Q3 saw gaming M&A activity from some of the biggest strategics after an extended quiet period. Q4 has started on a great note with the era-defining gaming deal in Microsoft/Activision finally closing after a lengthy regulatory review. We expect M&A activity to steadily increase in 2024.
Download the Drake Star Global Gaming Report Q3 2023 analyzing the third quarter and first nine months of 2023 for Gaming and Esports and outlining what to expect for the rest of the year.
Highlights include:
- Q3 saw some of the biggest strategics restarting their M&A consolidation, after an extended quiet period. Tencent and subsidiaries lead the way with five deals during the quarter, most notable the majority acquisition of Techland which is among the top 3 largest deals of the year. Playtika continued its casual gaming expansion with two acquisitions (Innplay Labs and Youda Game)
- Goldman Sachs alongside a group of investors (General Atlantic and LEGO) made an offer to acquire Kahoot for $1.72B! Take Two / Rockstar Games (Cfx.re), Behavior Interactive (Codeglue), Capcom (Swordcanes Studio) and Roblox (Speechly) were some of the other active strategics during the quarter. ~40% of M&A deals were in the PC / console segment, followed by mobile with ~21%
- With approximately $1B raised through 185 deals, private financing value increased over Q2. Some of the notable raises were Candivore ($100M), Second Dinner ($90M), Story Protocol ($54M), Futureverse ($54M), Inworld AI ($50M) and Veloce Media Group ($50M). ~85% of the financings were for early-stage companies and ~15% for mid / late-stage companies. BITKRAFT led the VC league table for the first nine months of the year, followed by Andreessen Horowitz, Play Ventures, Griffin Gaming and Vgames
- Gaming continues to experience fresh flow of capital with Blockchain Capital closing a $580M fund to deploy in crypto gaming. Play Ventures raised $78M and Alpha Protocol Ventures raised $20M.
Q4’23 - 2024 Outlook
- Q4 started on a great note with the closing of the era defining Microsoft Activision deal. We expect M&A activity to steadily increase in 2024. Tencent, Sony, Take- Two, Savvy/Scopely are expected to be the most active buyers, while Embracer will likely complete the divestiture of some of its studios. Several other strategics also started to participate in M&A discussions again after a pause for several quarters
- Investors have been largely cautious this year on mid / late-stage financings. We expect a continued healthy amount of investment in early-stage companies and an increase in mid / late-stage deals next year. AI and tools continue to be hot segments
- We saw the first successful tech IPO this quarter and several IPO ready gaming companies are exploring the listing in 2024. PE firms’ interest in the gaming sector has increased given the attractive public company valuations and we except several large acquisitions to be led by PE firms in the coming quarters