Market Map: Entertain me in the metaverse

To go deeper, PitchBook subscribers can read our Q2 2022 Metaverse Vertical Snapshot. Non-subscribers can download a preview of the report. 
 

Spotlight: Entertainment

The entertainment segment of the metaverse consists of:
 

• Immersive gaming (AR/VR/XR): Startups developing games for the immersive headset market. 
   
• Blockchain gaming: Startups integrating aspects of blockchain technology into video games in an effort to alter gaming business models and increase player agency. 
   
• Decentralized social media: Startups integrating blockchain technology into social media experiences and apps. 
   
• Art and collectibles: Startups in this category are developing NFT products that facilitate the exchange of physical and digital art. 
   
• Music and events: Startups developing experiences tailored around music or events, often integrated with blockchain functionality.

How deals and exits are trending

As dreams of the metaverse swept the tech world’s collective imagination, VC investment in the sector more than doubled in 2021 to $18.1 billion across nearly 1,500 deals. Activity remains robust, with $10.4 billion across 815 deals in the first half of 2022.

Notable recent deals include Pokemon owner Niantic’s $300 million round at a $9 billion valuation in November. NFT marketplace Opensea announced a $300 million round this past January, and augmented-reality glasses maker Nreal raised $60 million in March.
 

As an early emerging space, the metaverse saw few exits prior to 2021, when 24 deals and $3.8 billion in deal value were recorded.

One notable acquisition was game maker Unity’s purchase of Weta Digital for $1.6 billion in December. Weta creates tools for 3D virtual effects, and Unity wants creators on their gaming platforms to use this software to make 3D content.

Microsoft’s planned $75 billion acquisition of Fortnite owner Epic Games is clear proof of the value big tech sees in metaverse-style experiences. The deal has not yet been completed and is likely to be scrutinized by antitrust regulators.

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