We continue our 2024 wrap-up together with top managers and experts from the games industry (and related fields). Up next is an interview with Roman and Kirill Gurskiy, managing directors at GEM Capital.
What was 2024 for GEM Capital? What achievements would you like to highlight?
Roman: Like 2023, last year has been challenging for the entire gaming industry. Mass layoffs continued, even surpassing the previous year’s record lows. Several studios announced closures, and some gaming corporations underwent further restructuring. Nevertheless, despite the turbulence in the industry, 2024 was a successful year for GEM Capital.
The year truly embodied the saying, “Start the New Year as you mean to go on,” and we started it on a high note! In the very first days of 2024, our portfolio studio Mundfish received a well-deserved gift — a Steam Award! Following a vote with over 40 million participants, Atomic Heart was crowned the winner in the “Outstanding Visual Style” category.
2024 brought us everything: new investments and funding rounds for our portfolio companies, prestigious awards and high ratings, major announcements, new game releases, and a wealth of positive reviews.
Kirill: Two of our portfolio companies, Eschatology Entertainment and Red Rover Interactive, successfully secured new funding rounds. Notably, both rounds were led by the Korean giant KRAFTON, the creators of PUBG. We are proud of these studios’ achievements and firmly believe in their potential. That’s why we were delighted to participate in the rounds alongside KRAFTON, investing additional funds in both companies.
On the investment front, we strived to keep pace with our portfolio companies by closing a significant number of deals. We’re thrilled to welcome two incredible additions to the GEM Family this year: AppMagic, one of the world’s leading analytics platforms, and Order of Meta, a mobile game development studio founded by the creators of the hit game Tacticool. We are deeply grateful to the founders and their teams for their trust and enthusiasm in creating new projects with us!
We remain one of the most active investors in the global gaming industry. According to the latest Drake Star report for Q3 2024, we ranked third among early-stage funds, while the InvestGame report for the same period placed us at the very top of the rankings, taking first place.
Our accomplishments also earned us a nomination for “Investor of the Year” at the MENA Games Industry Awards, alongside regional industry leaders like Savvy Games Group.
Roman: And, of course, 2024 was an incredibly exciting year for us in terms of game releases and announcements!
This year, our portfolio studio VEA Games launched Nikoderiko: The Magical World—a vibrant and captivating platformer inspired by iconic series like Donkey Kong and Crash Bandicoot. The game received a warm reception from both players and critics, earning an impressive score of 80 on Metacritic. Nikoderiko: The Magical World has already garnered recognition: Kotaku listed it among the “20 Spectacular Indie Games,” Gamereactor ranked it third on their “Best Platform Games of 2024” list — outshining even the new Sonic — and Game Rant included it in their “10 Best 3D Platformers on PS5 of All Time.”
In addition, three of our studios thrilled their fans with major announcements and stunning showcases.
At the Xbox Showcase, Sad Cat Studios unveiled a demo of REPLACED. The response from journalists was overwhelming: Kotaku praised it as “beautiful from top to bottom,” while Digital Trends called it “the Hellblade 2 of pixel art games.” REPLACED is one of the most anticipated games globally, and the studio continues to live up to the high expectations placed upon it!
Meanwhile, Weappy made waves at the THQ Nordic Showcase by announcing The Eternal Life of Goldman, earning the honor of opening the event. The game’s unique visual style, depicted in classic frame-by-frame animation, makes players feel like they’re watching a cinematic masterpiece reminiscent of Studio Ghibli. Critics and audiences worldwide hailed it as one of the showcase’s standout titles. For example, Eurogamer described The Eternal Life of Goldman as “an absolute jaw-dropper.”
Kirill: And, of course, one of the most exciting events of this year was the announcement at Gamescom of the next installment in the Heroes of Might and Magic series by Ubisoft and our portfolio company, Unfrozen! For us, Heroes is more than just a game series — it’s a legacy. We are incredibly proud that, through our joint efforts with Unfrozen, we’ve had the privilege of contributing to the development of this legendary franchise.
Right before Christmas, the studio gave fans of the series a truly magical gift: it was announced that the legendary composer Paul Romero would return to create the game’s soundtrack. Joining him will be Cris Velasco, known for his work on Mass Effect, Borderlands, and God of War, along with Heroes Orchestra, who will perform breathtaking musical arrangements.
We wish all our studios truly mighty and magical (Might & Magic) releases in the coming year!
There are still many significant achievements from our portfolio companies and new deals we’d love to share, but we’ll save those stories for the new year — 2025!
How has the market for games venture capital changed for those ready and willing to invest in the games industry?
Roman: Now is a good time to invest in games. The decrease in company valuations, coupled with reduced competition among investors for projects, creates favorable conditions for new investments.
The “winter” in the market won’t last forever. As stability returns, experts predict that investment activity will rebound to previous levels. This trend is already evident: according to the InvestGame report, 372 deals were made in the first nine months of 2024, representing a 12% increase compared to the same period last year.
Another promising indicator is the announcement by major gaming investors of new funds with a combined capital of over $1 billion. This influx of capital will fuel new investments in the industry, positively impacting its growth in the coming years.
Have there been any changes in the investment landscape for studios seeking funding?
Kirill: We’ve observed that securing funding during the middle stages (Series A) has become increasingly challenging for many game studios. Early-stage funding (Pre-Seed, Seed) remains relatively stable, with investors eager to back projects with breakthrough ideas or strong teams. At the later stages, studios can secure financing based on solid financial performance. However, at the middle stages, investors now demand metrics comparable to the leaders of the genre — something that can be difficult to achieve quickly.
This makes it critically important to use the funds raised in the initial stages as efficiently as possible. If a studio secures early-stage funding and attracts investor interest, we recommend increasing the size of the first round. This provides a vital financial cushion to achieve key metrics that will make the studio appealing at the next stage.
Roman: Another crucial factor for successfully raising investments is building a network of industry contacts. Establishing connections with key players — investors, publishers, and platforms — can be a game-changer. Despite the obvious benefits of this approach, many studios fail to prioritize it adequately. In this regard, bringing on a specialized investor during the early stages can be a strategic move. Such a partner can facilitate access to major players who are often out of reach for young studios.
Our experience underscores the effectiveness of this approach: having an extensive network has repeatedly helped our portfolio companies secure significant deals with corporations like Krafton, Ubisoft, Tencent, Microsoft, and others.
What investment trends do you expect to emerge or intensify in 2025?
Kirill: We expect several key trends in the gaming industry that will develop and strengthen. First of all, we are seeing a growing interest in alternative app stores. We expect that in 2025, the opening of the market will lead to breakthroughs in this direction, with the emergence of the first strong players. One notable example is our portfolio company Skich, which is actively working in this area and preparing to launch its own store. Its key feature will be advanced game search and recommendations, making it especially user-friendly.
Roman: Another noticeable trend is the growing interest of developers in games with a premium monetization model for PC and consoles. According to the “State of Free to Play on Steam in 2024” report from VG Insights, 88% of players on the platform are concentrated on the top 25 titles, with most of them being older projects averaging over seven years old. The intense competition and market saturation are driving many studios to shift toward the premium model, often integrating in-game purchases. The success of Arrowhead, creators of Helldivers 2, clearly demonstrated that hundreds of millions of dollars can be earned without relying on a free-to-play model or a massive audience. This example is inspiring more developers to move toward the premium model, and we expect to see more such projects in the coming years.
There is also a sustained trend of the crossover between gaming IPs and video content (movies and TV series). Judging by the success of the Fallout series, the second season of Arcane, and the animated anthology Secret Level, this trend has continued into 2024. The series sparked a surge in popularity for games set in the Fallout universe. For example, daily revenue from the mobile Fallout Shelter increased from $20K to $80K when the show was released, and daily active users of Fallout 76 surged to 1 million players. This case clearly demonstrates how game IP owners can attract new audiences and stimulate game sales. BioShock, Death Stranding, Metal Gear Solid, Ghost of Tsushima, Sims, and Minecraft are just a few of the gaming IPs slated for new movie and TV series releases. So we are confident that this trend will continue to grow and strengthen at least through the next year.
What are GEM Capital’s plans for 2025?
Kirill: 2025 promises to be very exciting with game releases from our portfolio companies, which we are eagerly looking forward to not only as investors but also as gamers.
And, of course, we continue to select and support the best teams in the games industry. We have several deals in the pipeline, which we will be happy to share in 2025. So, many exciting updates are ahead — stay tuned!