Games mergers & acquistions (M&A) smashed a record >$5B in the three months to March 2014, after the prior full year record of $5.6B in 2013, as detailed in our latest report (www.digi-capital.com/reports).
The activity was driven by blockbuster transactions in both Asia and America, where the games M&A market scaled new heights for this stage of the cycle. The mountain of deals can be seen comparing Q1 2014 games M&A to full year historic games M&A in the chart below.
M&A activity was a combination of early stage growth deals and later stage pivot/consolidation deals focused largely on mobile. The big deals were in mobile (e.g. Zynga acquiring Natural Motion), tech (e.g. Facebook acquiring Oculus) and Asia (e.g. Tencent taking a big stake in CJ Games). We’re already seeing many private and public follow on deals hoping to come to market this year, trying to surf the wave of the massive transition driven by mobile across the games industry.
The games investment market was a different story, with the modest investment recovery of 2013 continuing at a rate similar to 2010. Comparing current games M&A to investment, the gap between them is the greatest we have ever seen. Mobile and tech took the lion’s share of games investment, which is expected to continue through the rest of the year. The King IPO was potentially the most significant in the games market since 2011, but its long term impact is yet to be determined.
After an unprecedented start to the year, it will be fascinating to see how this will change the course of the games market in the coming quarter.
I will be presenting the highlights of the Global Games Investment Review 2014 - Q1 Update at GMIC (http://beijing.thegmic.com/) in Beijing on 5th May 2014
About Tim Merel: Tim is Managing Director of Digi-Capital (www.digi-capital.com), an investment bank for apps and games, focused across America, Asia (China, Japan, South Korea) and Europe.