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2020–2022: The Most Exciting Time in the Gaming Industry
This analysis examines global investment and merger and acquisition (M&A) activity within the video game industry from 2020 through 2022.
- M&A activity reached a historic peak in 2022 with $37.7 billion in closed deals, representing a 199% increase over 2021, largely driven by major consolidations like Take-Two’s acquisition of Zynga.
- Public offerings for gaming companies collapsed in 2022, with an 82% decline in value as IPO and SPAC windows effectively closed due to macroeconomic headwinds.
- Private investment value fell by 16% in 2022 following a doubling of investment the previous year, signaling a shift toward a more disciplined, cooling market.
Global Video Game Deals Report 2020
The 2020 fiscal year marked a historic period of consolidation and capital infusion for the global video game industry, largely catalyzed by the COVID-19 pandemic and the resulting surge in at-home entertainment.
- The global video game industry reached a record $33.6 billion in total deal value across 664 transactions in 2020, driven by pandemic-induced demand for at-home entertainment.
- Public offerings were the largest financial contributor at $15.1 billion, bolstered by high-profile IPOs from Unity Software and Kakao Games alongside corporate debt refinancing.
- Mergers and acquisitions totaled $12.6 billion across 219 deals, with Tencent, Embracer Group, Stillfront, and Zynga accounting for 60% of that value.
Games Industry 2019/20
Germany stands as Europe’s largest video-game market and the world’s fifth-largest, a position reinforced by a robust developer community, flagship events and a policy framework that actively subsidises production.
- Germany is the largest video-game market in Europe and the fifth-largest globally, generating a record €4.4 billion in 2018 with a 9 percent year-on-year growth rate.
- The German government supports the industry with €50 million in annual non-repayable grants, which cover 25 to 50 percent of project costs for developers.
- The sector comprises approximately 524 game-related firms, including 368 development studios, employing 11,000 staff directly and nearly 28,000 when including ancillary roles.
Embracer Acquires Tarsier Studios: Investor Presentation
Embracer Group has finalized the acquisition of Tarsier Studios, a Malmö-based developer, to bolster its portfolio of original intellectual properties.
- Embracer Group acquired Tarsier Studios for a total purchase price of SEK 99 million, comprised of SEK 88 million in cash, SEK 11 million in B shares, and a ten-year earnout capped at SEK 44 million.
- Tarsier Studios will operate as an autonomous entity within the Goodbye Kansas Game Invest sub-group, shifting its strategic focus from external work-for-hire to developing and owning original intellectual properties.
- The studio employs over 60 staff members with an average of eight years of industry experience and a track record of developing million-selling titles like Little Nightmares.
Panel: Future of Esports
Esports has evolved from a niche subculture into a mainstream global phenomenon, increasingly outpacing traditional sports in engagement metrics among younger demographics.
- Esports is outperforming traditional sports in engagement metrics among younger demographics, establishing itself as a primary global entertainment medium.
- Game publishers currently utilize competitive tournaments as strategic marketing tools to extend product lifecycles and drive user acquisition.
- Long-term financial sustainability requires a transition from publisher-dependent funding toward attracting non-endemic brands like airlines and telecommunications firms.
Investment Panel from Pocket Gamer Connects Hong Kong
The gaming investment landscape is defined by a diverse array of mandates, ranging from project-specific financing for PC and console titles to strategic capital allocations focused on blockchain infrastructure and corporate synergy.
- Investors prioritize startups that demonstrate a clear alignment between their funding search and the firm’s specific investment thesis, rather than using indiscriminate pitching strategies.
- Founders are evaluated on their resilience, energy, and capacity to pivot quickly, as these traits are critical for navigating the high failure rates and volatility inherent in the free-to-play and blockchain sectors.
- Blockchain and token economy projects must provide genuine value to the user experience to attract capital, as investors are increasingly wary of trend-driven gimmicks.
Annual General Meeting FY 18/19: Presentation
The 2019 Annual General Meeting presentation outlines the strategic and financial trajectory of Embracer Group, emphasizing a dual-growth model driven by aggressive acquisitions and organic development.
- Embracer Group achieved massive financial scaling in FY 18/19, with net sales increasing 1,033% to 5,754 million SEK and operational EBIT rising 344% to 897 million SEK.
- The company operates a decentralized 'buy-to-build' model across three autonomous sub-groups—THQ Nordic, Deep Silver, and Coffee Stain—supported by 2,208 total employees and contractors.
- As of mid-2019, the group held 2,011 million SEK in net cash, providing the liquidity necessary to sustain its aggressive acquisition strategy for dormant intellectual properties.
THQ Nordic: Embracer Group Investor Presentation
Embracer Group operates as a decentralized parent organization overseeing a vast portfolio of gaming studios, including THQ Nordic, Koch Media, and Warhorse Studios.
- Embracer Group operates as a decentralized parent organization managing a portfolio that includes THQ Nordic, Koch Media, and Warhorse Studios.
- The company maintains a global footprint with operations spanning more than 40 countries across Europe, North America, Africa, and Asia.
- Corporate strategy is defined by four strategic pillars: Business Sense, Solid Work, Great People, and Greener Planet.
THQ Nordic AB (publ) Acquires Gunfire Games: Investor Presentation
THQ Nordic AB has finalized the acquisition of Gunfire Games, an Austin-based studio recognized for its expertise in action-adventure titles and virtual reality development.
- THQ Nordic AB has acquired Austin-based Gunfire Games, marking the company’s first owned development footprint in the United States.
- The acquisition is projected to be recouped within three to four years through immediate cash flow from existing IP, including 'Remnant: From the Ashes', and reduced royalty and development costs.
- Gunfire Games will retain operational independence and creative freedom, allowing the studio to continue external collaborations while contributing to THQ Nordic’s internal development pipeline.
THQ Nordic AB Acquires Goodbye Kansas Game Invest: Investor Presentation
THQ Nordic AB expanded its footprint in the Nordic gaming ecosystem through the acquisition of Goodbye Kansas Game Invest, a Stockholm-based platform specializing in early-stage investments.
- THQ Nordic AB acquired Goodbye Kansas Game Invest for 42 million SEK to expand its Nordic development footprint and internal capabilities.
- The acquisition grants THQ Nordic equity stakes ranging from 21% to 50% in five game studios: Framebunker, Neon Giant, Palindrome Interactive, Kavalri, and Fall Damage.
- The deal includes the acquisition of royalty rights for the action RPG title Biomutant.
THQ Nordic AB Acquires Milestone s.r.l.: Investor Presentation
THQ Nordic AB finalized the acquisition of the Italian game developer Milestone s.r.l. on August 14, 2019, to bolster its position in the global racing simulation market.
- THQ Nordic acquired Italian developer Milestone s.r.l. on August 14, 2019, for a total upfront consideration of EUR 55.8 million, comprised of EUR 44.3 million in cash and EUR 11.5 million in B-shares.
- The acquisition includes an earn-out provision tied to Milestone’s adjusted EBIT performance through the end of fiscal year 2022.
- Milestone brings a portfolio of established racing franchises including MotoGP, MXGP, Monster Energy Supercross, and RIDE, supported by a pipeline of ten titles scheduled for release between 2020 and 2022.
Greycroft | Venture Capital Funding of Game Companies
Venture capital has become a foundational element in the growth of the modern gaming ecosystem, supporting major industry players ranging from mobile studios like Supercell and Rovio to infrastructure companies like Twitch and Discord.
- Venture capital firms like Greycroft, through its GC Tracker fund, focus on seed-stage investments in gaming, esports, and VR/AR, prioritizing teams with scalable visions.
- The investment landscape has matured from speculative social and mobile gaming funding to a model driven by rigorous metrics, specifically customer lifetime value (LTV) and acquisition costs.
- PC and console development remain difficult to fund via venture capital because their unpredictable revenue cycles conflict with the steady-state revenue models preferred by most firms.