Drake Star Partners: Game offers surpassed $60B in initially half of 2021

Where does your enterprise stand on the AI adoption curve? Take our AI survey to obtain out.

Game offers surpassed an unparalleled $60 billion in the initially half of 2021, according to investment bank Drake Star Partners.

Spurred by pandemic lockdowns and investors searching for havens, gaming has benefited immensely for the duration of a time when several other industries have been wrecked. And halfway by means of the year, the quantity of dollars going into game acquisitions, investments, and public offerings is practically double the quantity for all of last year.

More than 635 offers announced and closed in the initially half with a total worth of $60 billion, mentioned Michael Metzger, a companion at Drake Star Partners, in an interview with GamesBeat.

“The market continues to stay very strong. What’s also interesting is that minority financing further ticked up from the dollar value in Q2 compared to Q1,” Metzger mentioned. “That’s going to determine the kind of the future gaming companies that we have. The more money that flows into the industry on the private side further builds momentum for the companies that will exit in the future.”


Image Credit: Drake Star Partners

The market saw 169 mergers and acquisitions (M&ampA) offers have been announced or closed for the duration of the initially half of 2021 with a mammoth $23 billion in deal worth.

Record consolidation occurred across mobile, Computer, and consoles driven by key strategic firms such as Tencent, Electronic Arts, Epic Games, Take-Two Interactive, Byte Dance, Embracer, and Stillfront. Private equity firms Bain, Blackstone, and Carlyle have been also active.

“The whole consolidation play is validated,” he mentioned. “Sea Garena’s stock did very well, and it was followed by Embracer and Stillfront. They have all been executing pretty well with the rollout strategy. They did better than most of the others. EA jumped into the M&A game late, but are now very aggressive. Take-Two as well. And they all realize, also late, that stock performance is not only based on performance of their own games, but also showing growth and accelerating growth.”

During the initially half, Electronic Arts acquired Glu Mobile for $2.4 billion and Playdemic (creator of Golf Clash) from Warner Media for $1.4 billion. The latter deal was feasible considering the fact that Playdemic didn’t genuinely match as AT&ampT decided to spin out the story-driven game business enterprise of Warner Bros. Games to Discovery in a $43 billion deal.

Tencent purchased a majority stake in Berlin-based Yager, maker of Spec-Ops: The Line. Take-Two acquired Nordeus for $378 million (and, just missing the deadline, it also purchased facial animation tech firm Dynamixyz for an undisclosed price tag). Azerion purchased social casino game developer Whow Games.

While the most significant game firms are acquiring in all regions, the media firms in Hollywood are in divestment mode and are much less focused on games than trends such as streaming films.

Private investments

Image Credit: Drake Star Partners

Private gaming firms have raised $4.8 billion by means of 364 minority financings from VCs and strategic investors such as major corporations.

The initially half had 19 higher-worth ($50 million-plus) private financings, and that signifies investment from each strategic and monetary investors is at an all-time higher. Investment activity appears to be additional accelerating with capital invested in the second quarter of 2021 exceeding the initially quarter of 2021.

For investments, Istanbul’s Dream Games raised $155 million at a $1 billion valuation to take Royal Match globally. VR Chat raised $80 million. Mythical Games raised $75 million to construct a nonfungible token (NFT) game engine. Educational games platform Lingokids raised $40 million for expansion. And Pokerface maker Comunix raises $30 million for social mobile games.

And a couple of weeks ago, Activision Blizzard disclosed that it had invested $one hundred million in Playstudios, which is preparing to go public in a SPAC.

Public markets

1625235004 665 Drake Star Partners Game deals surpassed 60B in first half

Image Credit: Drake Star Partners

The public markets are on “hyperactive mode” with 37 announced andclosed IPOs with a staggering $11.2 billion in proceeds and 3 huge
multibillion valuation particular goal acquisition enterprise (SPAC) offers in initially six months of 2021.

During the quarter, PUBG maker Krafton mentioned it would go public at a $25 billion valuation, but considering the fact that it is raising $5 billion in capital in that transaction, the smaller sized quantity is counted in the $11.2 billion in proceeds quantity, Metzger mentioned.

With $16.4 billion in secondary and debt offerings in the initially half of 2021, public strategics continue to raise more capital to fuel further inorganic development.

Public markets had a number of higher-profile IPO’s, direct listings and SPAC offers: Applovin, Playtika, Roblox, Huuuge, Nexters, Playstudios,  JamCity, TinyBuild, Nazara, Cherry Group, and Krafton.

Embracer Group raised $700 million in debt to accelerate its personal development. Cherry Group raised $500 million in an IPO in Germany. PlayStudios began trading and raised a $75 million line of credit for future development.

“I think the Krafton IPO is going to be massive,” Metzger mentioned. “They will probably be much more acquisitive in the future.”

A slowdown coming?

1625235005 801 Drake Star Partners Game deals surpassed 60B in first half

Image Credit: Drake Star Partners

As for the opportunity of a post-pandemic slowdown, Metzger mentioned, “I don’t expect any, you know, major correction or anything like that. Some stocks seem to be valued very frothy versus others seem to be a little bit undervalued. But, you know, often there are good reasons for that.”

Metzger watched to see what occurred with Apple’s focus on user privacy more than targeted advertisements. Some feared the transform in the Identifier for Advertisers (IDFA) would trigger an apocalypse for free of charge-to-play mobile games, which rely on discovering higher-worth customers by means of marketing. Fears about IDFA adjustments triggered a lot of acquisitions amongst adtech and game firms.

“It certainly affected the revenue the mobile game companies generate, and it made things more difficult,” Metzger mentioned. “Several of the companies are trying to make marketing work effectively again, but it’s probably still going to take time. But it wasn’t like the big reckoning that some people expected for a long time. I think people managed fairly well.”

Another sign of overall health is that we saw a lot of offers associated to the Computer and console segments, whereas the offers used to be mainly concentrated in mobile, mentioned Metzger.

“There used to be very few console and PC deals, but now it’s spread across different segments,” he mentioned.

Drake Star itself closed 4 offers. The enterprise is organizing on releasing quarterly reports, as it currently tracks more than 1,000 gaming firms.

Originally appeared on: TheSpuzz