The gaming industry is thriving this year as firms in the business have raised a whopping $71 billion in the first nine months of 2021, according to a report by investment bank Drake Star Partners.
That includes major third-quarter deals such as Netmarble’s $2 billion acquisition of casino game developer SpinX, Tencent’s $1 billion purchase of the Sumo Group (most recently developers of PS5 launch game “Sackboy: A Big Adventure”), and Unity’s purchase of cloud-streaming platform Parsec for $320 million.
The most active acquirer has been the Swedish studio consortium Embracer Group, which has purchased 18 companies. They’re followed by Tencent (14) and Epic (5).
With pandemic lockdowns shifting people from other activities into games and investors seeking havens, gaming has blossomed during a time when many other industries have been wrecked.
And nine months into the year, the amount of money going into game acquisitions, investments, and public offerings is still growing at a record rate.
More than 844 deals were announced and closed in the first half with a total announced value of $71 billion, said Michael Metzger, a partner at Drake Star Partners.
“2021 is turning out to be a landmark year,” Metzger said. “We mainly focus on M&A and financings for private companies and Q3 has been an amazing quarter for both. We also expect that the M&A and private placement market for gaming companies to stay red-hot in the coming quarter.”
Special purpose acquisition companies (SPACs) were very popular earlier this year as a way to go public quickly through a reverse merger with a shell company.
They are losing some steam as well, as the regulatory environment for SPACs is changing and companies are also more cautious, Metzger said. As an example, JamCity had to cancel its announced SPAC deal and go another route for funding.
With three months to go, the dollar volume for deals announced or closed is already more than twice the dollar volume for full-year 2020.
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