In game-industry deal-making, there’s Tencent, then there’s everybody else. The Chinese behemoth led or participated in over $four of each $10 invested in video games corporations worldwide within the final 12 months to the tip of Q1 2018. It was concerned both sell-side or buy-side in over three-quarters of all video games M&A deal worth (i.e., ) in the identical interval. And that is within the context of report totals (not simply Tencent) over $2.1 billion video games funding and over $14.four billion video games M&A within the first quarter of this 12 months alone.
Digi-Capital’s new Games Report and Deals Database Q2 2018 tracked a complete of almost $22 billion complete video games market investments and M&As (once more not simply Tencent) within the final 12 months, in addition to forecasting global games software/hardware market revenue to top $165 billion this year and over $230 billion by 2022. Let’s dive into the element to see what’s behind the numbers.
Games funding within the final 12 months broke all earlier data, with over $four.2 billion invested in video games market corporations. As has develop into the brand new regular in the previous few years, most of this cash went into video games tech and platform corporations fairly than recreation builders. In distinction to cellular video games’ funding dominance of the final 5 years, the primary quarter noticed MMO/MOBA video games funding, in addition to AR/VR and eSports during the last 12 months.
Games funding had been dominated by mega-deals as standard, whereas the variety of funding offers remained broadly flat. Amongst the massive Tencent investments had been:
Other non-Tencent offers embody:
Games M&A within the first quarter was dominated by one big deal, with Naspers selling 2 percent of Tencent for over $10 billion dollars for a 60,000 % return (not a typo!). Tencent was concerned within the $2 billion plus acquisition of Vivendi’s stake in Ubisoft, in addition to shopping for a $142 million stake in Seasun. Non-Tencent M&A included Aristocrat shopping for Big Fish Games for just under $1 billion and Plarium for $500 million, in addition to Stillfront Group buying Goodgame Studios for $318 million.
Even with over $17 billion of video games M&A within the final 12 months, the high-water mark from 2016 of $28.four billion stays an elusive peak. As with investments, the variety of video games M&A offers was broadly flat for the quarter.
Games IPOs may be reverting to the sample of the final decade, the place one bumper 12 months is adopted by two quiet ones. So the place 2017 noticed Netmarble Games, Sea Limited (Garena), Razer and Rovio IPOs, the primary quarter of 2018 was largely silent. The remainder of the 12 months may decide whether or not we’ll want to attend till 2020 for the subsequent large spherical of video games IPOs.
While this 12 months received off to a flying begin for video games offers, one factor’s for positive. Tencent’s the largest participant, and there’s extra the place that got here from.
Tim Merel is managing director of AR/VR and video games adviser Digi-Capital. You can discover full particulars of over 2,100 video games funding, M&A and IPO offers by sector, platform, nation and investor/acquirer in Digi-Capital’s new Games Report and Deals Database Q2 2018.