According to an analyst, mergers and acquisitions centered around artificial intelligence are "weakening" the investment landscape in the gaming industry

An analysis from S&P highlights a challenging investment landscape for the gaming industry, with a growing preference for funding models that focus on ongoing user engagement, leveraging platforms, or alternative revenue streams.

Significant mergers and acquisitions (M&A) in the second quarter were heavily concentrated in artificial intelligence, drawing attention away from sectors like software, according to Neil Barbour of S&P Global Market Intelligence, as reported by GamesIndustry.biz.

During the second quarter, there were 23 M&A transactions, accumulating a total value of $1.15 billion.

Notable transactions included Shengsong Investment's $596.4 million investment in Wemade and DoubleUGames' $183.7 million move to increase its investment in DoubleDown Interactive, a social casino company.

Additionally, Integrated Media Company acquired PlayStack, an indie publisher, at a price of $168.1 million.

Compared to the previous year, the total value of M&A transactions remained stable, though it showed an 85% decline from the first quarter.

Barbour explains that this decrease is indicative of a market performing at "such a low level that missing a single deal, even one as small as $100 million, can significantly affect the market."

*The Q3 2025 peak reflects the $55 billion purchase of Electronic Arts*

In private financing, 36 rounds raised a combined total of $519.7 million. Overall funding surged by 89.1% year-over-year, though the number of deals decreased by 29.4%.

The largest funding activity in Q2 was Veroplay's $215.6 million investment linked to acquiring JustPlay, a play-to-earn platform. Grand Games also secured $70 million to further develop its mobile games.

*Veroplay's $215.6 million funding round, associated with the JustPlay acquisition, was the largest for Q2*

Barbour remarks, "Investments and acquisitions in gaming haven’t vanished, but are now more selective, which doesn’t necessarily favor new creative talent entering the field."

He observes that the gaming sector's low revenue growth and reduced profit margins have led investors to hold back capital.

The movement of investments toward AI, live services, mobile platforms, and play-to-earn models presents challenges for traditional PC and console game teams seeking independent funding or acquisitions. Given the rising cost of development, user acquisition, and hardware, the economic conditions for creating new games remain pressured, concludes Barbour.