Unveiling The Decade's Most Prolific M&A Dealmakers in Gaming
Microsoft, Tencent and Savvy Games Group+PIF emerged as dominant players
Happy New Year! I hope everyone relished delightful moments with their friends and families during the holidays. Intriguingly, the year-end deal rush tradition didn’t materialize as expected. Consequently, no updates are needed for my earlier post on the Global Gaming M&A Landscape - 2023 Edition.
As we embark on 2024, the gaming industry stands at a fascinating intersection. It feels like 2023 wasn't merely a return to normalcy post-pandemic; it hinted at a new chapter, and some new interesting things are in the brew.
The inception of "in-app purchases" (IAP) by Apple in 2009 set the stage for microtransactions, giving rise to the popular free-to-play model via the App Store. Titles like Candy Crush Saga, Puzzle & Dragons, and Clash of Clans emerged around 2012, igniting a gold rush of M&A activities in the gaming industry from 2013 onward.
Highlights in recent years:
Microsoft and Tencent emerged as dominant players, collectively investing over $87 billion in M&A through their largest four deals: $68.7 billion for Activision Blizzard, $7.5 billion for ZeniMax, $2.5 billion for Mojang, and $8.6 billion for Supercell. Microsoft tends to favor large transactions, while Tencent engages across the spectrum, from early-stage to public companies.
The Rise of Savvy Games Group: Backed by Saudi Arabia's Public Investment Fund, this newcomer swiftly became a major player, dropping over $20 billion in gaming M&A in just two years alongside the Public Investment Fund. According to a recent article from PocketGamer - Savvy Games Group: “Approximately 75 percent of our capital allotment has not yet been invested”, $25 billion+ dry powder left.
Current $20 billion+ gaming portfolio according to PocketGamer: (Except #12)
Scopely - $4.9bn (100% as of July 2023)
Electronic Arts - $2.98bn (9% as of March 2023)
Take-Two Interactive - $1.36bn (6.8% to 14.9% as of March 2023)
Activision Blizzard - $3.3bn (roughly 4.9% as of March 2023). Likely see a $5 billion cash total in return after the Microsoft transaction closed
Nintendo - $3.8bn (8.3% stake as of Feb 2023)
Nexon - 88.5M shares (10.23% stake as of June 2023)
Embracer Group - $1bn (8.1% stake as of June 2022)
NC Soft - $700M (6.69% as of Feb 2022)
SNK Corp - $600M? (96% as of Feb 2022)
ESL & FACEIT - $1.05bn + $500M (100% January 2022)
Savvy Gaming Fund $30 billion+
VSPO - $265M (Feb 2023)
Asian Powerhouses Emerge: SEGA's acquisition of Rovio marked a rare (check size) overseas move by a Japanese company in recent years (besides an already active player - Sony), and my prediction (M&A Funding Capacity of Public Gaming Companies in 2023) of Asian companies with robust balance sheets seizing growth opportunities overseas appears partially fulfilled, despite a lower-than-expected overall number of deals, excluding China.
Non-corporate investors such as Andreessen Horowitz (A16z), BITKRAFT, and Animoca Brands have been remarkably active, participating in significant deals from seed to series B. A prevalent trend among these ventures is the increasing number of deals in decentralized gaming - Crypto, NFT, Web3, etc.
In a surprising twist, NetEase surpassed Tencent in total M&A activity by a small number for the first time.
While decentralized gaming has attracted substantial investments from venture capitalists in recent years, it has yet to witness notable exits from established web2 companies comparable to the mobile gaming gold rush.
China Inc. Takes Two Tracks: Chilled M&A, Soaring Buybacks. While outbound mergers and acquisitions (M&A) have cooled down, companies are revving up the engine on buying back their own shares. (not showing in the data below)
The tables below do not include all Savvy Games Group or Public Investment Fund’s transactions.
