According to recent data from Konvoy, venture capital firms have increasingly moved away from consumer-focused investments over the past decade, favoring business-to-business (B2B) enterprises instead. In 2024, only 6% of all venture capital investment from the top 100 most active firms was directed toward the consumer sector. This shift has resulted in a noticeable slowdown in the emergence of new consumer applications with mass adoption, with few standout successes in recent years. The last widely adopted consumer applications, such as ChatGPT and TikTok, launched years ago, and since then, new consumer platforms have struggled to gain traction.

Gaming’s Growing Role in Consumer Investing

Decline in Consumer Investing

Several factors have contributed to this decline in consumer investing. Enterprise software and B2B businesses have been seen as more lucrative, as they typically generate longer customer lifecycles and higher lifetime values. Additionally, enterprise companies often command higher market valuations due to their predictable revenue streams and strong retention rates. The investment environment for enterprise-focused businesses has also been healthier, with faster paths to initial public offerings (IPOs) and more frequent mergers and acquisitions.

Rising customer acquisition costs have further discouraged venture capital firms from pursuing consumer investments. The cost of acquiring new customers has increased significantly, with expenses varying widely across industries. Even in digital advertising, where consumer platforms rely heavily on paid marketing, the cost-per-click for Google ads rose by 10% from 2023 to 2024, making it more expensive than ever to attract new users. Meanwhile, social media platforms have solidified their dominance, with users spending an average of 2.5 hours per day on platforms like YouTube, TikTok, Instagram, and Snapchat. This entrenched consumer behavior makes it difficult for new entrants to gain visibility and compete for user attention.

Another challenge for new consumer platforms is the strength of existing market leaders. Across industries such as finance, transportation, shopping, and real estate, well-established incumbents maintain strong network effects that make it difficult for startups to compete. Consumers have largely settled on their preferred platforms, making them less likely to switch to new services unless the offering is significantly better. At the same time, concerns about consumer financial health have led some investors to be cautious. However, data suggests that while credit card debt has increased in absolute terms, it remains stable relative to GDP and well below crisis levels.

Apps to Reach $1 Billion in Annual Global IAP Revenue 

Gaming’s Growing Role in Consumer Investing

Despite the broader decline in consumer investing, the gaming industry has emerged as a bright spot. In the United States, gaming unicorns—private companies valued at over $1 billion—comprise just 10% of the 100 consumer unicorns but account for approximately 21% of the total enterprise value within the sector. This outsized influence highlights gaming’s ability to generate strong financial returns and maintain consumer engagement over time.

The gaming industry benefits from a combination of network effects, high user retention, and multiple monetization strategies, including in-game purchases, advertising, and subscriptions. Unlike many consumer platforms that struggle with user churn, successful gaming companies often build long-term relationships with their players. Additionally, the gaming sector has demonstrated resilience across economic cycles, with demand remaining strong even in challenging macroeconomic conditions.

The potential for liquidity events in the gaming sector over the next two years could be a catalyst for renewed investor interest in consumer markets. Many gaming unicorns are well-positioned for IPOs or acquisitions in 2025 and 2026, which could create momentum for additional investments in the broader consumer category. If these exits are successful, they may challenge the perception that consumer investments are less attractive than B2B opportunities.

Count of US VC-Backed Unicorns

International Expansion and Corporate Spin-Offs

Beyond the United States, gaming companies in international markets have also demonstrated strong growth and investment potential. Companies such as Dream Games in Turkey, Wildlife Studios in Brazil, miHoYo in China, and Mobile Premier League in India have gained significant traction and are contributing to the overall momentum in gaming-related investments. These companies highlight gaming’s global appeal and its ability to succeed across different regions and economic conditions.

In addition to independent gaming companies, some major gaming assets are currently housed within larger corporate entities. Riot Games, which is owned by Tencent, and Twitch, which is owned by Amazon, are two notable examples. Given ongoing geopolitical tensions, there is speculation that Tencent may eventually need to divest Riot Games, which would create a highly competitive bidding process. Similarly, Amazon’s gaming division has struggled to establish a strong foothold, raising questions about whether Twitch might be sold to a buyer better aligned with the gaming industry.

Latest Valuation and Total Funding of Top Private Gaming Unicorns

The Future of Consumer Investing in Gaming

The next wave of consumer investing is likely to be driven by gaming, with upcoming IPOs and mergers playing a pivotal role in shaping investor sentiment. The lack of venture capital funding directed toward consumer businesses in recent years presents a unique opportunity for investors willing to enter the space. While consumer startups still face challenges such as high acquisition costs and strong competition from incumbents, the gaming sector has demonstrated its ability to thrive in this environment.

As gaming continues to expand its influence within the consumer sector, it is likely to attract renewed investment interest. The financial performance of gaming companies, combined with their ability to engage and retain users, positions them as a leading force in the resurgence of consumer investing. Over the next decade, venture capital firms may increasingly look to gaming as a key driver of growth within the consumer category, leading to new opportunities and innovations within the sector.

Source: Konvoy