Gaming public companies saw a strong recovery in Q1’23, the sector outperformed the broader market indices, and we anticipate M&A activity to strongly rebound in the 2nd half of the year.
Download the Drake Star Global Gaming Report Q1 2023 analyzing the first quarter of 2023 for Gaming and Esports and outlining what to expect for the rest of the year. Highlights include:
- Introducing the Drake Star Gaming Index, an equal weighted index of select top 25 gaming companies with ~1B or more market cap. The index was up 12% in Q1 and LTM P/E and EBITDA multiples (median) expanded by 21% and 12% respectively.
- Q1 was relatively quiet with 43 announced deals compared to 76 deals in Q4’22. While the majority of the deal values were undisclosed, several of the top buyers were active including Savvy / ESL (Vindex), NetEase (Skybox Labs) and Embracer (Captured Dimension and All Caps).
- Private financings stayed steady with over 200 deals (212 deals last quarter), raising ~$1.3B. Over 70% of the deals were early-stage financings.
- Most active VCs list for Q1 was led by BITKRAFT, followed by Andreessen Horowitz, Play Ventures and Griffin Gaming.
2023 Outlook
- Q2 2023 has started on a great note with Savvy Gaming entering the mobile gaming and publishing space with the acquisition of Los Angeles based Scopely for $4.9B and SEGA announcing the acquisition of Rovio for $776M. Savvy Gaming has earmarked to deploy $38B in the gaming sector and we expect more large deals from them. There is also a good chance that the Microsoft / Activision deal will close in the coming months.
- While we continue to see a steady flow of smaller to mid-sized M&A deals and several large deals, we anticipate M&A activity to strongly rebound in the 2nd half of the year. We also expect several listed gaming companies to be acquired by PE firms this year.
- Gaming / blockchain VC funds raised over $13B in 2022 and while this capital pool is available for deployment, investors continue to be cautious. We expect a healthy number of early-stage financings and significantly less later stage rounds. We expect hot investments segments will be tools, AI and VR / AR.
NOTE: LTM = Last 12 Months; P/E = Price to Earnings; EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization; VCs = Venture Capital Firms