The game industry continues to show both resilience with rising acquisitions as well as weakness with stalled private game investments in Q2, according to a report by 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. Those layoffs, of course, are terrible news in my opinion.
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, according to Aream & Co.’s data.
But private investment activity stagnated at $400 million deployed across 83 deals — marketing the second consecutive quarter at five-year lows.
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 the report has more context.
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 & Co. numbers in Q2.
Based upon my own understanding of the game market, 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.
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.
When those players see the price of the new Mario Kart World game on the Switch 2, they can get sticker shock. 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.
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.
While there is less growth, there are some bright spots where firms like General Catalyst and PvX Partners are pouring more money into user acquisition solutions so that companies can target the right users and grow faster. 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.