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Why 2025 Could Be a Major Year for Video Game Development
By Movieguide® Contributor
While video game popularity has only risen in the past decade, investment into game development has been rocky, but after a rough 2024, this year has promise to be a positive one for developers.
A new report from DDM Games found that starting in the second half of 2024, investment in game development has been on the rise, and it is only expected to continue this year.
“While investors are being more cautious, top gaming giants and publishers including Hasbro, Krafton, My.Games, Nazara Technologies, and Say Games have all announced cash reserved to invest in games,” the report said, per Deadline, adding, “as the games industry moves on from ‘survive til 25,’ 2024 games investment and [mergers and acquisition] data reveals recovery and improvement.”
“While the games industry has made it through ‘survive ’til ’25,’ DDM’s outlook remains cautiously optimistic,” added Mitchell Reavis, Manager of the DDM Games Investment Review. “However, the belt-tightening is certainly not over as DDM expects the games industry to suffer more layoffs, pivots from in-house game development to external, and divestitures of non-core business offerings.”
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2022 was the biggest year ever for game development. With 1,001 merger and acquisition deals across the industry and billions of dollars spent on production, that year expanded the game industry like none before it. However, in some ways, it was an overreach, as many major companies entered the industry for the first time, expecting to find immediate success, simply by spending enough money.
Since then, these companies have found that a high budget isn’t the only requirement for success, nor is it a requirement at all. Hundreds of solo, or small, developer teams have created blockbuster hits that have made much more of a splash — and profit — in the gaming space than hundred-million-dollar projects. This realization has caused a sharp decline in spending the past two years as some of these major companies bow out of the industry after immediate success did not come their way.
Nonetheless, in an industry that reaches billions around the globe and generates more profits annually than the music and movie/TV business combined, companies are still willing to spend millions — or even billions — of dollars to claw out a piece of that pie. However, for the most part, this is shifting from trying to build a project from the ground up into acquiring studios that already have a hit under their belt. One of the major deals pending for the start of this year is Scopely’s acquisition of Niantic, the studio behind “Pokémon Go.”
This has allowed the spending in the industry to be much more productive, with the DDM Games report finding that on average investments now return 43% of their value in profit.
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