Sophie Blake
Dealmaking activity in the video games industry reached $25 billion total deal value across 249 transactions in the first quarter of 2021, up 2x as compared to the first half of 2020FY, per InvestGame’s report.
While M&As accounted for 57% of the total deal value of Q1’21 with $14.3B, public offerings demonstrated a “stunning” deal value of $8.3 billion, up 29X YoY growth with 3x number of closed transactions.
Mergers and Acquisitions
Mergers and acquisitions represented $14.3 billion across 52 deals in Q1 2021. M&A continues to be primarily driven by the PC&console sector, with 26 closed transactions representing half of all deals closed in Q1’21. Mobile game companies accounted for the 23% of total number of M&A deals with 12 closed transactions.
Microsoft, Embracer, and Electronic Arts became the key acquirers of Q1 2021 with a total disclosed value amount of $13.4B.
Largest M&A Deals of Q1 2021
- In February 2021, Electronic Arts completed the $1.2 billion acquisition of the UK-based game publisher Codemaster.
- In February 2021, Electronic Arts announced that it acquires Glu Mobile for $2.1 billion
- In February 2021, Embracer Group merged with EasyBrain in a $765 million deal (closed in April 2021)
- In March 2021, the EU officially approved the $7.5B acquisition of Bethesda.
- In March 2021, ByteDance acquired Moonton at a $4B valuation
Public Offerings
In Q1 2021, 7 gaming companies went public with $2.7 billion deal value across 21 deals. According to the report, the huge spike in public offering deals was concentrated in IPOs, accounting for over 50% of total value, and in $890m direct share issue by Embracer Group.
Notable announced IPOs and de-SPACs
- On January 15th, Playtika went public and secured $1.88B via IPO at $27 a share.
- Roblox went public on March 10th and its market value topped $39 billion.
- Applovin raised $2 billion in U.S. IPO at $80 a share.
- Krafton applied for preliminary approval for initial public offering.
VC and Corporate Investments
The investment activity in Q1’21 has increased significantly with $2.2B (+235% YoY) capital raised across 87 deals. According to the report, PIPE activity is dominated by European companies: Embracer, MTG, Remedy, and Dontnod raising $1.1B in total.
Early-stage VC activity reached $226m of capital (+120% YoY) raised by game developers and publishers across 45 deals (+61% YoY) in Q1’21.
35 Seed rounds and 10 Series A rounds were closed in Q1’21, with over ~55% of money raised in Seed rounds. The average Seed and Series A rounds’ check sizes in the first quarter were $4.7m and $11.8m respectively, showing a +120% and +25% increase over the full 2020.
Notable Early-Stage VC Transactions
- Istanbul-based Dream Games raised $50 million Series A in March 2021.
- Theorycraft Games raised $37.5 million (VentureBeat)
The total value of late-stage VC and corporate deals hit $0.8B across 31 closed deals in Q1’21. Mobile game publishers and developers were the hottest area of investment, accounting for almost 68% of total number of transactions.
Notable Late-Stage Transactions
- Roblox raised $520 million at $29.5 billion valuation in January 2021.
- In March 2021, Rec Room raised $100 million at a $1.25 valuation
- In April 2021, Epic Games raised $1 billion at $28.7 billion valuation
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