity firms are pouring more money into user acquisition solutions so that companies can target the right users and grow faster, Evodokimov said. Perhaps while VCs and IPOs are moving slowly, private equity may see more opportunities in gaming, and that could be good financial news for the industry.
There’s also a lot of strong activity in GenZ markets with the popularity of user-generated content and the success of Roblox, Fortnite and Minecraft. Over time, the VC market could come back, as there are some firms that are scoring big victories as exits proceed. And so it’s likely that game VC activity will not completely dry up, Evdokimov said.
