Global game investment rose 38% to $4.3B in 2024 | Hiro Capital

Global games investment rose 38% from $3.1 billion to $4.3 billion in 2024, according to a report by game venture capital firm Hiro Capital.

And if you look at games, mixed reality, and sports tech, the numbers showed over $10 billion was invested in those categories in 2024, based on data from Dealroom that was analyzed by Hiro Capital.

Despite an overall funding downturn in the world, global games investment rose, said Luke Alvarez, founding managing partner at Hiro Capital, in an interview with GamesBeat.

“We’re pretty optimistic,” Alvarez said. “We continue to make games in a huge and exciting sector and it’s had a slowdown, but it’s recovering from that and quality games makers will continue to make great games and make money for their investors. Games are eating the world by expanding into sports and all these other areas like deep tech, and we’re enthusiastic about that.”

He noted that the United Kingdom and European games industry are worth nearly $200 billion. In the U.K., investment into spatial computing increased by 141% in 2024, with AR, VR, and 3D technologies being widely adopted in industries beyond games, such as healthcare. And the report fond that investment into sports tech was $1.8 billion, down from from $2.5 billion in 2023.

As immersive technologies like spatial computing and AI move beyond entertainment, they are reshaping industries such as healthcare, automotive and skills training. This sets the stage for an exciting 2025, as the benefits of these new technologies begin to be realized, the report said.

During 2024, spatial computing companies raised $4.5 billion, with significant growth in AR and VR applications beyond gaming.

“We’re on the cusp of a new computing paradigm,” said Alvarez. “The Fifth Era of Computing will fundamentally change how we interact, create, and experience reality. Our role is to support the pioneers building this future but the real opportunity lies in the combined potential of all these sub-sectors, as we find new ways to integrate technology into our lives.”

Continued interest in games tech

According to Dealroom data, games funding across the U.S. and Europe reached $3.5 billion, nearly doubling from $1.8 billion in 2023. Globally, game funding rose from $3.1 billion to $4.3 billion. This is driven by the enduring popularity of established triple-A live service games as entertainment and disruptive new indie launches in 2024 such as Palworld, Helldivers II and Hiro’s own portfolio company Keen Games’ Enshrouded.

The U.S. continued to dominate games investment, contributing $2.9 billion to the total – up from $1 billion in 2023. Late-stage deals like Epic’s $1.5 billion raise was more than the total games funding raised in the US in 2023 ($1.1 billion).

“We are looking at data from Dealroom. From a Hiro perspective, we also look at various investment banks that cover the space. Everyone has a slightly different cut on these numbers, but the order of magnitude is about the same,” Alvarez said.

He added, “In 2022, we were north of $10 billion and in 2023 we were down significantly to $3.1 billion. And this year, we’re up significantly from 2023 but still less than half the peak in 2022. It’s up significantly on last year and we would argue there was better quality of investment in better quality companies,” Alvarez said. “There are some very big private market transactions like Build A Rocket Boy and Infinite Reality and so on.”

In the U.K., investment in 2024 was down 15% year-on-year to $313 million but significant deals, such as Edinburgh’s Build a Rocket Boy’s $110 million Series D, demonstrated continued activity in the sector.

Europe has fewer gaming unicorns (31) than the U.S. (34) over time. However, the fact this is so close demonstrates the strength of Europe’s gaming industry as overall the U.S. has more than three times the number of unicorns than Europe. Yet, Europe still lags behind the U.S. when it comes to enterprise value: the European and U.K. gaming sectors are worth $197.4 billion and employ 271,000 employees, compared to $3.8 trillion for the U.S. and over 330,000 employees, the report said.

A good portfolio

Alvarez, of course, is optimistic about Hiro Capital’s portfolio of game investments.

“We have some really quality game studios and games tech in the portfolio. Keen Games did really well with Enshrouded and we’re happy with that,” he said. “Happy Volcano, a Belgian studio we back a few years ago had a really good follow-on deal. Soccerverse, which we invested in in 2023, launched.”

In terms of layoffs, 2024 was a challenging year for the industry, he said. The big consolidators in the industry recruited aggressively in the post-pandemic era and “got over their skis,” Alvarez said. “Not all of the capital was well allocated. We all have a thesis that too much money at too high a valuation may feel great from a founder’s point of view, but it’s not necessarily good for the studio because you spend too much and you over-recruit and you have a high burn rate.”

On the other hand, earnings have been improving for companies like Epic Games and others that were in the public market (at least until recently with firms like Electronic Arts). Hiro Capital is an investor in esports, and that sector has had a tough time, but Team Liquid doubled its revenues and is profitable.

“Even in this tough market, I think 2025 feels pretty good,” he said. “Sectors are picking up and people are growing again. It’s probably harder than ever to get cut through as an indie or as a new studio, but if you’re making something brilliant with amazing fun and an innovative gameplay loop, you can cut through. Keen’s Enshrouded is great proof of that. There have been some brilliant launches in 2024 from studios we have never heard of like Black Myth: Wukong maker Game Science.”

He believes that strategic investors are going back into the market for M&A deals, and the windows are opening back up for IPOs. The companies that have empty pipelines for the latter part of 2025 and 2026 will likely buy their way into the markets, he said.

Skewing young

He noted there are companies making comebacks and bright spots like the market for young gamers.

“There are parts of the industry and specific companies where things are starting to go really well. We are partnered on a seed company with Garena and they got their mojo back. A lot of companies have weathered the storm. They’re in great shape. I think Epic’s in great shape. I think Roblox is increasingly in good shape. Whereas there are other companies, and I won’t name them, who had a very tough 2024 and saw their stock prices decline and their performance decline. Some are still going through their turnaround.”

For acquirers, he said, “If you’re a strategic and you want to acquire great new games studios or important new tech, now’s probably a pretty good time to do it. But I think people want quality. They want games that players love with really good retention metrics. They want studios that are making money where they’re buying tech. They want tech that’s proven product market fit and has good unit economics. So I think the speculative nonsense of 2022 is mostly gone away.”

He noted the firm made a few investments just before the year closed. Some of them reflect that “gamers tend to be at the sharp end of new computing tech.”

Bullish on VR and immersive tech

Demand for immersive environments, fueled by the convergence of AR and AI, as well as breakthroughs in hardware, saw British spatial computing firms (AR, VR, and 3D technologies) raise $2.2 billion in 2024 – a 141% increase year-on-year.

This helped drive European investment higher by a quarter to $2.7 billion. During 2024 these technologies moved further beyond the confines of games to applications across automotive, healthcare and industrial training, among other sectors, such as VR medical training startup, Oxford Medical Simulation’s $12.6 million Series A.

Overall, spatial computing funding was down 20% to $4.5 billion, but the U.S. again dominated deals, raising $3.1 billion. 

Alvarez is bullish on virtual reality, as he says VR is appealing Gen Z and Gen Alpha young folks. He noted AJ Shewki, Dr. Doom, launched a partnership with Meta where his company Liv can put cameras inside Horizon VR for streaming capture, as well as inside the popular VR game Gorilla Tag, so people can share their achievements in VR.

“It’s effectively a 3D social network dressed as a gorillas for kids of that age,” he said. “The number of monthly active creator streamers is solid and growing. Those of us who are a bit older probably may not be aware of the extent to which there is a generational shift happening, like for Roblox and Fortnite and that generation. There’s a genuinely 3D spatial computing social world beginning to emerge for the kids that are coming through. So I think we’re optimistic about that.”

He’s also excited about VR studios like Polyarc, making of Moss. He believes Google and Samsung will launch something good with Android XR before the end of the year, and Meta is going to come back with new hardware too. Apple might also try again, he said.

“I think that place, that space is coming,” he said.

Sports and tech and games

Alvarez said he is big on the intersection of games and tech and sports. Alvarez liked CarvSki, which is an AI game built for skiers connected to a clip-on wearable you put on your ski boots. That wearable tracks something like 120 variables about your skiing technique 100 times a second and in real time, he said.

“As you ski down the mountain, it gives you feedback on how to improve your skiing technique and the whole thing is gamified so you’re constantly hearing happy noises every time you do a turn correctly, as you do the turn,” he said. “It’s like playing Candy Crush except it’s tracking what your body is doing in extraordinary detail in real time and it’s responding to you as you’re moving down the mountain.”

He added, “We think that’s really interesting. Is it a game? Is it a human SaaS business? Is it a device? Well, it’s a bit of all of those things, but it’s almost turning the human body into a kind of partly digitized cyborg, which has fun and leads to better skiing.”