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Panel: Better Together: The Consolidation & M/A Panel
Strategic mergers and acquisitions within the gaming industry are increasingly defined by human capital and cultural synergy rather than purely quantitative performance metrics.
- Successful M&A in the gaming industry is increasingly driven by cultural synergy and shared long-term vision rather than purely quantitative financial metrics.
- Acquirers prioritize the purchase of autonomous, early-stage studios over established entities to ensure better cultural alignment and creative momentum.
- Direct, personal engagement is preferred over competitive auction environments to preserve founder autonomy and avoid the pitfalls of traditional investment banking structures.
Fireside Chat: Animoca Brands: Diversifying Your Business Through M&A
Animoca Brands utilizes a strategic approach to mergers and acquisitions (M&A) to diversify its business model and facilitate growth within the mobile and blockchain gaming sectors.
- Animoca Brands executes a targeted M&A strategy by acquiring small-to-medium independent studios with 6 to 30 employees to diversify into mid-core and blockchain gaming.
- The company caps individual acquisitions at approximately $10 million, focusing on a niche segment often ignored by larger multi-billion-dollar corporations.
- Acquired studios retain operational autonomy while receiving centralized support for administrative functions including legal, HR, finance, and user acquisition.
Panel: Pitch Perfect: How to Raise Funding from Investors
This panel discussion from the 2020 Pocket Gamer Connects London event features a group of venture capitalists, corporate investors, and investment bankers analyzing the current state of the gaming industry and the mechanics of successful fundraising.
- The gaming industry is currently in a 'golden age' defined by high capital availability, a massive global addressable market, and a commoditized technology stack that facilitates multi-platform development.
- Mobile game development and marketing now require significant capital, with competitive budgets often reaching $10 million to $15 million per title.
- Investors prioritize the 'Holy Trinity' of criteria: a management team capable of pivoting, a presence in a high-growth market segment, and a sustainable competitive advantage or barrier to entry.
Panel: VC in Games
Venture capital investment in the gaming sector is currently defined by a rigorous focus on scalable business models and leadership capability rather than individual creative concepts.
- Venture capital investment in gaming is currently prioritizing scalable business models and leadership capability over individual creative concepts, with a target of achieving 10x returns.
- The primary investment sweet spot for gaming firms currently sits in funding rounds ranging from $1 million to $7 million.
- Investors are shifting their focus away from content-heavy studio models toward platform technologies, cloud-based infrastructure, and data-driven monetization tools.
Fundraising 101
Fundraising for game industry startups requires a strategic, high-level approach that prioritizes narrative, vision, and relationship-building over mere technical presentation skills.
- Fundraising success depends on a founder's ability to articulate a compelling personal narrative and a vision that demonstrates how their business will materially change the game industry.
- Founders must prioritize building relationships with specific, high-value individual investors rather than utilizing broad, impersonal outreach strategies.
- Securing investment should be treated as a long-term, strategic game of chess rather than a transactional sprint, focusing on building rapport through unique industry insights and milestone updates.
Investing in Esports – The Current Meta
The current esports investment landscape is characterized by significant growth potential tempered by structural immaturity and a lack of standardized valuation metrics.
- The esports sector currently lacks a proven, replicable business model, leading to consistent profitability struggles for most entities outside of game publishers.
- Institutional investment is hindered by a lack of standardized valuation metrics and a scarcity of companies prepared for Series A funding, despite a robust early-stage seed ecosystem.
- Market valuations are frequently inflated by speculative investments in franchise slots and team ownership rather than being driven by sustainable technology or platform growth.
Panel: Hypercasual: Different Backgrounds at One Common Place
The hypercasual gaming sector represents a strategic pivot from traditional core gaming, prioritizing agility, rapid prototyping, and cost-efficiency over the multi-million dollar budgets and lengthy development cycles typical of legacy titles.
- The hypercasual sector prioritizes rapid prototyping and cost-efficiency, shifting away from the multi-million dollar budgets and long development cycles characteristic of traditional core gaming.
- Success in the hypercasual model is driven by a high-velocity development environment that relies on data-driven testing and the scalability of in-game advertising to reach global audiences.
- The industry is currently transitioning toward hybrid-casual models that combine in-app purchases with advertising revenue to increase long-term player value beyond simple download volume.
State of the Mobile Gaming M&A Market
The mobile gaming mergers and acquisitions (M&A) market remains robust and vibrant, characterized by a steady stream of strategic acquisitions rather than singular, transformative mega-deals.
- The mobile gaming market experienced a 34% compound annual growth rate between 2013 and 2019, reaching $68.5 billion in global revenue by 2019.
- M&A activity is characterized by frequent horizontal acquisitions in the $100 million to $500 million range, led by major players such as Playtika, Zynga, AppLovin, and Tencent.
- Valuation metrics for mobile gaming acquisitions are typically set at 2.5 times gross sales or 8.8 to 10.5 times EBITDA, depending on earn-out structures.
Emerging Macro Trends in Games and Game Streaming from a VC Investor’s Perspective
The global games industry has evolved into a massive, pervasive ecosystem, currently valued at approximately $200 billion to $350 billion when accounting for integrated advertising and streaming.
- The global games industry is valued at $200 billion to $350 billion, supported by a base of 3 billion gamers that grows by 10 million new users every month.
- Technological advancements in gaming, including mobile, 5G, and cloud infrastructure, have historically expanded the total addressable market rather than substituting existing platforms.
- A significant capital gap exists in the UK and Europe, where a lack of Series A and B funding often forces studios to be acquired by US or Chinese entities despite the region producing nearly 50% of top global titles.
UK Games Fund – 2020 Opportunities
The UK Games Fund, a not-for-profit organization operating under UK Games Talent and Finance CIC, provides critical financial and developmental support to early-stage game developers across the United Kingdom.
- The UK Games Fund provides early-stage developers with up to £25,000 in total grant funding, consisting of an initial £5,000 grant followed by a potential £20,000 award.
- The program targets small studios with fewer than 10 employees, specifically aiming to bridge the gap between initial concept development and market readiness.
- The 2020 funding cycle follows a structured timeline: initial video pitches and online applications lead to March interviews, a summer development phase, and an autumn showcase at events like EGX.
Embracer Group Acquires Saber Interactive: Investor Presentation
Embracer Group’s acquisition of Saber Interactive, announced in February 2020, serves to expand the parent company’s global development capabilities and intellectual property portfolio.
- Embracer Group acquired Saber Interactive for a total purchase price of $525 million, consisting of $150 million upfront and a $375 million earn-out structure over six years.
- Saber Interactive reported strong 2019 financial performance with $105 million in revenue and $62 million in EBIT.
- The acquisition adds 600 developers, 163 intellectual properties, and 31 internal studios to the Embracer Group portfolio.
The German Games Industry 2019
Germany stands as a premier global games market, characterized by a robust economic ecosystem and a strategic commitment to long-term growth.
- The German games market reached record revenues of 4.4 billion euros in 2019, driven by a domestic player base of 34 million people.
- Revenue growth is increasingly fueled by in-game purchases and subscription models, which have successfully offset declines in hardware sales.
- The federal government launched a 50-million-euro funding program to transition the country from a consumer-focused market into a hub for domestic game development.