Generative AI deals fell to 101 deals in 2023’s third quarter | Pocket Gamer.biz

Despite capturing the attention of the market for its potential as a game development tool, it appears that the industry is cooling on generative AI, with the sector seeing a 29% decline in deal count in Q3 2023, falling from 142 in Q2 to 101 deals completed according to Pitchbook data.

Despite the decline in deal count, deal value rose 39.9% quarter-on-quarter, with the bulk of this value coming from just one deal – Amazon’s $4 billion investment in large language model provider Anthropic. This deal is the second largest generative AI deal since Microsoft’s $10 billion investment in OpenAI in Q1. However, Pitchbook notes that prior to this deal’s closure last month there was a distinct downward trend in deal value. Taking this deal out of the equation, Q3 would have seen a total deal value of $2.1, representing a 51.8% decrease from Q2.

“Momentum is definitely waning as the market comes back to earth,” noted Index Ventures partner Bryan Offutt, who points out that despite the impressive implications of generative AI, it remains somewhat unreliable for most use cases, leeding to a cooling of investor enthusiasm.

“We are living in the messy middle of AI”, added Offutt.

Generating the future

Despite a relative cooling in generative AI, some companies have found massive success with the technology. Nvidia, for example, has placed AI at the centre of its chip development pipeline, and the spike in sales has seen the company vault the $1 trillion revenue threshold, making it one of the most successful companies on the planet.

While some within the industry are concerned about the potential for developers to use AI at the expense of jobs, with SAG-AFTRA recently authorising industrial action in gaming partly due to concerns that AI could replace voice actors in some capacity, it’s clear that the technology in and of itself still has potential, however it is still ultimately a relatively new tool in the space – and as such, companies have yet to utilise it to its full potential.

Last week, we reported that Ukranian deep tech company Zibra AI has passed a milestone 100,000 users.