Report · January 1, 2025

Global Gaming Report Q2 2025

Summary

Public gaming equities surged in the first half of 2025, with the Drake Star Gaming Index climbing 28 % compared to a modest 5 % gain in the S&P 500. Leading performers included Square Enix, Roblox and Konami, underscoring a robust rebound in the sector. M&A activity remained steady at 46 deals, highlighted by Krafton’s $516 million purchase of ADK and Epic Games’ acquisition of AI studio Loci. Private‑market financing reached $3 billion across 110 placements, driven by high‑profile exits such as Dream Games’ $2.5 billion minority stake sale to CVC and Apple’s acquisition of RAC7 for its arcade portfolio. Projections indicate a continued rise in M&A and IPO activity through 2026, with artificial intelligence and technology platforms identified as primary growth catalysts. Private‑placement capital in Q2 2025 totaled $2.6 billion across 24 deals, with the largest transaction—a $5 billion minority stake sale—valuing its target at nearly $5 billion. Deal distribution spanned mobile ($1.5 billion), PC/console ($0.8 billion), platform/tools ($0.4 billion), esports ($0.3 billion) and blockchain/VR‑AR ($0.2 billion). Key investors included CVC, Blackstone, Tencent and Bessemer Venture Partners. Notable exits such as Dream Games’ $2.5 billion minority sale and Arrowhead’s $80 million investment provided significant liquidity for early‑stage venture capitalists. Valuation analysis reveals a pronounced divergence between high‑growth Asian titles and mature Western peers. Tencent (EV/EBITDA ≈ 5.7x, revenue growth 10%) and Sea Limited (EV/EBITDA ≈ 4.1x, revenue growth 30%) command premium multiples and robust double‑digit growth, reflecting investor appetite for fast‑growing Asian firms. In contrast, U.S. hardware and platform players such as NVIDIA (EV/EBITDA ≈ 17.9x, revenue growth 43%) and Unity (EV/EBITDA ≈ 6.2x, revenue growth –17%) exhibit lower multiples and mixed performance, indicating more modest valuations amid fluctuating earnings. This geographic and segmental disparity underscores the continued premium placed on rapid growth in emerging markets while mature Western companies face a more cautious valuation environment.

From the report

PROVEN TRACK RECORD IN GAMING M&A AND GROWTH FINANCING ADVISORY MICHAEL METZGER JULIAN RIEDLBAUER Linkedin - Free social media icons MOHIT PAREEK Managing Partner Linkedin - Free social media icons Partner Partner Linkedin - Free social media icons Managing Partner Partner Partner Los Angeles Berlin Los Angeles [email protected] [email protected] [email protected] * Obsess SINGULARITY GAME tastypill nWay spiketrap FIREFLY ECHTRA CIRCUS Power Rangers WILDWORKS SALE TO COINDOZERMERGE SALE TO Power Rangers SALE TO SALE TO Kimmoms SALE TO SALE TO ZOO SALE TO Napster AZUR SALE TO reddit Nazara DEVOLVER zynga c N OBAL MONUMENTAL AMES AAA Game Developer Mobile / Console Games * * FreshPlanet * * C chillingo animoca C astragon Videndum SONGPOP elgato InnoGames RANDS BLAST CODEMASTERS LIGHTSTREAM SALE TO EQUITY SALE SALE TO SALE TO DIRT GRID] RAINMAKERapi.stream CORSAIR MO EA Asset Managers VEKSTFONDEN SLIGHTLYMAD Xsolla GAMELOFT Hedge Funds CREANDUM Video Game / Content Streaming MAKI.VCDRE * 00 * * * LIGHTSTREAM HEARSTCorporatiOn Wphoton OUYA SALE TO SALE TO SALE TO SALE TO EQUITY SALE SALE TO SALE TO CS VITE skillz RAZER CREATIVE SOLUTIONS GameReview and Advertising Mobile Games Mobile / Online Gaming Topgole GAMES JUMPSTART BulkyPix Gamepot SALE TO AKAPrivate Equity STROER SONY ND * Transactions executed by current Drake Star Partners C O 0 2 employees while employed at other firms

Public gaming stocks saw a strong rebound in the first half of 2025, with the Drake Star Gaming Index rising 28%, • Public gaming stocks saw a strong rebound in the first half of 2025, with the Drake Star Gaming Index rising 28%, SQUARE ENIX ROBLOX 15 significantly outperforming the S&P 500’s 5% gain. The strongest overall performers were Square Enix, Roblox, and KONAMI 46 Konami. In Europe, leading stocks included CD Projekt RED, everplay group, and MTG, while in the US markets, Roblox, Corsair, and Take-Two stood out as the top performers. ADK< KRAFTON • Gaming M&A activity remained relatively stable in Q2'25, with 46 announced deals. The largest transaction was Gaming M&A activity remained relatively stable in Q2’25, with 46 announced deals. The largest transaction was KRAFTON’s $516M acquisition of ADK, a Japanese company specializing in advertising and animation with some mobile EPIC game development. Other notable deals included Epic Games acquiring Loci, Apple purchasing RAC7, and PlayVS acquiring Generation Esports and PlayFly College Esports. PC and console gaming tied with blockchain gaming for the loci GAMES most M&A deals after a notable increase in blockchain gaming deal activity this quarter.

otable deals included Epic Games acquiring Loci, Apple purchasing RAC7, and PlayVS acquiring Generation Esports and PlayFly College Esports. PC and console gaming tied with blockchain gaming for the loci GAMES most M&A deals after a notable increase in blockchain gaming deal activity this quarter. 110 • Q2’25 featured one of the largest and most successful exits for gaming VCs with CVC’s significant minority investment in RACZ Apple Dream Games. The deal, comprising both equity and debt, totaled ~2.5B at a 5B valuation. Overall, the quarter recorded 110 private placements with a combined disclosed deal value of $3B. Other notable financings included GENERATION Tencent’s 80M investment in Arrowhead, Wolves Esports Club raising 28M from Lvfa Group, AI startup Sett securing 11 PlayVS ESPORTS 27M, Turkish mobile studio Bigger Games completing a 25M Series A, and Hybe IM raising $21M. PLAYFLY • The most active investors over the past year included Play Ventures, BITKRAFT, and Makers Fund among larger funds, COLLEGE ESPORTS $0.6B while Goodwater, TIRTA, and 1AM Gaming were the leading seed-stage investors. On the strategic side, Krafton, LUDQ Xsolla Tencent, and Samsung drove the most activity, while Animoca, Spartan, and Gam3Girl Ventures were the most active

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RAFT, and Makers Fund among larger funds, COLLEGE ESPORTS $0.6B while Goodwater, TIRTA, and 1AM Gaming were the leading seed-stage investors. On the strategic side, Krafton, LUDQ Xsolla Tencent, and Samsung drove the most activity, while Animoca, Spartan, and Gam3Girl Ventures were the most active • players in blockchain gaming. dream ARROWHEAD Take-Two Interactive announced a proposed 1B public stock offering, with an option to sell an additional 150M, while 3.5B GameStop announced a debt raise of over 2B. Embracer plans to spin off Coffee Stain Group as an independent public SSett company by the end of the year and Discord is in late-stage discussions with banks for a potential IPO. $3.0B company by the end of the year and Discord is in late-stage discussions with banks for a potential IPO. WOLVES HYBE IM • Following the strong rebound of public gaming equities in the first half of 2025, we expect a new wave of M&A activity BIG throughout the remainder of 2025 and 2026, as gaming companies look to leverage their higher equity valuations for GER Goodwater inorganic growth. Additionally, IPO activity is likely to pick up, supported by the broader market recovery. • Private equity participation in the gaming ecosystem is expected to remain very active, with some publicly traded gaming PL GameStop M&A PP Public Markets companies potentially being taken private and PE firms taking growth equity positions in large private gaming companies. AY EMBRACER VENTURES ts • Key growth segments are expected to include AI and tech platforms. Later stage financings will likely continue to be T2 GROUP challenging. Key growth segments are expected to include Al and tech platforms.

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