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Microsoft’s $ 68.7 billion plan With a $ 12.7 billion bid for Activision Blizzard and Take-Two, the purchase of Zynga boosted gaming transactions to a total of $ 98.7 billion in the first quarter. Drake Star Partner..
That was $ 85 billion last year, well above the $ 32.7 billion transaction in 2020. But even if it didn’t count the biggest deals, Sony bought Bungie for $ 3.6 billion, Michael Metzger, a partner at investment bank Drake Star, said in an interview with GamesBeat.
“Trading reached about $ 100 billion in the same quarter. It wouldn’t have been possible a few years ago,” Metsger said. “It is amazing.”
The March Edition of Drake Star’s Global Gaming Industry Report Transactions in the first quarter of 387 were compared to all 1,159 transactions in 2021 and all 505 transactions in 2020. Understanding this kind of activity is one of our themes. GamesBeat Summit The 2022 event from April 26th to April 28th next week. ((((This ticket).
Drake Star continues to predict all deals in 2022 Can exceed $ 15 billionn. The number of investments in game companies in 2022 is expected to reach a record high, Metsger said. Gaming companies that have traditionally focused on the PC / console segment continue to expand and diversify to mobile, and vice versa. The acquisition of Western studios by Asian companies will accelerate.
This activity demonstrates the fundamental health of the industry, driven by continued investment and acquisitions, and the significant changes brought about by the integration of the industry in all gaming sectors of PC, console, mobile and esports. I am. In esports, Savvy Gaming Group purchased ESL and FaceIt for $ 1.5 billion. This was important because the Saudi Arabia-based Savvy move was the first major move to the game by regional power investors.
However, some danger signals were seen as the public offering slowed due to the stock market instability caused by the war in Ukraine. Most public gaming companies’ ratings have been revised in the last six months, but Drake Star expects private-sector ratings to continue to grow.
All this activity shows that the gaming industry is expanding and can be expanded and contracted at the same time. The fare of a company in this market depends on the execution of the company.
“I think the fundamentals are still very strong. Some public companies may have been overvalued during COVID. And it’s coming down. The private ecosystem has a lot of new funding. Yes, a lot of new money is flowing into it, “Metsger said. “This is a sign that all institutional investors and pension funds believe in this segment because much of the money is funded by them. This is a positive sign. Public market valuations I think it’s possible that the M & A’s reputation could go down a bit because of the downturn. The IPO market is essentially closed. ”
Metzger believes that Microsoft’s acquisition of Activision Blizzard still requires regulatory approval and will accelerate the growth of Microsoft’s gaming business across mobile, PC, console, cloud, and Metaverse. Microsoft will be the third largest gaming company in the world in terms of revenue after acquisition.
Sony’s Bungie agreement gives Sony access to Bungie’s world-class approach to live gaming services and technology expertise, facilitating Sony’s vision of expanding its player base.
Take-Two Interactive’s Zynga deal also brings complementary changes, including Take-Two’s best-in-class console and PC gaming portfolio and Zynga’s leading mobile franchise.
There were 82 M & A transactions in the first quarter, 75 in the second quarter of 2021, 58 in the third quarter of 2021, and 68 in the fourth quarter of 2021.
“I haven’t seen it, it’s slowing down. You can also see the trading combinations, but if you look only at the trading volume, it also includes small trading at the seed stage. , The number of 287 transactions was a record high, so there is absolutely no slowdown. ”
Private Game Deals
Still, venture capitalists and strategic investors have invested $ 3.4 billion in private gaming companies through 287 transactions. This is a record quarter of the number of transactions completed. in contrast, National Venture Capital Association He warned about the key points and slowdown in investing in US start-ups in the first quarter. On top of that, the top private gaming companies still seem to have a high reputation, Metsger said.
Large VC rounds were procured by Dream Games, Thatgamecompany, Tripledot, and Zupee, but the most active VCs included Bitkraft, Sequoia, Makers Fund, and Griffin Gaming Partners. Griffin also announced Raised the largest game VC fund in history with $ 800 million.
One of the hottest trends was also the most controversial. Non-fungible tokens (NFTs) are used to authenticate unique digital items and give players true ownership of what they purchase in the game. However, hardcore fans and some game developers are against NFTs. This is about the same as free games raised concerns about silly games and fraud 10 years ago. In the first quarter, there were 128 blockchain gaming transactions, raising $ 1.2 billion. By comparison, there were only $ 1 billion worth of 43 mobile gaming transactions during that same period.
Still, a significant amount of new investment money has been invested in blockchain game studios. The largest rounds were raised by Animoca Brands, Immutable, and New Sin City, but the most active investors were Animoca Brands, Alameda Research / FTX, and Shima Capital.
“There is very little M & A activity on the blockchain at this point. It’s still early. I don’t think quite a few companies will probably succeed. That’s my expectation. But a lot of money is still flowing in. And In the first quarter, we found that it was a place where a lot of investment was made, “Metzger said. “I think there is a second generation company that will hopefully be very successful, but it’s still very early and there are regulatory uncertainties surrounding it.”
I’ve heard that some game studio entrepreneurs have heard that game VCs will run if the studio announces that they are creating a blockchain game. Some of that concern has been validated with these numbers. On the other hand, it’s clear that traditional games are also heavily funded. for example, Probably a monster Yesterday, it announced that it had raised $ 250 million to fund multiple Triple A games.
“Many start-ups are shifting their focus to places where funding is available,” Metsger said.
Drake Star expects to see many new NFT / blockchain unicorns among young gaming companies. Metzger also believes that this year we will see the first wave of NFT / blockchain acquisitions.
For the blockchain industry, 2022 is expected to significantly exceed last year’s $ 3.6 billion investment, and many new NFT / blockchain unicorns could be seen among young gaming companies. Drake Star also believes it will see the first wave of NFT / blockchain acquisitions this year as well.
More transactions are in progress. Many of the early game funds were successful, primarily because Limited Partners continue to fund follow-up game funds.
Drake Star is a game and cryptocurrency that includes FTX’s $ 2 billion fund, Griffin Gaming Partners’ $ 750 million fund (closed at $ 800 million), Makers’ $ 500 million fund, and Hiro Capital’s $ 340. Announced a record number of new and follow-on funds focused on 1 million funds, Gumi Crypto’s $ 110 million fund and many more, according to Metsgar.
Other notable transactions. Tencent, the world’s largest gaming company, has acquired China’s BlackShark for $ 470 million. The deal follows Tencent’s previous agreement with other smartphone makers such as ASUS and Nubia. Stillfront has announced that it has completed the acquisition of Hong Kong-based mobile publishing company 6waves at a pre-purchase price of $ 201 million.
Public market declines
In the public market, the stock market was volatile. Roblox’s valuation has dropped from $ 42 billion at the time of the public offering in 2021 to $ 25 billion. Ubisoft is trading at a valuation of $ 4.3 billion, compared to a value of $ 12.4 billion in January 2021.
But we still saw the deal. Habbo and Hotel Hideaway owner Azerion have completed a special purpose acquisition (SPAC) transaction worth $ 1.5 billion and $ 105 million in revenue. Nexon has raised $ 883 million in PIPE (Private Investment in Public Capital) from the Public Investment Fund of the Kingdom of Saudi Arabia. And Team17 Digital has completed a $ 108 million PIPE for the acquisition of Astragon Entertainment.
Drake Star expects the game company’s initial public offering (IPO) and SPAC market to recover in the second half of 2022. Metzger still believes that we can see IPOs for companies like Discord and Epic Games.
Other notable transactions
Animoca Brands raised $ 359 million in a $ 5.4 billion valuation in a round led by Liberty City Ventures with the participation of Kingsway, Sequoia, 10T Holdings and others.
Dream Games is a Series C led by Index Ventures and backed by Makers Fund, BlackRock, Kora Management, IVP and Balderton Capital, raising $ 255 million in a $ 2.8 billion valuation.
Immutable has raised $ 200 million in Series C rounds with a $ 2.5 billion valuation, led by Temasek and backed by Animoka brand Tencent and others.
Thatgamecompany raised $ 160 million in a round led by TPG and its $ 1.5 billion TechAdjacencies fund. Tripledot Studios has raised $ 116 million in a $ 1.4 billion valuation for Series B, led by The Twenty Minute VC. Zupee has raised $ 102 million in a Series B led by WestCap Group, Nepean Capital, Smile Group and Tomales with a valuation of $ 600 million.
The average price of transactions has been flat or slightly down, according to Metsger. In the case of multiples of revenue, the average acquisition price was 3.5 times the revenue of the total 41 transactions that reported the total value. In all of 2021, the acquisition price was a multiple of 3.9 times revenue.
The sum of the 20 transactions shows that the sum of the reported figures is 12.8 times EBITDA (a measure of profitability that represents income tax, depreciation, and profit before amortization). The acquisition price in 2021 was 11 times EBITDA.
This showed that even during the uncertain quarters of macroeconomics, the prices generated by trading in the gaming industry were still very healthy.
While most public gaming companies’ valuations have been revised in the last six months, Drake Star expects private-sector valuations to continue to grow through gradual funding.
“We know a fair amount of additional funding that hasn’t been announced yet,” Metsger said. “And I know at least 10 funds focused on games that are in funding mode. All of those funds need to be invested, so more money is flowing in. So I don’t think private investment will slow down. “
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Drake Star: First-quarter gaming transactions reached a value of $ 98.7 billion, surpassing all in 2022
https://venturebeat.com/2022/04/21/drake-star-q1-game-deals-hit-98-7b-in-value-more-than-all-of-2022/ Drake Star: First-quarter gaming transactions reached a value of $ 98.7 billion, surpassing all in 2022