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Drake Star Global Gaming Report Q3 2024: Steady M&A growth for the 4th straight quarter
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24 Oct 2024
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Gaming M&A deal activities continued to increase for the 4th straight quarter with $2.5B in disclosed deal value and over a billion raised in private financings. Public markets continue to recover with the Drake Star Gaming Index growing 10.2% for the first 9 months of the year, and a bumper IPO of Tencent-backed Shift Up that surged almost 50% on its trading debut.
The Drake Star Global Gaming Report Q3 2024 analyzes Gaming and Esports dealmaking in Q3 and outlines what to expect for the rest of the year. Highlights include:
- With 56 announced M&A deals and $2.5B in disclosed deal value, Q3 continued the strong uptick in M&A activity for the 4th straight quarter (70% growth in number of deals compared to Q3 last year).
- Playtika’s acquisition of SuperPlay for $700M at close ($1.95B including earn-out) was the largest deal of the quarter. Other notable acquirers included Tencent (Aojue Digital), Warner Bros. Discovery (Player First), Krafton (Tango Gameworks), Capcom (Minimum Studios), Keywords (Wushu Studios), Nazara (Fusebox, Deltias Gaming) and Infinite Reality (LandVault).
- $1.1B was raised in private financing through 181 deals, a notable growth in deal value, but the number of deals was similar relative to Q2. Large financings included Infinite Reality ($350M), Hybe IM ($80M), Gcore ($60M), Volley ($55M) and Saber Interactive. Investors continue to invest primarily in seed / early-stage companies (over 90%). Blockchain gaming attracted ~32% of all investments and platform / tools ~23%. Funding for growth stage gaming studios continued to be challenging.
- Andreessen Horowitz and Bitkraft were the most active large gaming VCs over the last 12 months, followed by Play Ventures. Early-stage gaming and consumer investor Patron has raised $100 million for its second fund.
- Tencent-backed Shift Up had a bumper IPO with the stock surging around 50% on its trading debut (raised $320M), while Nazara raised over $100M in equity. Embracer Group refinanced its credit line ($652M) and Kakao Games raised $198M in bonds that are exchangeable for Krafton shares owned by Kakao.
- With a gradual recovery in public markets, the Drake Star Gaming Index grew 10.2% for the first 9 months of this year. Top performers were SEA, Konami and Krafton, and laggers were Ubisoft, Corsair and Unity.
Outlook
- M&A activity is expected to further strengthen for the rest of this year and next, continuing its strong growth over the last year, on the back of lowering interest rates and a gradual broader recovery in the public gaming market.
- While we expect some large transformative deals from industry leaders such as Tencent, Take-Two, Savvy/Scopely and Playtika, the trend of strong growth in mid to small sized deal count will likely continue. With limited mid / late funding available, some gaming studios will choose an earlier exit and join a larger company.
- PE firms have been a major consolidator this year (CVC / Jagex, EQT/ Keywords), and we anticipate more acquisitions / take-private deals led by financial sponsors. We also expect more divestitures of large gaming divisions.
- For private financings, AI, mixed reality, platform and tools continue to be hot segments.
- As broader gaming markets continue to recover, we anticipate IPO-ready gaming companies to start exploring their listing ambitions in 2025.
Download the full report below.
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Enquiries
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For further enquiries, please contact:
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Michael Metzger
Managing Partner
Digital Media
FinTech
Los Angeles
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Julian Riedlbauer
Partner
Digital Media
Digital Services
FinTech
Software/SaaS
Berlin
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Mohit Pareek, CFA
Digital Media
FinTech
Los Angeles
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