Gaming Industry Report

Q4 2022
Gaming: at a glance
Total gamers in 2022 by region:
• 2022 market size: $184.4b (+2.3% YoY)
• Public markets: No activity in Q4 2022 North America
• Venture funding in Q4 ‘22: $553m across 97 Latin America
rounds (-83% YoY)
315 219
(10%) (7%)

Europe 430
Key Trends (13%) 3,198m 1,746
• Mobile monetization is getting harder (55%) Asia-Pacific
• Race for content consolidation 488
(15%)
• VR headset shipments down 13% YoY
Middle East & Africa
• Drastic decline in web3 gaming investment
• Regulators take firmer stance against tech

Source: CB Insights, Newzoo, Sony, Microsoft, Nintendo, public reporting, Drake Star

1
Gaming is a $184b global market and estimated to
reach $283b in 2027
$ in billions Actual Projected

+8.94%
$283
$260
$238
$219
$201
$180 $184
$166
$152
$138
$122
$107
$93
$71 $77 $85
$68
$55 $60 $64
$42
$32
$20 $22 $23 $26 $28

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

Source: IFPI, Newzoo, Arstechnica, MPAA, Mordor Intelligence

2
Gaming VC funding: 2021 growth was an anomaly
2021: Frothy VC market plus over-investment in web3 gaming
$ in millions
Late Growth Early

2019: $2,501 2020: $2,729 2021: $8,813 2022: $5,291

$3,193
$145

$2,306
$2,240 $0
$1,919
$2,189
$900
$1,462 $1,278 $1,430
$825 $0 $0
$1,041 $438 $1,002
$305 $934 $631
$729 $412 $737 $0
$0 $440 $879
$533 $11 $539 $100 $0 $664 $452 $553
$197 $525
$0 $360 $150 $86 $433 $1,024 $1,028 $119 $0
$301 $108 $363 $859 $799
$180 $227 $460 $550
$358 $305 $430 $434
$231 $229 $162 $227 $237
Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights

3
Gaming VC deals: 0 late-stage deals done, 36%
decline in number of growth-stage deals in 2022
# of deals Late Growth Early

2019: 313 2020: 357 2021: 569 2022: 579

219
199 0
22
1
27
151
0
125 124 16
121
2 0 3 112
105 21 16
87
97
2 21 11 0 97
85 197
81 78 77 11 0 16 5 0
8 0 9 2 1 171
60 10 10 1 7 1 135
9 0 102 105 100 101
86 87 92
77 76 70 67 69
51

Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights

4
Gaming in the public markets: down ~35% YTD
Stock performance of Gaming ETFs: ESPO & GAMR, % change from January 2019

YTD change:
160% • ESPO: -35.3%
• GAMR: -37.0%
140%

120%

100%

80%

60%

40% ESPO
GAMR
20%

0%

-20%
2019 2020 2021 2022

Source: Barron’s as of September 30, 2022; Note: ESPO seeks to track the MVIS Global Video Gaming and eSports Index (MVESPOTR), GAMR
seeks to track EEFund Video Game Tech Index

5
Public gaming companies hold ~$48b in cash and
equivalents; a healthy M&A environment
Gaming companies Tech companies with Gaming divisions
Company Cash & equivalents2 (USD) Company Cash & equivalents2 (USD)
$9.4b $34.9b

$7.7b $23.8b

$6.3b $23.6b

$3.0b $22.9b

$2.7b $22.0b

$2.7b $14.3b

$2.0b $9.4b

Others1 $14.0b $6.1b

Total $47.7b Total $157.0b

1: Konami, Ubisoft, EA, Square Enix, Playtika, Unity, Sega, Krafton, TTWO, Applovin, Embracer, NCSoft; 2: Does not include short-term
investments; Source: Latest public reporting (as of January 12, 2023)

6
Q4 2022: Largest game content VC deals
Game content investments – Q4 2022
Company Stage Raise, $m Region

Series A $33.01 Asia

Line Studio Series A $30.4 Asia

Series A $19.0 North America

Series C $15.0 Asia

Seed $15.0 North America

Series A $15.0 Asia

Seed $10.0 North America

DELYSIUM Seed $10.0 North America

Seed $7.5 Europe

Seed $7.5 North America

1: Includes $25m from Playtika and $8m from Re-Pie Asset Management (classified as separate rounds); Source: CB Insights

7
Q4 2022: Largest gaming tech & platform VC deals
Gaming Tech & Platform investments – Q4 2022
Company Stage Raise, $m Region

Series B $100.0 Europe

Series A $40.0 Europe

Series A $40.0 North America

Series A $30.0 North America

Series A $12.0 Europe

Seed $10.0 Asia

Anything World Seed $7.5 Europe

Angel $7.0 North America

Seed $5.0 North America

Seed $4.9 North America

* denotes Konvoy portfolio companies; Source: CB Insights

8
Regional Breakdown
Q4 Gaming deals globally: at a glance Early Growth Late

Gaming venture funding in Q4, $m Number of gaming venture deals in Q4

$212 37
$0 $198 1 0
34
$4 $0 0
2

$100
$144 25
$0 0
$15 2

36
$194
32

$129 23
$112

1
$0 $0 $0 $0 $0 $0 0 0 0 0 0 0
$0 $0 $0 $0 $0 $0 1 0 0 0 0
Europe North Asia Australia1 South Africa Europe North Asia Australia1 South Africa
America America America America

1: The 1 early-stage deal in Australia is pre-seed (Soul Aether) with unannounced round size; Note: Early = Pre-Seed through Series A, Growth = Series B
through D, Late = Series E+ VC; Source: CB Insights; * denotes Konvoy portfolio companies

9
Europe: less subject to funding trends vs Asia, NA Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $265 2020: $353 2021: $1,177 2022: $1,202

$474 $489
$356
$284
$204 $217 $212
$145 $127 $143
$82 $55 $62 $67 $49
$32

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 82 2020: 100 2021: 129 2022: 139 Oct-22 $100.0m

Nov-22 $40.0m
47 51
Oct-22 $12.0m
30 30 34
27 29 29 29 25
21 22 24 Anything World
16 17 19 Nov-22 $7.5m

Dec-22 $7.5m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights

10
North America: largest gaming VC market in 2022 Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $1,934 2020: $1,651 2021: $5,384 2022: $1,922

$1,905
$1,528
$1,237
$787 $688 $714 $655 $578
$422 $557 $444 $492
$168 $288 $231 $198

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 120 2020: 131 2021: 192 2022: 174 Oct-22 $40.0m

Oct-22 $30.0m
71
61 Oct-22 $19.0m
48 45
36 41 40
32 33 30 33 34 34
26 26 27 Nov-22 $15.0m

Nov-22 $10.0m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights

11
Asia: similar total funding but 40% more deals Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $228 2020: $595 2021: $2,117 2022: $1,848

$892
$770
$532 $537
$375 $440
$241 $219 $275
$83 $71 $73 $144
$29 $45 $62

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 107 2020: 118 2021: 228 2022: 243 Dec-22 $33.0m

Line Studio Dec-22 $30.4m

98
Nov-22 $15.0m
72 65
58 50 48 43
28 32 29 37 34 37 Nov-22 $15.0m
18 23 24
Dec-22 $10.0m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights

12
Australia: small market, yet funding has >2x YoY Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $14 2020: $8 2021: $111 2022: $258

$214

$68
$38 $27
$0 $0 $13 $0 $1 $0 $0 $7 $5 $0 $17 $0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 3 2020: 4 2021: 12 2022: 11 N/A N/A N/A

6
4
3 3 3 3 3
2
1 1 1
0 0 0 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41
1: The 1 early-stage deal in Q4 is pre-seed (Soul Aether) with unannounced round size; Note: Early = Pre-Seed through Series A, Growth = Series B
through D, Late = Series E+ VC; Source: CB Insights

13
South America: no growth deals since 2020 Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $60 2020: $120 2021: $16 2022: $37

$120

$60
$34
$2 $10 $4 $3
$0 $0 $0 $0 $0 $0 $0 $0 $0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 1 2020: 1 2021: 3 2022: 4 N/A N/A N/A

1 1 1 1 1 1
0 0 0 0 0 0 0 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights; * denotes Konvoy portfolio companies

14
Africa: nascent but growing Early Growth Late

Gaming venture funding from Q1-2019 through Q4-2022, $m

2019: $0 2020: $3 2021: $8 2022: $24

$22

$6
$3 $2 $1 $1
$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Largest gaming venture deals in Q4 2022

Number of gaming venture deals from Q1-2019 through Q4-2022 Company Date Deal size
2019: 0 2020: 3 2021: 5 2022: 8 N/A N/A N/A

3 3
2 2 2
1 1 1 1
0 0 0 0 0 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41

Note: Early = Pre-Seed through Series A, Growth = Series B through D, Late = Series E+ VC; Source: CB Insights; * denotes Konvoy portfolio companies

15
1 Mobile: monetization is getting harder

2 Console: content providers are racing to create large enough libraries

3 XR: VR headset manufacturers continue to innovate despite declining sales

4 Web3 gaming: drastic decline

5 Regulators are taking a firmer stance against major tech and gaming companies

Trends + Current Events

1 Mobile: monetization is getting harder (1/2)
The content on mobile must be more in depth and engaging

• Mobile has been the largest distribution channel for games ($116b consumer
spend in 2021, 64.4% of the total 2021 $180b gaming market)

• However, data privacy regulation has made it more challenging to optimize ad

targeting, as Apple (IDFA) and Google (AAID) have restricted access to
consumer data

• Higher cost-per-install (CPI) for developers caused by an inability to

effectively reach their most relevant audience

• Mobile games are going to be forced to compete on content quality, not on

how efficient or optimized their user acquisition channels are; this is a good
thing

16
 1 Mobile: monetization is getting harder (2/2)
Hypercasual will be the most impacted by IDFA changes
Ads vs in-app purchases (IAP), % of total revenue Ads IAP

By region By genre

Action 23% 77%

APAC 39% 61% Adventure 24% 76%
Arcade 67% 33%
Board 70% 30%
Americas 47% 53%
Card 46% 54%
Casino 24% 76%
China 59% 41% Casual 37% 63%
Hypercasual 94%
Puzzle 25% 75%
EMEA 33% 67% Racing 27% 73%
RPG 19% 81%
Simulation 35% 65%
Japan 56% 44%
Sports 56% 44%
Strategy 29% 71%
Korea 32% 68% Trivia 60% 40%
Word 80% 20%

Source: Unity

17
 2 Console: content providers are racing to create
large enough libraries
Google to shutdown its largest gaming endeavor after just
Top game subscriptions
three years: unable to provide gamers with a compelling value
# of subscribers # of games proposition
• Internal game development studios shut down 18 months
after launch
• Spent 10s of millions to produce content up until the shut
45m+ 400+ down (Tangle Tower, Olde Sküül, No More Robots)
• Latest Stadia software development kit (SDK) was released
to studios 2 days before the shutdown

32m+ 100+1 Netflix decides games are the best way to compete as an
entertainment platform
• Focused on giving people more to do with their Netflix
subscription
• Library of 48 games; all only available on mobile
25m+ 475+
• Have 6 studios - acquired 4 and internally launched 2
• Recently announced that they are “seriously exploring” a
cloud gaming offering

1: Source: Bloomberg, Sony, Microsoft, Nintendo, Netflix, Axios, CNBC, gamesindustry.biz, TechCrunch, Protocol, Phil Spencer,

18
 3 XR: VR headset manufacturers continue to
innovate despite declining sales
• Sales of VR headsets in the U.S. this year declined 2% from a year earlier to
$1.1 billion as of early December
• Global shipments for AR and VR headsets are expected to decline by 12.8% in
2022, dropping to 9.7 million units
• PS VR2 is officially taking pre-orders and launches in February 2023
• Meta launched the Meta Quest Pro for $1500; Meta Quest was the top free
app for iOS on Christmas day
• Outside of gaming, the sectors experiencing the most growth in VR and AR
are workforce development (24%), manufacturing (21%), automotive (19%),
and marketing & advertising (16%)

Source: NPD Group, IDC, Emerged Research

19
 4 Web3 gaming: drastic decline
Web3 Gaming venture funding1, $m
Main issues:
$1,432 • Game quality is lacking
• Developers are building for web3 functionality and
users instead of for gamers
• Token values are inflated due to low float and
investors are moving away from pure token deals
• Most tokens and NFTs lack utility: these are sold to
$613 retail investors before games are released and
$530 utility is created
$437 $457
$328 $298 • Consumer excitement has also diminished with
major fraud coming from once-trusted
$1702
organizations and exchanges like BlockFi, FTX, and
Terra
Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22

1: Pre-Seed through Series E; 2: Omits Fenix Games due to funding structure (includes strategic) and source classification as “Unattributed VC”; Source:
CB Insights

20
 5 Regulators are taking a firmer stance against
major tech and gaming companies

Walled Gardens Anti-Competitive M&A Consumer Protection

• Following Epic Games’ lawsuit • Microsoft’s record-breaking $68.7m • Epic Games will pay a $520m
throughout 2020 + 2021, Apple’s acquisition of Activision Blizzard is penalty for allegedly violating the
mobile ecosystem has continued officially being challenged by the FTC Children’s Online Privacy
to face scrutiny over the past year given concerns that the joint entity Protection Act (COPPA) through
will be able to suppress competitors implementing “dark design
• Apple’s ability to limit app
through their combined platform and patterns” that tricked players into
distribution channels on first-
content offering making unintentional purchases
party hardware has been met with
complaints, and Q4 2022 saw one • This highlights the FTC’s increasingly • $275m of the penalty (largest ever
of the first major breakthroughs aggressive stance, as previously fine for breaking an FTC rule) will
as the company is allegedly demonstrated through the be for violating COPPA, while the
preparing to allow third-party organization’s attempt to block other $245m will be refunded to
marketplaces on iOS devices for Meta’s $400m acquisition of VR affected customers
the first time fitness app maker Within back in
July

21
Top gaming industry conferences / events
2023 events schedule

Event Location Dates Category

Pocket Gamer Connects* Multiple Multiple Gaming

Design, Innovate, Communicate,

Las Vegas, NV February 21-23, 2023 Gaming
Entertain (DICE) Summit*
South by Southwest (SXSW)* Austin, TX March 10-19, 2023 Gaming, Media

Game Developers Conference (GDC)* San Francisco, CA March 20-24, 2023 Gaming

NFT.NYC New York, NY April 12-14, 2023 Blockchain, Gaming

Augmented World Expo (AWE)* Santa Clara, CA May 31 – June 2, 2023 Gaming, Technology

Electronic Entertainment Expo (E3) Los Angeles, CA June 13-16, 2023 Gaming

Gamescom* Cologne, Germany August 23-27, 2023 Gaming

Tokyo Game Show Tokyo, Japan September 21-24, 2023 Gaming

Brazil Game Show São Paulo, Brazil October 2023 (TBA) Gaming, Media

Slush* Helsinki, Finland November 30 - December 1, 2023 Gaming, Technology

* denotes events our team at Konvoy plans to attend

22
Konvoy: Summary + Team
Konvoy: by the numbers
Assets under
$252m management (AUM) 3 Funds

34 Portfolio companies 32% Of all funds invested

outside of NA

10 New investments in ‘22 9 Deals led in 2022

Our top newsletters published in Q4:

1. State of Gaming Investment: Q3 2022
2. Seeking Player Two
3. Browsers: An Answer to Walled Gardens
4. Gaming: Is It Recession Proof
5. Digital Identity Update: One to Rule them All?

23
Konvoy invests in the platforms and technologies
at the frontier of gaming
Investment Stage Check Size Fund III
Pre-Seed, Seed, $1m - $5m $150m
Series A

Submit your company idea here 24

Left to right: Philip
Collins, Dani Tran, Taylor
Hurst, Jason Chapman,
Jackson Vaughan,
Dhinuka Perera, Josh
Chapman

Link to our socials here

Konvoy Team