Drake Star Partners: Game offerings topped $ 60 billion in first half of 2021
Where is your business on the AI adoption curve? Take our AI survey discover.
Gaming deals topped unprecedented $ 60 billion in first half of 2021, investment bank says Drake Star Partners.
Spurred on by pandemic lockdowns and investors seeking safe havens, gambling has benefited tremendously at a time when many other industries have been destroyed. And by the middle of the year, the amount of money spent on game acquisitions, investments, and public offerings is almost double the amount last year.
More than 635 deals were announced and concluded in the first half for a total value of $ 60 billion, said Michael Metzger, partner at Drake Star Partners, in an interview with GamesBeat.
“The market remains very strong. What’s also interesting is that minority funding rose further against the dollar in the second quarter versus the first, ”Metzger said. “This is going to determine the type of future gaming companies we have. More money flowing into the industry from the private side builds momentum for companies that will retire in the future. “
Mergers and Acquisitions
The industry has seen 169 mergers and acquisitions (M&A) deals were announced or completed in the first half of 2021 with a gigantic value of $ 23 billion.
Record consolidation has occurred across mobiles, PCs and consoles thanks to large strategic companies such as Tencent, Electronic Arts, Epic Games, Take-Two Interactive, Byte Dance, Embracer and Stillfront. Private equity firms Bain, Blackstone and Carlyle were also active.
“The whole consolidation game is validated,” he said. “The Sea Garena stock performed very well, followed by Embracer and Stillfront. They’ve all done pretty well with the rollout strategy. They did better than most. EA got into the M&A game late, but is now very aggressive. Take-Two too. And they all realize, even belatedly, that stock performance is not only based on the performance of their own games, but also on growing and accelerating growth.
In the first half of the year, Electronic Arts acquired Glu Mobile for $ 2.4 billion and Playdemic (creator of Golf Clash) from Warner Media for $ 1.4 billion. This last deal was possible because Playdemic was not really suitable as AT&T decided to divest the games business based on the history of Warner Bros. Games to Discovery in a $ 43 billion deal.
Tencent bought a controlling stake in Berlin-based Yager, maker of Spec-Ops: The Line. Take-Two acquired Nordeus for $ 378 million (and narrowly missing the deadline, it also bought facial animation tech company Dynamixyz for an undisclosed price). Azerion has acquired social casino game developer Whow Games.
While the biggest game companies buy in all regions, media companies in Hollywood are in divestment mode and focus less on games and more on trends such as movie streaming.
Private gaming companies have raised $ 4.8 billion through 364 minority fundings from venture capitalists and strategic investors such as large corporations.
The first half saw 19 high-value private financings ($ 50 million and more), which means that investments by strategic and financial investors are at an all-time high. Investing activity appears to be accelerating further with capital invested in Q2 2021 overtaking Q1 2021.
For investments, Istanbul’s Dream Games raised $ 155 million for a valuation of $ 1 billion to bring Royal Match on a global scale. VR Chat raised $ 80 million. Mythical Games has raised $ 75 million to create a non-fungible tokenized (NFT) game engine. The Lingokids educational games platform has raised $ 40 million for its expansion. And Pokerface maker Comunix is raising $ 30 million for social mobile games.
And a few weeks ago, Activision Blizzard disclosed that he had invested $ 100 million in Playstudios, which is about to go public in a SPAC.
Public markets are in “hyperactive mode” with 37 IPOs announced and closed with a staggering $ 11.2 billion in proceeds and three large, multi-billion-valued Special Purpose Acquisition Company (SPAC) deals over the years. the first six months of 2021.
During the quarter, PUBG maker Krafton said it would go public at a valuation of $ 25 billion, but since it is raising $ 5 billion in capital in this deal, the smaller amount is counted in the 11, $ 2 billion in proceeds, Metzger said.
With $ 16.4 billion in secondary deals and debt in the first half of 2021, public strategies continue to raise more capital to fuel further inorganic growth.
Public markets have had several high profile IPOs, direct listings and SPAC deals: Applovin, Playtika, Roblox, Huuuge, Nexters, Playstudios, JamCity, TinyBuild, Nazara, Cherry Group and Krafton.
Embracer Group has raised $ 700 million in debt to accelerate its own growth. Cherry Group raised $ 500 million in an IPO in Germany. PlayStudios began trading and raised a $ 75 million line of credit for future growth.
“I think the Krafton IPO is going to be massive,” Metzger said. “They will probably be a lot more buyers in the future.”
A slowdown ahead?
As to the possibility of a post-pandemic slowdown, Metzger said, “I don’t expect, you know, a major correction or anything like that. Some stocks seem to be rated very frothy while others seem a bit undervalued. But, you know, there are often good reasons for that.
Metzger looked at what happened with Apple’s focus on user privacy versus targeted ads. Some feared that the change in Identifier for Advertisers (IDFA) could trigger an apocalypse for free mobile games, which depend on finding high-value users through advertising. Fears over the IDFA changes have sparked numerous acquisitions between ad technology and games companies.
“It definitely affected the revenue generated by the mobile game companies, and it made it more difficult,” Metzger said. “There are a number of companies trying to get marketing to work effectively again, but it will probably take some time yet. But it wasn’t like the big toll that some had been waiting for. I think people did pretty well.
Another sign of health is that we’ve seen a lot of deals tied to the PC and console segments, while the deals were mostly focused on mobile, Metzger said.
“Previously there were very few offerings on consoles and PCs, but now they are spread across different segments,” he said.
Metzger made four deals in the first six months and Drake Star himself made 28. The company plans to publish quarterly reports, as it already tracks more than 1,000 game companies.
GamesBeat’s credo when covering the gaming industry is “where passion meets business”. What does it mean? We want to tell you how much news matters to you, not only as a decision maker in a game studio, but also as a game fan. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn more about the industry and enjoy participating in it.
How will you do this? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational and fun speakers at our events
- Networking opportunities
- Special member-only interviews, discussions and open office events with GamesBeat staff
- Chat with community members, GamesBeat staff, and other guests on our Discord
- And maybe even a fun prize or two
- Presentations to like-minded parties
Become a member