The math that killed gaming VC. Gaming startup funding: $12.5B in 2021. $627M in H1 2025. Not a single spherical crossed $100M. Collapse? More like decimation. Why? Two causes. 1️⃣ The acquirers bought… | Michail Katkoff

The math that killed gaming VC.

Gaming startup funding: $12.5B in 2021. $627M in H1 2025. Not a single spherical crossed $100M. Collapse? More like decimation.

Why? Two causes.

1️⃣ The acquirers bought acquired (Zynga by Take-Two, Activision by Microsoft). Fewer consumers means fewer exits. And nearly no exit alternatives for underneath $100M.

2️⃣ Apple killed IDFA, which killed environment friendly UA. Making it a lot tougher to scale large enough to get acquired. At the identical time, apps commerce at 10-17x income. Games commerce at 3-5x. Same income, fraction of the exit.

Fund math merely stopped working when acquirers left and multiples collapsed.

After practically each discuss I give, sport builders ask me why I’m so unfavorable on the gaming market. I’d reframe that. I’m bullish on gaming individuals. I’m bearish on gaming enterprise math.

The abilities that free-to-play sport operators have constructed over the previous decade are precisely what the highest-growth app corporations are determined to amass.

Retention design, engagement loops, dwell operations, monetization structure, and neighborhood administration at scale. These aren’t area of interest gaming abilities. These are the working methods of contemporary shopper apps.

The market is already telling you this. Strava employed its CPO and CTO straight from Epic and Zynga. Duolingo acquired NextBeat, a studio spun out of Supercell, particularly for his or her experience in sport design, person retention, and monetization to make their merchandise, of their phrases, “as fun and joyful as the best mobile games.”

Consumer apps are being rebuilt across the engagement ideas that gaming invented. And the individuals who perceive these ideas finest are sitting in sport studios, questioning the place the funding went.

Net-net: If your pleasure comes from creating video games, that’s a professional path. Just know the journey will probably be for much longer, bootstrapped, and hit-dependent.

But if what excites you is constructing merchandise that hundreds of thousands of individuals use each day, fixing retention at scale, designing methods that maintain customers engaged for years, you must know that each main shopper app firm is searching for precisely what you already know tips on how to do. The capital is there. The exits are there. And proper now, gaming expertise is underpriced relative to what it’s value within the app financial system.

Full evaluation of the gaming VC math on Deconstructor of Fun weblog and the publication.