The value of private equity- and venture capital-backed funding rounds for video game companies fell more than 80% year over year in 2023.

Total private equity-backed funding rounds for the year came to $1.37 billion compared to $7.53 billion in 2022, according to S&P Global Market Intelligence data.

The analysis involves the interactive home entertainment sector, as designated by Market Intelligence. It consists primarily of publishers and developers of video game products and includes a minority of interactive education, fitness and gambling software.

Overall, funding rounds by the sector, both with and without private equity participation, amounted to $2.98 billion in 2023, the lowest annual total since 2020. Private equity-backed rounds comprised roughly 46% of the total.

In 2022, the total funding raised by the sector was $10.66 billion, with private equity funding rounds accounting for 70.6% of the value.

In the first quarter of 2024, total video game funding rounds were $2.13 billion, up significantly from $900 million in the first quarter of 2023. Private equity rounds fell to $380 million from $410 million during the measured period.

Looking at the number of transactions in the sector, the quarterly volume of all funding rounds, with and without private equity involvement, has been declining since the second quarter of 2023, according to an analysis by Kagan, a research group within Market Intelligence.

– Download a spreadsheet with data featured in this story. – Read about the decline in private equity-backed exits in the first quarter of 2024. – Catch up on the falling number of terminated private equity deals.

Top deals

Most of the overall funding round value during the first quarter was from the $1.5 billion capital Epic Games Inc. raised from Walt Disney Co. in February. This deal emerged as the largest funding round in the sector since 2023.

Two of the top 10 deals since the past year were backed by private equity. These were Build A Rocket Boy Ltd.'s $110 million round in January 2024 and Candivore Ltd.'s $100 million funding round in August 2023.

RedBird Capital Partners LLC led Build A Rocket Boy's fundraising, with participation from Galaxy Interactive, NetEase Inc., Endeavor Capital Management, Alignment Growth Management LLC, Woodline Partners LP and other investors.

Investors in Candivore's funding round included Haveli Investment Management LLC, O.G. Tech Partners and Union Tech Ventures, Market Intelligence data shows.