The Web3 and NFT sectors appear to be particularly affected with what little investment there has been directed to more traditional, less speculative projects.

Although startup funding nosedived, the broader gaming industry didn’t have a particularly bad year.

The largest publicly traded gaming companies, including Take-Two Interactive Software, Electronic Arts, Nintendo and Sony, all ended 2023 with share prices well above where they began. And in October, Microsoft finally consummated the largest acquisition in industry history, snapping up Activision Blizzard for $68.7 billion.

Hit games also piled up, including Zelda: Tears of the Kingdom (Nintendo), Star Wars Jedi: Survivor (EA), and Marvel’s Spider-Man 2 (Insomniac Games). For Nintendo, profits from its Mario and Zelda brands added up to one of its best years ever.

Notably, however, the largest success stories go to well-known, large-cap players in the gaming space. Given the stickiness of established franchises, perhaps it’s a tough environment for newcomers to compete.

Better fortunes in 2024?

Looking ahead, optimists can point to a few factors that could result in a more favorable 2024 investment climate.

For one, the 2023 funding tallies are so low that even a historically subpar year will show a marked improvement. The quiet funding environment of 2023 also doesn’t mean investors were sitting out deal vetting.

In this notoriously hits-driven business, there are always new titles coming out with potential to go viral. And historically, quite a few of those result from the creative energies of startups.