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August 04, 2014

Wheelings & Dealings: Mergers & Acquisitions in Gaming Putting Up Big Numbers


While for most gamers, the topic of video gaming tends to focus on the end product, there's quite a bit going on behind the scenes that bears consideration as well. One major point in the field is underscored by a report from the Corum Group, which took a look at mergers and acquisitions (M&A) in the field of video gaming, and what the Corum Group discovered is likely to have gamers wondering just what's going on out there.

Basically, the numbers from the Corum Group suggest that M&A numbers are on the rise after a pretty substantial drop-off back in 2012. What's more, the values of said M&A is likewise on the rise, with a grouping number of transactions measured in multiple billions of dollars. The second half of 2013, for example, saw $3 billion in total transactions—excluding deals in the multiple billions—while the first half of 2014 saw a bit of a decline from that to $2.3 billion, which is still a figure that's larger than many portions of the year going back to the first half of 2009. Reports suggest that the first half of 2014 is the third largest such portion in terms of M&A, with the second half of 2013 and the first half of 2012 being larger once multi-billion deals are excluded.

The first half of 2014 had a particular edge in its favor, though, as the total number of deals reached the highest levels seen in two years, or not since the first half of 2012. The total average deal size is likewise on the rise, with an increase of 57 percent from just the first half of 2013, and a complete doubling from 2009's totals.

Alina Soltys, senior analyst with Corum Group, offered up some additional commentary on the matter, saying “Total volume, total value and average deal value have all hit new benchmarks. Megadeals like Activision and Pokerstars have helped set the stage, but even without the multibillion-dollar transactions, game deal value has had a record 12 months.”

So what's driving this growing intensity of dealmaking? Some might point to the increasing presence of and viability of small firms in the marketplace. The rise of mobile gaming and its control by smaller studios is allowing said firms to draw attention, which in turn draws larger firms' interest. Companies like Mojang, makers of “Minecraft”, and King.com and the like can compete on a fairly level field, making simpler gamers for rapid distribution and getting users interested from the beginning. This is also seen with things like ID@Xbox and the growing number of indie games being produced for the major console providers, Nintendo, Microsoft and Sony. Where before, the idea of getting a game on Xbox or PlayStation was a pipe dream unheard of for many studios, it's now a comparatively simple matter, and as the last E3 event showed, indie gaming is a steadily increasing proposition for all the major providers.

Will this continue on? It's not a surprise to suggest that it might; some reports are emerging of improvements in unemployment and consumer confidence, though these are a bit shaky as of yet. Still, a video game is often a comparatively minor purchase that can provide more than its share of entertainment in terms of hours, so it's not out of line to think that video gaming may see more M&A action as time goes along. The next big game could be waiting, and by extension, so too could the next big gaming deal.




Edited by Maurice Nagle


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