- Q2 saw 52 announced M&A deals with $3.5 billion in disclosed deal value
- EQT’s acquisition of Keywords for $2.8 billion is the largest gaming deal of the year so far
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Gaming M&A activity continued to increase for the third straight quarter with two of the largest deals being acquisitions by private equity firms.
That’s the good news coming from Drake Star Global Gaming Report Q2 2024. Quarter two has seen a significant uptick in public equity and debt deals. There’s also good news for blockchain gaming as the field attracted 40% of all private company financings.
The rebound is here
Drake Star’s latest report features 52 announced M&A deals with $3.5 billion in disclosed deal value. These latest Q2 figures represent the third straight quarter of continued increase in deal activity – activity that hit its low point in quarter three of 2023 with 33 deals being completed.
Notable recent M&A activity includes private equity firm EQT announcing the acquisition of Keywords for $2.8 billion, being the largest gaming deal of the year so far. Meanwhile notable strategic buyers include Infinite Reality, Miniclip / Tencent, Nintendo and Tripledot.
The report notes that private financings seem to be stabilizing with 180 deals in Q2 2024, remaining flat when compared to Q1’s figure of 191 deals.
Blockchain bounceback
Notably the largest volume of the capital being invested went into blockchain gaming companies and services, accounting for 40% of the total deals and 44% of disclosed deal value. Of these companies Zentry raised the largest round with $140 million in investments within the quarter, followed by Spyke at $50 million and k-ID at $50 million.
M&A activity will continue to strengthen into 2025, buoyed by the broader recovery of the public gaming company market.
The report finds that investment dollars continue to be mostly focused on early-stage companies (attributing 93% of total deals). By region, Asia led the pack with five of the largest financings, followed by three in Europe/UK, and one each in Turkey and the U.S.
The report also found that “very little VC money went to gaming studios”. Of those, Bitkraft was the most active VC, followed by a16z, Play Ventures and vgames.
While Konami, Logitech and Krafton came out as the report’s top performers over the last 18 months, the broader market of gaming stocks has not recovered. However the leading listed indie and AA game developers and publishers have seen a significant rebound this year.
Embracer announced its plan to restructure its business into three separate listed public companies. Gamestop raised $3.1 billion in equity and Embracer, Take Two and MTG raised around $1.7 billion in debt.
Predictions for the rest of 2024
Following these figures Drake Star now anticipates that M&A activity will continue to strengthen throughout the remainder of this year and into 2025, “buoyed by the broader recovery of the public gaming company market.”
Other trends include an increase in the volume of mid to small sized deals. So far private equity firms have been the top buyers so far in 2024 (the report calls out the CVC/Jagex deal and EQT/Keywords deals specifically) with the prediction being for more acquisitions and ‘take-private deals’ on the way from such PE firms.
With limited mid-to-later stage financing available, Drake Star now expects some gaming companies to opt for earlier exits. Highlighting the recent Voodoo/BeReal deal, the company expects that more games companies will be likely to diversify in adjacent segments by acquiring mobile app companies.
In unsurprising news the fields of AI, mixed reality, platform and tools “continue to be hot segments”.
Finally the report predicts more upcoming IPO action, following the likes of Shift Up’s IPO in Korea. “We anticipate that several IPO ready companies such as Appsflyer, Discord and EPIC will start to plan for a listing in the quarter to come,” says the report.
