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In 2024, the gaming sector witnessed a significant upswing in mergers and acquisitions (M&A) and financing activities, with deal values rising by 39% to reach $27.3 billion across more than 967 transactions, as detailed in a recent report from Drake Star Partners.
This surge comes at a pivotal moment for the industry, particularly as revenue growth stagnated and the sector saw over 15,000 job losses. A survey by the Game Developers Conference (GDC) revealed that in 2024, approximately one in every eleven developers faced layoffs.
Despite these challenges, public markets showed signs of revitalization. According to Michael Metzger, a partner at Drake Star Partners, the Drake Star Gaming Index, which tracks major public gaming companies, reported a 10.4% increase for the year.
The growth in M&A activity, private financings, and stock market valuations suggests a healthier financial landscape during 2024 compared to previous years. “Overall, it was a solid year, with over $27 billion in deal activity—a 39% increase from 2023, which is certainly promising,” Metzger stated. He highlighted that the financing aspect consists of both private and public elements, enabling companies to raise debt or equity, thereby injecting capital into the ecosystem and facilitating inorganic growth.
M&A Deals
M&A transactions in the gaming industry saw a 21% rise in deal volume in 2024, with 198 deals announced and a total disclosed value of $10.5 billion. Several notable transactions were led by private equity firms, including EQT’s acquisition of Keywords for $2.8 billion and CVC’s $1.1 billion purchase of Jagex.
Metzger underscored that while the number of M&A deals increased, the average deal value remained relatively stable. Although private financing values surged, much of this increase was influenced by Disney’s remarkable $1.5 billion investment in Epic Games; without it, private financing levels would have appeared flat.
Other significant transactions included Playtika’s acquisition of SuperPlay for up to $1.95 billion (including earnouts) and Embracer Group’s $1.2 billion sale of EasyBrain to Tencent’s Miniclip. The report indicated that the PC and console segments were the most active within M&A, consisting of 53 deals, followed by mobile, which recorded 38 deals, and platform and tools with 32 deals.
Private Placements
While M&A captures larger company dynamics, private placements provide insight into the health of smaller startups. In 2024, a total of $4.8 billion was raised across 711 private placement deals, representing a 30% increase in total disclosed value despite an 8% decline in deal count compared to 2023.
Major financing rounds included Epic’s $1.5 billion funding round led by Disney, alongside notable raises for Infinity Reality ($350 million), Build A Rocket Boy ($110 million), and Aonic ($105 million). Early-stage deals constituted over 90% of total raises, with blockchain being the most active sector, accounting for 250 deals, followed by platform and tools (133) and mobile (111).
The fourth quarter of 2024 showed a slowdown in private financing activity, yet private equity firms remained actively involved, particularly as new investors entered the gaming market from regions like the Middle East. Investors raised over $1.8 billion in new funds, including significant follow-on funds from A16z and Bitkraft, as well as fresh funds from Big Time and Beam Ventures.
Prominent public offerings included Shift Up’s successful IPO in South Korea and GameStop’s substantial $3 billion fundraising. The Drake Star Gaming Index, which measures the performance of the top 30 global gaming companies, increased by 10.4% due to strong performances from companies such as Sea/Garena, DeNA, and Konami, while firms like Corsair, WeMade, and Unity faced challenges.
Q4 2024 Results
In Q4 2024, the gaming sector recorded 151 private placements, amassing $650 million, a decrease from both the prior quarter and the same period in 2023. The blockchain sector led with 47 deals, raising approximately $200 million.
M&A activity also contracted in Q4, with 40 deals completed compared to 57 in the previous quarter and 44 in Q4 2023.
Outlook
Drake Star Partners maintains an optimistic outlook for the gaming and technology sectors in 2025, forecasting strategic consolidations, heightened interest from private equity firms, and shifts in the regulatory environment to bolster deal activity.
As the valuations of publicly listed gaming companies show signs of recovery, a significant increase in M&A activity is anticipated. Key players to watch include Savvy/Scopely, Tencent, and Krafton, as well as newly independent companies like Embracer’s Asmodee.
Private equity firms are predicted to remain dynamic, with the potential for several public gaming companies to transition to private ownership. Ubisoft, in particular, has attracted attention as it contemplates a possible delisting in 2025 after engaging strategic advisers.
The influx of over $1.8 billion in new capital raised by investment funds in 2024 bodes well for seed and early-stage financings, as well as selected mid-to-late-stage rounds. Nevertheless, challenges persist, with projections indicating that approximately 9,800 job losses may still occur in the gaming sector in 2025. While this marks a decrease from 15,000 in the previous year, it still represents a considerable impact on the workforce.
“For content-driven companies, much depends on the specific sectors they focus on,” Metzger noted. “Ubisoft’s significant valuation drop of 46% is largely because its titles underperformed, and the postponement of future releases hasn’t helped either.” As such, the company continues to initiate layoffs.
Amidst these changes, trends indicate a mixed landscape; while Meta is laying off over 3,000 employees, the company has also announced plans to invest significantly in AI technology. Metzger posits that advancements in AI will rapidly accelerate, possibly allowing companies to operate more efficiently and with fewer personnel in the longer term.
Significant growth sectors are likely to be AI, tech platforms, and blockchain, fueled by a resurgence in the crypto market and a favorable stance from the new U.S. administration toward digital assets.
With major titles like the anticipated Nintendo Switch 2 and Grand Theft Auto 6 set for release in 2025, the gaming industry is poised for an upswing in player engagement and revenue generation, further enhancing fundraising and M&A opportunities.
However, there remains a risk of potential tariffs affecting game consoles and PCs, as hinted by former President Donald Trump, which, if implemented over an extended period, could severely disrupt the industry’s economy.
As public markets are expected to recover in 2025, Drake Star anticipates a wave of gaming companies ready to go public, including a surge of IPOs from Indian gaming firms.
Source
venturebeat.com