Games industry reaches $2.5 billion in M&A deals in Q3 2024

Drake Star’s latest Q3 2024 report highlights steady growth in mergers and acquisitions within the global gaming industry, marking the fourth consecutive quarter of sustained expansion.

According to the report, Q3 marked the fourth consecutive quarter of rising M&A activity, with 56 deals announced and a disclosed deal value totaling $2.5 billion—a 70% increase in deal volume compared to the same period last year.

Playtika’s acquisition of SuperPlay closed the quarter with the highest transaction at $700 million, potentially reaching $1.95 billion with earn-outs included. Other notable buyers in Q3 included Tencent (Aojue Digital), Warner Bros. Discovery (Player First Games), Krafton (Tango Gameworks), Capcom (Minimum Studios), Keywords Studios (Wushu Studios), Nazara Technologies (Fusebox and Deltias Gaming), and Infinite Reality (LandVault).

In private financing, $1.1 billion was raised across 181 deals, marking an increase in deal value, though deal volume remained consistent with Q2. Larger financings included Infinite Reality at $350 million, Hybe IM at $80 million, Gcore at $60 million, Volley at $55 million, and Saber Interactive. Early-stage and seed investments accounted for over 90% of total investments, with 32% going into blockchain gaming and 23% into gaming tools and platforms. However, financing remained challenging for growth-stage gaming studios.

Andreessen Horowitz and Bitkraft emerged as the most active major gaming venture capitalists over the past year, followed by Play Ventures. Early-stage investor Patron also closed a $100 million fund dedicated to gaming and consumer startups.

In public markets, Tencent-backed Shift Up experienced a robust IPO, with shares surging 50% on the first trading day and raising $320 million. Nazara Technologies secured over $100 million in equity funding, while Embracer Group refinanced its credit line with $652 million. Kakao Games raised $198 million in exchangeable bonds linked to its Krafton holdings.

Public markets showed a steady recovery, with the Drake Star Gaming Index increasing by 10.2% in the first nine months of the year. SEA, Konami, and Krafton led in performance, while Ubisoft, Corsair, and Unity trailed behind.

According to the report, mergers and acquisitions in the gaming sector are anticipated to gain momentum through late 2024 and into 2025, spurred by declining interest rates and an improving public market landscape.

Major players, including Tencent and Take-Two, are forecasted to pursue “significant, transformative deals” that could reshape the industry. Meanwhile, a steady pace of smaller and mid-sized acquisitions is also expected to continue, supporting broader industry growth.

On the funding front, the report suggests that smaller gaming studios with limited financing options may increasingly consider early exits, merging with larger firms as a strategic path forward.