VCs have been playing big in the gaming business for quite a while, worldwide. A few examples incorporate Andreessen Horowitz, which invested in Roblox, an online gaming platform that went public in March 2021 and, as of now, has a market valuation of more than $45 billion. Likewise, Sequoia Capital invested in Unity Technologies, an organization that provides a game development platform, and it went public in September 2020 with a market valuation of more than $26 billion.

Accel Capital Partners has invested in Supercell, the maker of the famous mobile game Clash of Clans. The game was acquired by Tencent for $8.6 billion in 2016, making it perhaps one of the most costly acquisitions in the gaming industry.

GV, otherwise called Google Ventures, had invested in Discord, a chat app for gamers that recently went public through a direct listing. Bessemer Venture Partners has invested in Twitch, a live-streaming platform for gamers acquired by Amazon in 2014 for $970 million.

Generative AI gaming
In any case, presently, with generative AI coming into the picture, the investment is simply going to get more extreme.

Scenario: Anorak Ventures, Founders Inc., The VR Fund, Brendan Iribe from Oculus, Justin Kan from Twitch, Hugging Face founders Clem Delangue and Julien Chaumont, and Play Ventures led a $6 million seed round for an AI startup. During the funding period, the organization, with only eight team members, is empowering game developers to create many custom generators for entirely new game assets that are within a specific style.

More startups like Poly, which is backed by Y Combinator, Hotpot, and Pixela.ai are additionally significant players in the AI-based game asset generation field. The application of generative AI can change the game development process for studios. However, existing game projects may not quickly receive the benefits of this innovation, and future games currently being developed are likely to use the power of generative AI. This suggests that the forthcoming generation of games could be related to AI, and VCs are most certainly keeping watch.

The gaming industry is one of the quickest adopters of innovation, with the industry itself evolving as quickly as the technological developments occurring around it. The high adoption of Web3 in gaming is one of the new examples.

Pearl Agarwal from Eximius Ventures, a gaming-focused VC firm, told AIM that the idea of Web3 in gaming is not just a buzzword. “Minecraft and Roblox are very close to the idea of the metaverse.” “With Web3, AR, and VR in the picture, the gaming industry can head to another level.”

Be that as it may, the Web3 phase looks faint right now with generative AI and any semblance of ChatGPT and DALL-E taking center stage. The gaming industry requires a high volume of content, a lot of which is artwork. So normally, generative AI most certainly presents a disruptive opportunity in the industry, and the VCs are prepared for it.

Meanwhile India
The Indian gaming industry saw a phenomenal blast during the pandemic. What’s more, the introduction of multiplayer games like PUBG took it to another level, giving a significant fillip to the community. Thus, in FY 22, India turned into the biggest consumer of mobile games with 15 billion downloads. That was the ideal opportunity—the unexpected development caught the attention of venture capitalists, who had been awaiting their chance to watch it from afar.

What’s more, presently, riding the interest wave, VCs are progressively showing interest in the gaming industry. As per a report by Lumikai, a venture fund zeroed in on gaming, in FY22, the Indian gaming market was valued at $2.6 billion, and gaming startups consistently raised $349 million. With a CAGR of 27%, the market, which currently has 900 gaming organizations, will be worth $8.6 billion by 2027.

One of the significant reasons why VCs are attracted to the gaming industry in India is the result of the youth base that is focused on online gaming. Roland Landers, CEO of the All India Gaming Federation, told AIM that the consistency with which the industry is growing in India is actively attracting a wide range of investors.

The Lumikai report expressed that there were around 507 million gamers in India, out of which 120 million were paying users. A similar report says that this number will reach 700 million by 2025. The main thing missing in India is transforming the online gaming industry into eSports. This can be accused of missing infrastructure; however, in all honesty, work is underway. FPS games like Call of Duty, after the ban of PUBG, have been the driving force behind this.

The Indian VC ecosystem, like the gaming ecosystem, is as yet blind to the capabilities of generative AI in games. The majority of the money goes towards mobile games, as that has been the market up until this point. Ideally, the trend of generative AI will get going soon.

Credit: AIM