Highlights
- Casual gaming investment has overtaken esports funding globally in 2025–2026.
- Mattel, Netflix, PIF, and Blackstone are prioritizing scalable game IP over tournament ecosystems.
- Indian studios like Scara Gaming and SuperGaming mirror the global pivot toward volume and retention.
Casual gaming investment is no longer a side narrative. Between 2025 and 2026, capital allocation patterns across the U.S., MENA, Europe, and Asia indicate a structural pivot away from esports-heavy theses toward scalable casual and mid-core ecosystems. Where 2020–2023 saw outsized bets on tournament IP, franchise leagues, and broadcast rights, the current cycle favors durable monetization loops, live-ops infrastructure, and culturally localized engagement models.
The shift is visible not just in financial markets but in operator strategy. Outlook Respawn’s conversations with Indian stakeholders Scara Gaming and SuperGaming reflect the same recalibration. They want to scale for the everyday player, not just the competitive minority. The global investment community appears to agree.
Casual Gaming Investment vs Esports Investment: The 2025–2026 Capital Reallocation
Casual gaming investment accelerated in 2025 while esports funding plateaued or declined in most regions. Globally, venture and private equity deployment into pure-play esports organizations slowed due to:
- Limited profitability outside publisher-backed circuits
- Media rights underperformance relative to projections
- High fixed operating costs (player salaries, bootcamps, production)
By contrast, capital flowed into:
- Mobile-first studios
- Mid-core live games
- Platform-native gaming ecosystems
- Transmedia IP strategies
One of the clearest signals that casual gaming investment has overtaken esports as the preferred capital thesis is who is writing the checks. The 2025–2026 cycle is not being led primarily by legacy esports operators or publisher-backed tournament organizers. Instead, it is focusing on the casual and mid-core audience.
Mattel’s expansion into digital gaming reflects a broader IP monetization strategy that extends beyond traditional console licensing. Following the commercial resurgence of its core brands, the company has emphasized interactive and mobile-first live service IPs.
Netflix is another major player that has steadily expanded its internal gaming portfolio, focusing primarily on mobile titles integrated within its subscription ecosystem. Rather than positioning itself as an esports broadcaster, Netflix treats games as retention infrastructure designed to reduce churn and increase time spent within the app. Casual and mid-core titles are strategically aligned with subscription economics because they appeal to a wider audience.
Saudi Arabia’s Public Investment Fund (PIF) has broadened its gaming mandate from high-visibility esports exposure to full-stack industry participation, including publisher stakes, studio investments, and ecosystem infrastructure. While esports remains part of its portfolio, PIF’s capital deployment increasingly targets casual and mid-core studios.
Private equity firms such as Blackstone are evaluating gaming through the lens of cash flow and operational scalability. Esports teams often face margin pressure due to sponsorship dependence and publisher-controlled economics, making long-term underwriting complex. By contrast, casual gaming investment has far fewer uncertainties. This makes mobile and mid-core ecosystems more compatible with private equity models focused on stable returns and defined exit pathways.
Why Esports Investment Lost Momentum
Esports did not disappear in 2025 and 2026. What changed was investor expectations. After years of aggressive growth projections, the sector began to be evaluated on profitability rather than audience hype. When that shift happened, several structural weaknesses became harder to ignore.
The first issue is publisher control. In traditional sports, leagues and federations operate independently from the teams. In esports, the game publisher owns the intellectual property, controls tournament rights, sets the rules, and determines revenue distribution. Teams and tournament organizers operate within systems they do not own. That creates an imbalance. If a publisher changes priorities or reduces funding, the entire competitive ecosystem can contract overnight. For investors seeking long-term stability, that level of dependency increases risk.
The second friction point is team economics. Running an esports organization is expensive. Costs include player salaries, coaching staff, housing or bootcamp facilities, travel, content production, and marketing. Revenue, however, is far less predictable. Sponsorship deals fluctuate with brand budgets. Prize money depends on performance. Media rights have not scaled to the levels once forecasted. Without direct publisher support, many independent tournament organizers and teams struggle to operate profitably.
This concern is echoed by Manoj George of Scara Gaming, who said, “Publisher-led tournaments are funded because the publisher has money to deploy. But are tournament organizers making money? Very few (are).”
His point highlights the core imbalance. Publishers can justify esports spending as marketing for their games. Teams and organizers cannot rely on that same internal logic. They need external revenue to survive.
The third issue is advertising skepticism. Brands once entered esports hoping to capture a young, digital-native audience at scale. While engagement remains strong during major events, advertisers increasingly demand a clear return on investment. Logo placements on jerseys or livestream overlays are no longer enough. Marketing departments want measurable conversions, direct sales impact, or integrated commerce opportunities. Casual gaming environments, with in-game purchases and native brand integrations, offer more trackable consumer behavior data than broadcast-style esports sponsorships.
Together, these three factors shifted investor sentiment. Esports still commands attention and cultural relevance, but its revenue structure concentrates value at the intellectual property level. Most of the economic upside accrues to the publisher that owns the game.
Casual gaming investment operates differently. Instead of relying on sponsorship cycles or tournament visibility, it distributes monetization across millions of everyday transactions. A ₹15 ($0.17) cosmetic purchase, repeated across millions of players, creates recurring revenue that does not depend on competitive gaming or broadcast deals.
That difference in revenue architecture is central to why capital has moved. Investors increasingly favor systems where value is generated continuously by players, not episodically by events.
Casual Gaming Investment in India
While industry discourse often centers on BGMI and Free Fire, Scara Gaming argues the real opportunity lies elsewhere. George said, “The larger chunk are casual gamers… It is more community than esports.”
He estimates roughly 500M casual gamers in India, including players of Candy Crush, Ludo King, Subway Surfers, Clash of Clans, and 8 Ball Pool. This is not an esports audience. It is a volume economy.
George expanded on the monetization systems casual games offer, stating, “Microtransactions are what work in India. Fifteen-to-twenty-rupee kind of transactions are what people are comfortable with.”
This aligns with global casual gaming investment logic: lower ticket size, higher transaction frequency, frictionless payment rails (UPI in India, Pix in Brazil, etc.). Rather than chasing high Average Revenue Per Unit (ARPU) competitive whales, Scara is focusing on tier-two and tier-three markets, mirroring its broader capital pivot.
If Scara reflects the casual thesis, SuperGaming reflects the mid-core evolution of casual gaming investment. CEO Roby John describes Prime Rush as deliberately positioned between hyper-casual and hardcore. He said, “We have not firmly believed in the ads model. We think that mid-core kind of live ops games are an opportunity…”
The studio’s game Prime Rush, built Brazil-first rather than India-first, represents a culturally grounded expansion model. Localization here is structural, not cosmetic. He added, “The global gaming we see is dead. There is nobody putting money instead of content or instead of games at this point in time.”
In other words, capital now rewards execution, retention, and lifecycle management, and not hype cycles. This mirrors investor behavior globally: fewer speculative esports valuations, more scrutiny on day-1, day-7, and day-30 retention metrics.
Stakeholders Want Engagement Over Spectacle
Between 2020 and 2023, gaming headlines were driven by spectacle. Franchise leagues raised large rounds. Prize pools broke records. Broadcast deals were framed as proof that esports would mirror traditional sports economics. Visibility was high, and capital followed momentum.
By 2025 and 2026, the conversation changed. Investors began looking for consistent revenue. The answer increasingly pointed toward engagement density. Casual gaming investment succeeds because it focuses on repeat behavior. A player who logs in daily, makes small purchases, and participates in live events generates steady lifetime value. That value does not depend on tournament schedules, seasonal championships, or media rights negotiations. It depends on habit.
This shift helps explain the strategies outlined throughout this article. Scara Gaming is targeting 500M casual players in India who integrate gaming into everyday life. SuperGaming is building mid-core systems designed to improve retention rather than chase short-term spikes. Mattel and Netflix are embedding games inside larger entertainment ecosystems to extend user engagement. Saudi Arabia’s Public Investment Fund and private equity firms like Blackstone are allocating capital toward scalable studios and infrastructure instead of relying solely on competitive circuits.
Esports remains culturally relevant. It still drives community, storytelling, and high-intensity competition. However, from a capital allocation perspective, it functions increasingly as a layer within a broader gaming economy rather than the core engine.
The defining theme of 2026 is not who won the biggest tournament. It is the one who owns the most consistent player engagement. For now, institutional capital is betting on the everyday player and the systems that keep them coming back.
