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The games industry, whether from packaged console games, or online activity and in particular in terms of M&A, is not having the best of years according to a report from analyst Tim Merel at Digi-Capital.
“The first nine months of the year were brutal for games deal makers, with total deal value (i.e. dollars) across investments, mergers and acquisitions (M&As), and IPOs down 82 per cent on last year. Of that decline, games investments fell the least at 35 per cent below last year, games M&As deals dropped 74 per cent and the games IPO market evaporated,” states Merel.
Not helping matters was the fact that two Chinese games companies were taken into private ownership and thus de-listed from the Nasdaq exchange earlier this year. “Exclude them, and the market is actually down 90 per cent. The total market for games exits (selling companies or going IPO) was down 93 per cent without the take-privates,” says Digi-Capital.
“The take-privates and de-listings of Chinese MMO games company Perfect World and Chinese mobile games company CMGE dominated games M&A this year. If those transactions are not considered, the total remaining $1.2 billion of games M&A is in the ballpark of a single deal out of last year’s handful of billion dollar deals like Mojang, Oculus, Twitch or FunPlus.”
“Where does the market go from here?” asks Merel. “A few big deals could turn things around in the next three months, but the market could also go sideways for a while. The last time the market dropped like this, it took four years to recover. Winter is here, so it continues to be a great buyers’ market.”