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Roundtable News | Acquistions & VR Failures | Episode 293
The gaming industry is currently undergoing a period of intense consolidation, characterized by multi-billion dollar acquisitions such as Microsoft’s purchase of Activision Blizzard and Sony’s acquisition of Bungie.
- Major industry consolidation, exemplified by Microsoft’s acquisition of Activision Blizzard and Sony’s purchase of Bungie, is driven by the need to secure intellectual property and expand capabilities in mobile and live-service gaming.
- Large gaming entities are prioritizing long-term ecosystem stability and subscription service growth over immediate financial returns to mitigate the impact of escalating development costs.
- Meta’s Reality Labs division has incurred massive financial losses, signaling a failure to achieve mass-market adoption for its metaverse strategy.
MTG Capital Markets Update 2022
Modern Times Group has successfully transitioned into a pure-play gaming entity, marking a strategic pivot defined by the divestment of ESL Gaming and a renewed focus on scaling evergreen mobile franchises.
- Modern Times Group has transitioned into a pure-play gaming entity, targeting a 7–10% organic revenue CAGR and a doubling of EBITDA by 2025.
- The company aims for an adjusted EBITDA margin of 23–25% and a cash conversion rate of 50–60% to support future acquisitions and shareholder distributions.
- The business model centers on Games as a Service (GaaS) across strategy, word, and simulation titles, utilizing the Flow platform for shared data and cross-promotion.
Observatoire économique de l'esport: France 2022
The French esports sector has undergone a period of rapid professionalization and expansion, establishing itself as a significant component of the national digital economy.
- The French esports industry reached a total turnover of €141.4 million in 2022, reflecting a 31.4% compound annual growth rate between 2019 and 2022.
- Market concentration is high, with the ten largest organizations generating 70% of the sector's total revenue.
- The sector supported 1,017 full-time equivalent positions in 2022, though the majority of industry entities remain micro-enterprises.
Global Gaming Report Q1 2022
The global gaming industry experienced a historic surge in financial activity during the first quarter of 2022, recording a record-breaking $98.7 billion in total deal value.
- The global gaming industry reached a record $98.7 billion in total deal value in Q1 2022, surpassing the total deal value of the entire previous year.
- Industry consolidation was driven by major acquisitions, including Microsoft’s $68.9 billion purchase of Activision Blizzard and Take-Two’s $11.8 billion acquisition of Zynga.
- Strategic M&A activity is currently focused on cross-platform diversification, with PC and console giants aggressively acquiring mobile gaming expertise and established intellectual property.
Global Gaming Report 2021
The global gaming industry experienced an unprecedented surge in financial activity during 2021, reaching a landmark $85 billion in total deal value across 1,159 transactions.
- The global gaming industry reached a landmark $85 billion in total deal value across 1,159 transactions in 2021, nearly tripling the previous year's figures.
- Mergers and acquisitions totaled $38 billion, driven by strategic activity from major players like Tencent and Embracer Group, while private placements hit a record $13 billion.
- Blockchain and NFT-based gaming emerged as a significant sector, securing $3.6 billion in total financing and accounting for nearly half of all private investment in the fourth quarter.
Gaming Deals Activity Report: Q1–Q3 2022
The gaming investment landscape in the first three quarters of 2022 reflects a significant market correction following a record-breaking 2021.
- The $124.5 billion total deal value for Q1–Q3 2022 is heavily skewed by Microsoft’s $69 billion acquisition of Activision Blizzard, masking a broader market cooling driven by macroeconomic instability and regulatory pressure.
- Strategic M&A activity reached a record $101.4 billion despite a 40% decline in the number of closed transactions, with major activity led by Embracer Group, Sony, and Saudi Arabia’s Public Investment Fund.
- Public offerings have nearly collapsed to their lowest point since early 2020, with deal values shrinking fivefold compared to 2021 levels.
Gaming Deals Activity 2021
The video games industry experienced a record-breaking financial year in 2021, with the total value of closed transactions reaching $71.3 billion across 937 deals.
- The gaming industry saw record financial activity in 2021, with closed transactions totaling $71.3 billion across 937 deals, representing a 2.1x increase in value and 1.4x increase in volume over the previous year.
- Mergers and acquisitions were the primary growth driver at $34.5 billion, with mobile gaming capturing 49% of that value, followed by 34% for PC and console gaming.
- Public offerings, including IPOs and SPACs, generated $24.8 billion in value, while private investments doubled to $12 billion, primarily driven by late-stage funding.
Embracer Group Acquires Shiver Entertainment
Embracer Group has finalized the acquisition of Shiver Entertainment, a Miami-based game development studio founded in 2013.
- Embracer Group has acquired Miami-based Shiver Entertainment, integrating the studio into its Saber Interactive business unit to expand U.S. development capacity.
- Shiver Entertainment is expected to contribute SEK 40–60 million in operational EBIT for the 2022/2023 fiscal year, increasing to SEK 70–90 million in 2023/2024.
- The acquisition is structured as a combination of cash and shares, featuring an earn-out arrangement that incentivizes the founding management team for up to eight years.
Embracer Group Acquires DIGIC Pictures
Embracer Group has finalized the acquisition of DIGIC Pictures, a Budapest-based animation studio specializing in high-end 3D cinematics and commercial trailers for the global video game and film industries.
- Embracer Group has acquired Budapest-based animation studio DIGIC Pictures, integrating the 400-employee firm into its Saber Interactive business unit.
- DIGIC Pictures reported net sales of SEK 240 million and an operational EBIT of SEK 50 million for the 2021 calendar year.
- The studio is projected to contribute between SEK 60 million and SEK 80 million in annual operational EBIT through the 2023/2024 period.
Embracer Group Acquires Spotfilm Networx
Embracer Group has expanded its media footprint through the acquisition of Spotfilm Networx, a Berlin-based leader in the German ad-supported video-on-demand (AVOD) market.
- Embracer Group has acquired Berlin-based AVOD leader Spotfilm Networx through its subsidiary Koch Films to expand its digital media footprint in German-speaking territories.
- The acquisition integrates Spotfilm’s streaming infrastructure and 22 branded channels—including the Netzkino service—with Koch Films’ library of over 3,000 titles.
- Spotfilm currently reports significant scale with 7 million unique users, 30 million monthly video views, and 40 million monthly ad impressions.
Embracer Group Acquires Dark Horse: Presentation
Embracer Group’s acquisition of Dark Horse serves as a strategic expansion into transmedia, integrating a major comic book publisher and production house into its existing portfolio.
- Embracer Group is acquiring Dark Horse to integrate its transmedia capabilities, including a library of over 600 titles and a network of 2,000 creative professionals, into its gaming portfolio.
- Dark Horse will become Embracer’s tenth operative group, with the transaction expected to close by January 2022 and no planned restructuring.
- Dark Horse reported 2021 net sales of SEK 900 million and an operational EBIT of SEK 130 million, with projections to reach up to SEK 200 million in operational EBIT by the 2023/2024 fiscal year.
The Belgian Games Industry: Facts and Figures 2020
The Belgian games industry demonstrated notable resilience and growth during 2020, characterized by an overall turnover of €82 million, representing a 17% increase compared to the previous year.
- The Belgian games industry generated €82 million in turnover in 2020, marking a 17% year-over-year increase.
- The sector is composed of 84 registered companies, with 67 operating as developer studios and a majority classified as micro-entities or solo developers.
- Industry growth remains strong, with 60% of firms projecting continued revenue increases and 47% planning to expand their full-time headcount.