Gaming funding contracts in face of investor demand for sustainable monetisation

 Gaming funding went from $133 million in 2025 to $42.5 million so far in 2026 in India

Demand for sustainable monetisation and capital efficiency has contracted deal sizes for gaming investments globally. Viewing the trend as a funding reset, industry bodies in India suggest a shift away from funding-led expansion to mature investment ecosystem where companies that can assure profitability have a better chance at attracting capital.

Investors focused on gaming companies now demand stronger retention, capital efficiency and sustainable monetisation. Particularly in India, gaming funding went from $133 million in 2025 to $42.5 million so far in 2026. This despite the market crossing a $1 billion revenue mark in 2025.

Industry leaders viewing the development as a reset argue the trend to be one of the most significant changes in gaming investment strategy over the past decade. The sector is now evolving from a hit-driven business into a maturing digital entertainment ecosystem. As such, the gaming fraternity is urging industry players to prove differentiated IP and real users to gain investor trust.

The representatives from Nazara Technologies and BITKRAFT argued that the market opportunity remains compelling, even as investors become more disciplined about capital deployment, considering the increasingly engaged player base, rising consumer spending and growing number of homegrown gaming companies.

Targeted capital

Further, new forms of targeted capital are emerging, such as the $20 million non-dilutive user-acquisition financing secured by Metasports Interactive from London-based frim Metica to scale Hitwicket globally.

“Companies that can consistently retain players, build communities around their products and create multiple engagement touchpoints are proving to be far more resilient businesses. The strongest gaming companies are building long-term player relationships rather than chasing short-term growth spikes,” said Nitish Mittersain, Founder, Chief Executive Officer & Managing Director, Nazara Technologies.

AI usage

For investors, this is also changing the role of technology in the gaming business. AI is increasingly being assessed not simply as a product feature, but as a means of improving development velocity, productivity and the economics of running a gaming company. Companies that can demonstrate strong retention and monetisation can also adopt targeted capital like user acquisition funding as an important route to scale.

“What’s changed isn’t investor appetite for gaming, it’s the bar for what a fundable gaming business looks like. AI is now a genuine differentiator, not a buzzword. Studios using AI to cut development cycles, personalise live-ops, improve player retention and build large distribution moats are able to do more with leaner teams and tighter burn. That efficiency, combined with strong recurring revenue and engagement fundamentals, is becoming the new baseline for investor screening,” said Anuj Tandon, Partner, Emerging Markets, BITKRAFT Ventures.

For India’s gaming ecosystem, the reset could ultimately strengthen the quality of companies being built. With the domestic market growing despite a significant regulatory transition, the opportunity is increasingly shifting towards studios and platforms capable of creating globally relevant IP’s, building durable player communities and scaling with greater capital efficiency.

Published on August 24, 2026