The opening quarter of 2023 turned out to be a testing period for the gaming industry, particularly in terms of investments and mergers and acquisitions (M&A). According to a comprehensive analysis conducted by DDM Agency, the combined sum of financial activities in this sector tallied to $1.2 billion. Delving into the specifics, M&A transactions contributed $415 million, encompassing 40 deals with an average deal value of approximately $10.375 million.
On the investments front, a total of $755.2 million was spread across 144 transactions, yielding an average deal value of about $5.244 million. These numbers reflect a noticeable decline and position Q1 2023 as the quarter with the lowest value since the third quarter of 2018, which recorded a comparatively modest $635.8 million. This trend underscores a marked cooldown of the market following the unparalleled upswing experienced during the “Covid-boom.”
Breaking down the numbers further, Q1 2023 recorded significant declines in both investments and M&A activities in comparison to the preceding quarter. Investments saw a substantial drop of 40.7%, sinking from a sum of $1.3 billion dispersed across 171 deals, each having an average value of around $7.602 million.
On the M&A front, the decline was even steeper, registering a staggering 91.9% drop from the $5.1 billion in Q4 2022, spanning 61 deals with an average value of approximately $83.606 million. This positions Q1 2023 as the second lowest Q1 for M&A in more than fourteen years, leaving room to consider that the actual figures might indeed be higher than reported.
However, it is crucial to underscore the fact that 93% of the M&A transactions carried out during the quarter were concluded at undisclosed fees.
Remarkably, mobile platforms constituted 15% of the total gaming investments in terms of value during Q1 2023, accumulating a substantial sum of approximately $116.28 billion. While this percentage might seem relatively modest, mobile platforms continued to capture the attention and interest of some of the foremost investors in the industry. This was especially evident in the investments of companies such as Magic Eden, BITKRAFT Ventures, and Play Ventures. Their combined investments of $17.5 million, $82.6 million, and $30.1 million respectively underscore their unwavering enthusiasm and confidence in the mobile gaming segment.
In essence, despite the challenges faced by the broader gaming market, the enduring appeal and promise of mobile gaming remain resilient, serving as a testament to its lasting relevance in the industry landscape.