Current Investor Sentiment in the Video Game Industry

The video game industry has experienced significant investment over the past five years, with numerous studios being established, floated, and acquired. However, the current market is facing challenges due to post-pandemic lull, economic uncertainty, and rising energy costs, resulting in lower-than-expected results for some games giants. Spike Laurie, a partner at Hiro Capital, notes that the investment landscape has been 'wild,' with excessive valuations and a lack of due diligence. Nick Gibson, director at Games Investor Consulting, adds that the combination of tough comparisons with lockdown years, hardware supply issues, and Apple's changes to App Tracking Transparency have given investors a reason to pause. Despite this, Laurie believes it is still a great time for investors to invest in games studios, as acquirers are less active, and the music has 'stopped' or slowed down. Patrick O'Donnell, senior equity analyst at Goodbody, states that investors are watching their exposure to the industry, citing concerns over consumer behavior, mobile headwinds, and regulatory issues. While the UK sector has seen downgrades, O'Donnell believes the worst is behind us, and the industry remains in a good place, with a huge long-term growth plan.