Can Mobile Gaming Companies Go Public Again?

Mobile gaming's relationship with public markets shifted markedly between the Zynga and King IPO era of 2012 to 2014 and autumn 2017, and Eric Seufert argues that the once-prevailing belief that public investors are structurally hostile to mobile games has become outdated. The piece uses Rovio's September 2017 Nasdaq Nordic listing as its starting point: priced at €11.50, at the high end of its range, and opened at €12 after being halted for oversubscription, implying an enterprise value above $1BN despite the company being written off as recently as 2015.

The earlier skepticism rested on the idea that mobile gaming is hit-driven. Zynga traded at roughly a third of its debut price by mid-2013, King's stock halved within months of its 2014 listing, and Activision later acquired King for $5.9BN, about $18 per share against a $22.50 IPO price. Kabam's sale of assets to Netmarble for $700 to $800MM ended IPO speculation and fueled doubts about whether VC backing suited game companies at all.

Recent evidence points the other way. Netmarble raised $2.3BN in South Korea's second-largest IPO at a valuation above $12BN. Tencent reported quarterly profit of $2.7BN, up 70% year over year, with mobile gaming revenue surpassing PC for the first time. Next Games rose from under €8 to over €12 after its March 2017 Finnish listing, while Zynga climbed from under $3 to above $3.50 under new CEO Frank Gibeau's focus on live operations, and Glu Mobile gained on the success of Design Home.

Seufert attributes the thaw to five maturation points: sustainable user acquisition that no longer depends on viral spikes or platform favoritism, less abrasive monetization, effective brand and IP integration, successful advertising monetization led by the hyper-casual segment, and live operations and eSports that extend engagement well beyond 2012 to 2014 norms. He concludes that the earlier antipathy was probably deserved but has dissipated, at least for now, because of real changes in how games are marketed, monetized, and operated.