Augmented reality glasses firm Magic Leap confirmed today that it has raised $793.5 million from Alibaba Group and other investors. Together with the expected closing of the $5.9 billion acquisition of King by Activision Blizzard, the Magic Leap funding could do wonders for game-related deal activity in 2016.

As we noted yesterday, game industry transactions for investments and acquisitions dropped 81 percent in 2015, according to tech adviser Digi-Capital. But in this age of mega-deals, one big transaction can make a big difference in whether the year is up or down, and that influences how investors perceive the overall investment worthiness of the game industry.

Digi-Capital reported that the total deal value in dollars across games investments, mergers and acquisitions (M&As), and initial public offerings (IPOs) dropped 81 percent to under $5 billion in 2015, compared to $25 billion in 2014. Investment in game companies fell 30 percent in value in 2015, while games M&A deal value dropped 75 percent.

Investors put $1.1 billion in 2015 led by mobile games, games tech/other (including esports), console/PC games, massively multiplayer online games, multiplayer battle arena games, and augmented reality and virtual reality games. (Another note: Digi-Capital does not count fantasy sports as games, as regulators in Nevada have declared it to be gambling. As a result, the large DraftKings and FanDuel investments from last year’s numbers are excluded).

Including a few Chinese take-private transactions, the total value of games M&A in 2015 was $3.7 billion. Without those deals, it was $1.6 billion. Activision Blizzard’s $5.9 billion deal with King is still pending, and Digi-Capital will count it as a 2016 transaction. That means that in two deals, the game industry will dwarf the 2015 level of activity in acquisitions and nearly top the 2015 level of investments.

The Magic Leap transaction was previously reported at $827 million, based on early paperwork. The Florida-based Magic Leap raised $50 million in February 2014, and then it raised another $542 million later in the year in a round that included Google as an investor. Its total is now close to $1.4 billion raised.

The Dania Beach, Florida-based Magic Leap raised money from China’s Alibaba as well as existing investors Google and Qualcomm Ventures. New investors joining in the round include Warner Bros., Fidelity Management and Research, J.P. Morgan Investment Management, Morgan Stanley Investment Management, T. Rowe Price Associates, and Wellington Management Co.

“Here at Magic Leap we are creating a new world where digital and physical realities seamlessly blend together to enable amazing new experiences. This investment will accelerate bringing our new Mixed Reality Lightfield experience to everyone,” said Rony Abovitz, the founder and CEO of Magic Leap, in a statement. “We are excited to welcome Alibaba as a strategic partner to help introduce Magic Leap’s breakthrough products to the over 400 million people on Alibaba’s platforms.”

Magic Leap wants to create “cinematic reality,” or “mixed reality.” It wants the animations before your eyes to be so real that you won’t be able to distinguish them from real objects. You can imagine how it could be used for games that mix real life and a virtual world.

Magic Leap opened in 2011, and part of the reason it has to raise so much money is that it has to develop the special displays and other hardware. Google is clearly investing as a hedge against the success of virtual reality and Oculus VR, which rival Facebook acquired for $2 billion in 2014. Facebook’s purchase kicked off a frenzy. Some 234 VR startups have raised $3.8 billion and created an enterprise value of $13 billion — with only one platform launch (the Samsung Gear VR) so far, according to VB Profiles.

Get more stories like this on TwitterFacebook