Rising competition drives games-related acquisitions in 2021
Ampere Analysis tracked 610 games-related deals in 2021, with an estimated value of $57bn. Motivated by heavy competition, app store privacy changes, the need to tap higher-growth games segments and to bring talent in-house, 235 of all funding and M&A deals were acquisitions, reaching a value of over $32bn and accounting for 57% of the total investment value.
Mergers and acquisitions increased by 36% year-over-year from Q4 2020 (53) to Q4 2021 (72), with the volume of marketing/advertising acquisitions tripling during this time. Acquisitions in the sector are forecast to rise in the coming year, in response to app store operators placing a greater priority on privacy and limiting targeted ads on mobile.
Acquisitions in the games technology sector reach $2bn in value
Acquired companies working across multiple games platforms accounted for the largest share of acquisitions by volume at 108. However, acquired companies working mainly in mobile accounted for the largest share of acquisitions by value, reaching over $17bn in 2021.
Acquired companies working in games development or publishing accounted for the largest share of acquisitions by volume (144) and value ($19bn). Following this, 16 companies in the technology (software, development tools, and game engines) sector were acquired for a total of $2bn. As businesses in the games industry grow and mature, they may choose to cover a broader range of technology operations in-house. In doing so, the businesses can more greatly support game development efforts, gain greater control of the development process, and potentially save on outsourcing costs.
Games studio acquisitions largely driven by other games publishers/developers
Acquirers were most likely to be companies working across multiple games platforms, accounting for the largest share of deals by both volume (147) and value ($16bn). Acquirers were also most likely to operate in games development or publishing, acquiring 148 companies for $20bn. 90% (136) of the companies acquired by those in games development or publishing were also operating in games development.
Large organisations in the games industry acquire smaller games developers or IP to secure exclusive content, create a more diverse portfolio, and take a larger share of the market. For example, Ampere tracked 24 acquisitions by Embracer Group in 2021. One of these was the acquisition of Perfect World Publishing from Perfect World for $125m; as a developer of multiple MMO titles, the acquisition saw Embracer bolster its talent and content in the genre.
Acquirers and target companies typically work on the same platform
Acquirers that focused on one platform were most likely to acquire companies that focused on the same platform as themselves. For example, of the 48 acquisitions made by companies with a mobile focus, 67% (32) of the target companies also focused on mobile. Acquisitions occurring within the same platform were primarily focused on growing existing market share with new IP and genres; of the 32 acquisitions of a mobile company by a mobile company, 21 of the target businesses worked in games development.
Note: Mergers, acquisitions, and funding activity were collected on the day it was announced; but public listings were recorded when the company launched on the stock exchange.
Piers Harding-Rolls, Nima Pourtaheri
Games sector outlook: Weaker 2022, but 2023 offers promise
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