Mobile Mavens: Is Playtika’s acquisition of SuperPlay worth the big bucks? And what does it mean for M&A activity

Last week Playtika announced a blockbuster deal to acquire Dice Dreams developer SuperPlay for $700 million – which could rise to $1.95 billion if it meets financial targets.

It’s a significant deal for the publisher, eyeing new growth opportunities and new games, and for the mobile games industry at large.

But is the price right? What message does this acquisition send to the wider market? And what does it mean for Playtika and SuperPlay moving forward? We asked our expert Mobile Mavens for their thoughts and insights on the move.

First off, this is a strong signal for the market. The more successful acquisitions we see, the more capital will flow into new and growing companies. This deal is a clear sign of that momentum.

The acquisition sum is big, but there are two key factors here: a diversified portfolio with outstanding growth – especially at this scale – and the fact that a large portion of the payment is tied to performance-based earnouts. Plus, SuperPlay’s lean team of 240 on over $20m/month in-app  – we don’t know about ads – revenue is a high revenue-per-employee ratio, which is very impressive.

SuperPlay’s portfolio growth has been steady and diversified, with Domino Dreams showing strong potential while Dice Dreams continues to grow. This suggests their player cohorts have strong traction, giving confidence that they’re primed for scaling.

The multipliers are high but not overly aggressive. They reflect a slight premium in today’s downmarket, which I see as a healthy level of optimism.

It’ll also be interesting to watch the post-acquisition dynamics, as these companies seem to have a solid cultural alignment.

Nick Gibson

Director
at Games investor consulting

The SuperPlay purchase is a solid and not entirely unexpected one for Playtika to make.

SuperPlay was formed by Playtika alumni and it’s likely that the Playtika management will have been keeping tabs on them since they set up shop.

Playtika is acquiring a fellow Israeli company that makes post-acquisition management and integration easier. Its two released games – and possibly others in development – fit neatly into Playtika’s portfolio and demographic target markets.

The headline price of $2bn seems high at first glance when compared to estimated ongoing revenue for the two released titles, but having $1.25bn of this $2bn in performance-based earn-out over three years should hedge this bet substantially and points to a high expectation for future titles.

Maria Kochmola

Co-founder and Managing Partner
at The Games Fund

This is great news for the market – M&A activity is steadily picking up again.

I believe the terms are fair. The upfront valuation likely reflects slightly above-average market multiples, but SuperPlay is in a unique position.

There aren’t many companies out there that can demonstrate this kind of large-scale growth. SuperPlay has successfully launched and scaled several products, with more in the pipeline. A significant portion (over 60%) of the deal is tied to earn-outs over the next few years.

There’s also a strong cultural fit, given that the founding team is from Playtika and SuperPlay is an Israeli company. This should make the integration process much smoother.

Joost van Dreunen

Investor & entrepreneur with expertise in video games
at New Breukelen

Playtika’s $700 million purchase of SuperPlay, with a potential earnout of $1.95 billion, highlights its strategy to grow through acquisitions.

The substantial earnout structure suggests that the true value lies in the future earnings potential of SuperPlay’s main titles, Dice Dreams and Domino Dreams. This approach builds on Playtika’s previous successes, such as June’s Journey – part of the $220 million Wooga acquisition in 2018 – and Solitaire Grand Harvest – from the $174 million SuperTreat acquisition in 2019.

These pre-pandemic purchases have generated a combined $1.2 billion in revenues. Moreover, nine of Playtika’s 11 top-performing titles were acquisitions.

Given Playtika’s most recent 2.5% year-over-year revenue decline in Q2 2024, this acquisition strategy seems logical.

However, the significantly different economic landscape since their earlier successful acquisitions raises questions about whether this approach will yield similar results in the current market environment.