Why are gaming startups struggling to attract funding in 2025

Gaming startup funding struggles as 2025 begins. Approximately 61% of Americans engage with digital games each week, with Generation Alpha averaging over five hours. However, funding in 2024 fell to around $2.4 billion, a 12% decrease from the previous year, continuing a decline that started after a peak in 2021. While overall startup funding has increased, sectors like gaming experience contractions. Mass layoffs affected about 10% of developers, with companies like Embracer Group, Microsoft, Sony, and Electronic Arts reducing their workforces and canceling projects. Some startups, however, secured significant funding, including Build A Rocket Boy, which raised over $110 million, and Second Dinner Studios, which raised $100 million. The high valuations of major gaming companies underscore the limited funding available to startups, despite growing consumer interest in new gaming experiences. The slowdown in funding reflects broader trends in the consumer sector, highlighting the need for evolving strategies among emerging companies.

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