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[Lunatic_Gamer]

Mergers and acquisitions in the games industry are picking up after "an extended quiet period," according to a new third-quarter report from Drake Star Partners.

Why it matters: Consolidation will make gaming's giants even bigger.

• But it also brings the risk of further job cuts in an industry racked by layoffs this year.

Details: Drake Star tracked 33 M&A deals worth around $5 billion between July and September.

• By the sheer number of deals, that was a two-year low. But the deal value exceeded three of the last five quarters, when all the deals tallied in each period totaled less than $1 billion.
• M&A deals for 2023's third quarter included mobile gaming firm Playtika's purchase of Youda Games and Innplay Labs for around $450 million as well as the successful $1.7 billion offer led by Goldman Sachs to take educational gaming platform Kahoot private.
• Drake Star also counted nearly $1 billion in private investment for the quarter, up from the spring. Investments were primarily in PC, console or blockchain companies.

What they're saying: "Based on our discussions with many of the top gaming companies in the last weeks, we expect the deal volume to increase steadily over the next year," Drake Star partner Michael Metzger tells Axios.

• Metzger anticipates Tencent, Sony, Take-Two and Savvy/Scopely will be the most active buyers in 2024, while the Embracer Group is expected to divest more studios.
• Public companies, including Nintendo, EA and Nexon, are sitting on $45 billion in cash and cash equivalents, setting up the potential for more M&A, according to venture capital firm Konvoy Ventures.

Yes, but: It's been a year of panic for industry pros, who have despaired over job cuts and lessening investment.

• That bleak climate has come despite expectations by analysts that the gaming industry is returning to growthfollowing a post-lockdown correction.

What's next: Metzger sees some hope for developers and firms seeking investments, thanks to an increase in venture capital funds focused on gaming.

• "While it is true that it is harder for founders to raise an early stage round and even harder to raise a growth/late stage round compared to 2021, it is also true that we have never had more gaming-focused VC funds than now," he says.
• He pointed to Bitkraft, A16Z's gaming fund, Play Ventures, Griffin Gaming, Vgames and Makers Fund as examples, and said "several of them are in the process of raising follow-up funds."
• "Valuations have come down, but that also makes it more attractive for VCs to invest now in the future unicorns."

https://www.axios.com/2023/10/26/game-industry-deals-2024

 

[TheThreadsThatBindUs]

Fewer and fewer decision-makers determining the greenlighting of gaming projects is a fucking disaster. I don't know why any gamer would cheerlead for this consolidation.

Most of the games and genres you know and love will disappear, in favor of bland, homogenized GaaS, MTX-riddled shit.

There'll be no more games within genres competing with each other. There'll be one huge AAA in each popular genre that everybody plays because there's nothing else, and then there'll be indie games.

 

[F0rneus]

I fucking hope not but we all know sony is going to go for a Japanese publisher(s)...And I hate that.

 

[Mowcno]

Hate this acquisition spree. Can't believe some think a few gigantic entities owning everything wil be good for the industry.

 

[Fabieter]

Hate this acquisition spree. Can't believe some think a few gigantic entities owning everything wil be good for the industry.

I think its okay in some way when devs struggle somewhat but buying huge profitable publishers couldn't be worse for the industry.

 

[StealthGoblin]

T

I fucking hope not but we all know sony is going to go for a Japanese publisher(s)...And I hate that.

The likelihood is that Sony will keep the games multiplat but will block gamepass.

Given the bullshit Microsoft have pulled then I think that's inevitable.

 

[GrayChild]

Eventually, it'd be mostly AA studios and indie devs remaining fully independent. This industry gets worse by the day.

 

[SABRE220]

The shitstorm has sadly begun its a chain reaction now with everyone scrambling to buy the remaining studios before competitors mainly microsoft makes another giga sweep. Imagine Microsoft targets Ubisoft or hell rockstar next thats pretty much the majority of the multiplatform aaa titles taken off the market.

Sony will probably try to make tactical mid sized purchases but lets be honest they cant keep up with the trillion dollar firm in an aquisition war...that leaves tencent or new entrants like amazon/apple.

 

[Hudo]

So many billions been thrown around for bullshit but no new Command & Conquer project in sight...

This industry is garbage.

 

[StueyDuck]

it was always gonna be the beginning of the end when the ABK deal sailed through the system.

the writing has always been on the wall, people still act like they can't see it happening, I say just try enjoy the last 4 or 5 years or whatever we get of good ol gaming till the Disneyfication begins

 

[IDKFA]

What have I been telling you all for months?

In a decade or so every gaming publisher and independent developer will be owned by a handful of companies. Cold wars will be fought and billions will be spent on a single indy dev. Governments will bought up by these giants will use national economies to drive content development.

Dark times are coming.

 

[HeWhoWalks]

I fucking hope not but we all know sony is going to go for a Japanese publisher(s)...And I hate that.

Well, Sony has yet to do anything like that (the one pub they bought is keeping their games multiplatform), but if it comes down to it, but that door has been opened wide now.

 

[Topher]

Really hope all those studios Embracer bought get bought by some quality third party publisher and not a platform owner. Would hate for any of those games to be part of the exclusivity nonsense.

 

[Porticus]

Everyone should remember that by rumor this BS was started by Microsoft because Sony had the audacity to have Starfield has a temporary exclusive LOL look how that turned out.

 

[Topher]

Everyone should remember that by rumor this BS was started by Microsoft because Sony had the audacity to have Starfield has a temporary exclusive LOL look how that turned out.

Bethesda was the one shopping their games around for a exclusivity paycheck. Pete Hines revealed this during the FTC hearing.

 

[Fabieter]

Everyone should remember that by rumor this BS was started by Microsoft because Sony had the audacity to have Starfield has a temporary exclusive LOL look how that turned out.

Hope you missed the /s because yikes if not.

 

[onQ123]

SMH fire the people that's been working for you for years just to own companies with big names .

 

[SABRE220]

Everyone should remember that by rumor this BS was started by Microsoft because Sony had the audacity to have Starfield has a temporary exclusive LOL look how that turned out.

Please tell me you're joking.

 

[mansoor1980]

this is all microsofts fault

 

[ChuckeRearmed]

Will be interesting to see the moves.

It is hilarious that people think that Sony will go after somebody big though.

 

[SteadyEvo]

Fewer and fewer decision-makers determining the greenlighting of gaming projects is a fucking disaster. I don't know why any gamer would cheerlead for this consolidation.

Most of the games and genres you know and love will disappear, in favor of bland, homogenized GaaS, MTX-riddled shit.

There'll be no more games within genres competing with each other. There'll be one huge AAA in each popular genre that everybody plays because there's nothing else, and then there'll be indie games.

This could be true of Sony and MS. Good thing Nintendo is around. Feels their games are made with fun factor and creativity in mind.

 

[Zannegan]

Anyone but Tencent at this point. Egregious mobile monetization tactics is a cancer that's spreading everywhere, but they're the worst.

 

[Fredrik]

I fucking hope not but we all know sony is going to go for a Japanese publisher(s)...And I hate that.

They can buy whatever they want but if they treat me as a PC gamer as a secondary customer I’ll treat their games platforms and services the same way.

 

[F0rneus]

They can buy whatever they want but if they treat me as a PC gamer as a secondary customer I’ll treat their games platforms and services the same way.

That's my problem. It's pretty much a fact now that sony will make one or two big acquisitions. And I don't see them keeping the games multiplat at all, PC releases yes but a year later as they do.

Everybody will lose.

 

[Unknown?]

Fewer and fewer decision-makers determining the greenlighting of gaming projects is a fucking disaster. I don't know why any gamer would cheerlead for this consolidation.

Most of the games and genres you know and love will disappear, in favor of bland, homogenized GaaS, MTX-riddled shit.

There'll be no more games within genres competing with each other. There'll be one huge AAA in each popular genre that everybody plays because there's nothing else, and then there'll be indie games.

Is it? Microsoft fans seem to think it's good.

 

[jroc74]

Metzger anticipates Tencent, Sony, Take-Two and Savvy/Scopely will be the most active buyers in 2024, while the Embracer Group is expected to divest more studios.

And here we go....

 

[jroc74]

Bethesda was the one shopping their games around for a exclusivity paycheck. Pete Hines revealed this during the FTC hearing.

Blaming Sony for MS acquisitions will forever be funny. When actual info is revealed, some ppl just cover their eyes.

 

[kvltus lvlzvs]

I can't wait until a market crash that takes out half of the market.

 

[ahtlas7]

Monolithic giants consuming all. Consolidation limits competition and rarely has a positive impact for consumers. I don’t like where we are headed.

 

[BennyBlanco]

That's my problem. It's pretty much a fact now that sony will make one or two big acquisitions. And I don't see them keeping the games multiplat at all, PC releases yes but a year later as they do.

Everybody will lose.

I don’t see Sony buying anyone big. Way less risky to pick and choose moneyhats and fund startups.

 

[Unknown?]

b

Monolithic giants consuming all. Consolidation limits competition and rarely has a positive impact for consumers. I don’t like where we are headed.

But Xbox fans love it! They don't care about the overall health of the industry.

 

[Mibu no ookami]

I don’t see Sony buying anyone big. Way less risky to pick and choose moneyhats and fund startups.

When the entire industry is changing, the real risk is doing nothing.

Nintendo can survive without M&A, but Sony can't.

When you want to sell 130-150 million console units largely off of 3rd party software sales, you need... 3rd parties...

 

[Fredrik]

That's my problem. It's pretty much a fact now that sony will make one or two big acquisitions. And I don't see them keeping the games multiplat at all, PC releases yes but a year later as they do.

Everybody will lose.

No idea what their plan is going forward but right now everything with Sony comes with some drawbacks from a multi system owner perspective. Do you wait for a PC release and risk having the story spoiled? or do you go in day 1 on console and risk ruining your excitement of a late and possibly superior PC version?

 

[Raven77]

Yeah that's going to be a no from me.

I've spent the bulk of my career in m&a and in the finance world. Money is as tight as it's been for well over a decade. Interest rates are soaring, making the cost to borrow, and in general raising capital, extremely difficult.

Combine that with the fact that Microsoft just pulled off a hail Mary acquisition, you're actually going to see much smaller acquisitions getting approved, but not large ones. Sony will pick up a few, I imagine, in the next 18 months likely one to two big ones. But that's only because they haven't been on the buying spree that Microsoft has.

This is an amateur article cherry-picking data to try to prove some kind of point. They clearly have no understanding of broader financial conditions and the effects that they have on all industries.

 

[TheThreadsThatBindUs]

This could be true of Sony and MS. Good thing Nintendo is around. Feels their games are made with fun factor and creativity in mind.

Nintendo alone can't carry the industry.

 

[TheThreadsThatBindUs]

Is it? Microsoft fans seem to think it's good.

Because they can't see past their own platform bias.

Microsoft of all companies being one of the companies owning half the gaming industry makes it even worse.

 

[Cert.in.Death]

Wednesday is gonna be Yuuuuuge

 

[Mibu no ookami]

If you're Sony you have to realize the growing threat of major financial powers in the market as well as how the market is shifting.

Both Microsoft and Sony missed the boat on mobile gaming and Sony entirely missed the boat on GaaS (Microsoft bought Mojang and was able to get Minecraft fairly early). Sony could have bought Mojang as well.

They were asleep at the wheel and that is a large part of why Andrew House isn't here. In reality the PS3 was a disaster for Sony on so many levels and so was the Vita. So you look at mistakes from Kaz Hirai and Andrew House and you can see why Sony never grew all that much.

Compare the two of them to Strauss Zelnick who took over T2 in 2011. When he took over T2's stock was worth as little as 12 dollars a share. Today it is worth 134 dollars a share.

How did T2 grow their company 10fold in the same time period in which Sony only doubled their worth? Some of it predates Strauss. The purchase of Visual Concepts was a massive boon for them. They expanded rapidly, particularly through M&A.

There are a lot of people who think that Sony will limit themselves to very small studios like Bluepoint and I'm sure they'll still buy small studios like this. It's a low-risk high-reward proposition. That being said, Sony is going to have to ensure its own future in the gaming space and it'll take a significantly larger M&A to do it and not everything has to be straight cash.

Sony has to be looking at the following companies and consider how they fit in their overall strategy and whether you'd make them exclusive or maintain multiplatform publishing. How the company's existing technology can benefit SIE or how SIE's technology or scale could benefit them and take them to a new level.

There are a lot of companies that make sense and a lot that don't, but I think ti's also the question as to whether Eric Lempel should be the guy next. You really need to bring in a visionary, not JUST the next guy up.

 

[midnightAI]

Just because MS went out and spent a fuck ton of money doesn't mean others will.

 

[Mibu no ookami]

https://www.mckinsey.com/featured-insights/leadership/how-new-ceos-can-boost-their-odds-of-success

I think SIE does need to reorganize their hierarchy, but not certain that is going to cause wholesale improvements in their numbers. I think they just need to have more structure around their PC aspirations and it can't be an afterthought. PC should report directly to the CEO and not to product and strategy.

That means M&A is the real key to changing the direction of the company.

Cost reduction is important and we see that happening all the time, but it can only take you so far without reducing quality or deliverables.

You look at Jim Ryan and he was doing all of these things more or less. He looked to reduce cost by shuttering underperforming studios, launch new businesses, high-quality M&A and geographic expansion.

I think there are a lot of reasons to look at Eric Lempel and decide that he is not the right person for the job.

I think the idea that Totoki would step in to look for a CEO is a stark lack of confidence in Lempel but also a potential to look at large companies for M&A with the thought that their current CEO could step in as CEO for SIE post-merger. To say he could stay on as interim CEO for up to a year means he doesn't think Lempel is the obvious choice and at best he would be trialed at the job. After April we'll see who we see more of Totoki or Lempel.

I think that makes sense for Epic and it makes sense for T2. Both companies have more success than Sony when it comes to mobile (T2/Zynga) or Gaas (Epic/Fortnite).

 

[StealthGoblin]

That's my problem. It's pretty much a fact now that sony will make one or two big acquisitions. And I don't see them keeping the games multiplat at all, PC releases yes but a year later as they do.

Everybody will lose.

Microsoft are to blame for that one. Sony kept their multiplat developers working on multiplat games. Microsoft have made things exclusive and cut out userbases.

People can't have it both ways.

That said, I think Sony are smarter and will keep almost everything multiplat, but will only block gamepass.

 

[Mibu no ookami]

Just because MS went out and spent a fuck ton of money doesn't mean others will.

This didn't start with Microsoft. Japanese companies jumped into M&A to catch up to Western companies long ago.

Square Enix Taito
Bandai Namco
Koei Tecmo
Sega Sammy Atlus

Microsoft has certainly hit the accelerate button on this, but it was already happening.

Some think because of inflation and high interest rates it'll slow, but I doubt that will be the case... if anything those are reasons why it'll continue.

 

[ShadyAcshuns]

I'd be fine with that if it meant faster output of games, but sadly it doesn't.

 

[Mibu no ookami]

Microsoft are to blame for that one. Sony kept their multiplat developers working on multiplat games. Microsoft have made things exclusive and cut out userbases.

People can't have it both ways.

That said, I think Sony are smarter and will keep almost everything multiplat, but will only block gamepass.

Sony is very strategic with their multiplatform games. The only reason MLB is on Xbox is because they were forced to do so. Same with Switch.

The only reason why Destiny is still on Xbox is because Bungie deemed it to be. Same with Marathon.

If Sony were to buy Capcom, you'd never see Resident Evil or Street Fighter on Xbox again.

I think Sony will support PC where they feel it makes sense, but don't expect much if any support for Switch or Xbox in future M&A dealings.

 

[midnightAI]

This didn't start with Microsoft. Japanese companies jumped into M&A to catch up to Western companies long ago.

Square Enix Taito
Bandai Namco
Koei Tecmo
Sega Sammy Atlus

Microsoft has certainly hit the accelerate button on this, but it was already happening.

Some think because of inflation and high interest rates it'll slow, but I doubt that will be the case... if anything those are reasons why it'll continue.

Not saying it did, but this article or analysis or whatever you want to call it is a knee jerk reaction to Microsoft's recent spending

 

[Mibu no ookami]

Options for Sony



T2
Epic Games
CDPR
Capcom
Sega Sammy
Square Enix
Namco Bandai
FromSoftware/Kadokawa
SuperMassive Games/Nordisk Film

High					T2, Epic Games
Medium High			Capcom	Namco Bandai
Medium		Square Enix	Sega Sammy	CDPR
Medium Low			FromSoftware
Low	SuperMassiveGames
Cost/Benefit	Small	Medium Low	Medium	Medium High	High

 

[winjer]

The games industry is becoming as bad as cinema. Really sad state of affairs.
Hopefully the AA and indie studios will still make good games.

 

[Mibu no ookami]

To give some comparisons to what they've already done

High
Medium High
Medium				Bungie
Medium Low
Low	Haven, Firewalk, Firesprite, Housemarque, Savage Game Studio, Valkyrie Entertainment	Bluepoint	Audeze, Nixxes		Insomniac
Cost/Benefit	Low	Medium Low	Medium	Medium High	High

 

[Mibu no ookami]

Not saying it did, but this article or analysis or whatever you want to call it is a knee jerk reaction to Microsoft's recent spending

Microsoft has certainly hit the accelerate button on this, but it was already happening.

 

[Unknown?]

To give some comparisons to what they've already done

High
Medium High
Medium				Bungie
Medium Low
Low	Haven, Firewalk, Firesprite, Housemarque, Savage Game Studio, Valkyrie Entertainment	Bluepoint	Audeze, Nixxes		Insomniac
Cost/Benefit	Low	Medium Low	Medium	Medium High	High

No way Nixxes is above Bluepoint.