Booming M&A Gaming Market
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Corum is a sell-side advisory firm established in 1985, specializing in technology transactions with over 300 M&A deals worth more than $7 billion. The document provides insights into the gaming M&A market, highlighting significant transactions, trends, and the rise of Asian acquirers, alongside regional growth in markets like Brazil and Russia. It underscores the impact of messaging apps and social gaming companies on the industry, alongside security concerns related to mobile transactions.
Booming M&A Gaming Market
- 1. San Francisco 2014 Alina Soltys Senior Analyst
- 2. 2 Corum – Sell Side Advisory Firm Establishedin 1985. Focusedon transactions in technologyproductsand services businesses. Professional staff drawn from senior positions at technologycompanies. 300+ M&A transactions. Over$7 billionin transactionvalue. 25+ year relationshipswith global software companies. Most extensive databasein the industry (approx. $25millioninvested). Integratedglobal operations; transactions in 21 countries. Educational Leader,creatorof the world’s most attended techM&A conference,sponsor of the World FinancialSymposiums,frequentguest on CNBC, MSNBC and other industry events.
- 3. 3 Overview Technology M&A Update Gaming M&A Update Gaming Market Driving Trends @CorumGroup
- 4. 4 Overview Technology M&A Update Gaming M&A Update Gaming Market Driving Trends @CorumGroup
- 5. 5 Technology Index: Quarterly Subsectors: Vertical, IT Services, Internet, Infrastructure, Horizontal, and Consumer
- 6. 6 41 39 33 20 18 17 17 16 15 14 14 14 14 14 Top Strategic Acquirers: 2013 - YTD
- 7. 7 41 39 33 20 18 17 17 16 15 14 14 14 14 14 Top Strategic Acquirers: 2013 - YTD
- 8. 8 Top Strategic Acquirers: 2013 - YTD* *
- 9. 9 Representative M&A Transactions Acquirer: Facebook Target: Oculus Rift Deal Value: $2 Billion Date: April 2014 Sold to Following the Acquisition Target: Carbon Design Group Acquirer: Oculus VR Transaction Value: Undisclosed Sold to Target: Jenkins Software (RakNet) Acquirer: Oculus VR Transaction Value: Undisclosed Sold to
- 10. 10 Overview Technology M&A Update Gaming M&A Update Gaming Market Driving Trends @CorumGroup
- 11. 11 0 10 20 30 40 50 60 70 80 90 100 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 Reported Gaming Transactions Transaction Value ($B) Billion Dollar + Total Deals Transactions in the Gaming Ecosystem Sources includecompany filingsand releases,industry databasesand CorumGroup. • Both majority andminority dealsincluded. • Transactionsrelatingto thegamingecosystemwereincluded,notlimited to gamingstudios. • Only announced or availabledeal valuesincluded.
- 12. 12 Source:Corum 0 10 20 30 40 50 60 70 80 90 100 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 ReportedGamingTransactions Transaction Value ($B) Billion Dollar + Total Deals Transactions in the Gaming Ecosystem Deal Volume Highest in 2 years Record 2013 & H1 2014 Excluded Billion $ Transactions: • H2 2013: $3.05B • H1 2014: $2.27B $0 $20 $40 $60 $80 $100 $120 inMillions AverageDealSizeTrending Average Deal Size: 5 Year Growth : 98.9%$42m to $84m YoY: 57% $53.5m to $84m
- 13. 13 Asian DominanceIncreased, Focused Regionally Source: Corum $1.53B for 51% $330M for 40% $1.4B for 6% Global Transactions Top 7 of 10 Deals Top 9 of 10 Deals (2013)(2012) ChangYou will invest $600M in mobile game developers South Korean GameVil sets $150M+ for M&A / investment. Acquires Com2uS & Nine Wheels plusother partners. $200m – Acquisition$200m – Marketing$200m -- Rev Share
- 14. 14 Top Asian Gaming Acquirers 10 10 4 4 3 3 2 2 1 1 1 50%+ Growth 50%+ Growth 235% Growth
- 15. 15 Overview Technology M&A Update Gaming M&A Update Gaming Market Driving Trends @CorumGroup
- 16. 16 BRICS Growing Up BRIC outpacing Downloads and Revenues by 2.7x compared to US & Asian Markets Brazil and Russia are growing rapidly!
- 17. 17 BRICS Growing Up - Brazil and Russia Source: PwC Russia $460M in 2011 $1.5B in 2014E Latin America $1.4B in 2013 $1.8B in 2016E
- 18. 18 BRICS Growing Up - Brazil and Russia Source: PwC OnlineGaming 2nd largestin Europe Hits Top 5 for iOS and Google Play in 2013 Mobile penetration & long commutes drive further growth Brazil gaming market 5th largest in the world Consoles prohibitively expensive, push users to FTP on Mobile & PC Russia $460M in 2011 $1.5B in 2014E Latin America $1.4B in 2013 $1.8B in 2016E
- 19. 19 Overview Technology M&A Update Gaming M&A Update Gaming Market Driving Trends @CorumGroup
- 20. 20 Messaging Is Disruptive WeChat Upgrade adds games, emoticons & mobile payment system Line filed to go public in Tokyo Feeling the Pinch, March Year end -10% 3 mo. after releasing Kakao Games, monthly revenue soared 9x to $35M 396 Million + Players Monetizing similarto
- 21. 21 Messaging Apps Driving Adoption Rank 2013 Game 1 모두익마줌 for Kakao 2 Million Arthur 3 마구마구2013 forKakao 4 Wind Runner for Kakao 5 DevilMaker for Kakao 6 Puzzle& Dragon 7 카드뫼 샨 샵략지 8 Everytown for Kakao 9 Clash of Clans 10 Hello Hero for Kakao Korea Top iOS Games Rank 2013 Game Publisher 1 Puzzle& Dragons GungHo Online 2 LINEBubble! LINE 3 Pokopang LINE 4 LINEPOP LINE 5 LINEWINDrunner LINE 6 LINEHIDDEN CATCH LINE 7 LINEJELLY LINE 8 PrincessPuntSweets GungHo Online 9 LINEPLAY LINE 10 TempleRun 2 Imangi Japan iOS & Google Play Downloads + + = 950M+ Users
- 22. 22 Candy Crush Saga uniting with WeChat Key Markets Exposed to Candy Crush through WeChat Top 20 in US Top 80 in China
- 23. 23 M&A Making Huge Impact in OTT Acquirer: Facebook Target: WhatsApp Deal Value: $19 Billion Latest User Counts: 465M Sold to Acquirer: Alibaba Target: Tango Deal Value: $215M Received funding Acquirer: Rakuten Target: Viber Deal Value: $900M Latest User Counts: 100M Sold to Dedicated Gaming Fund $25M
- 24. 24 Social and Real Money Casino Companies 21% 11% 9% 7%6% 5% Restof Market** 41% SocialCasino GameMarket Share - 2Q14 SOCIAL ONLY MOBILE ONLY $2.7BSocial Casino Gaming Market 46% 20% on Mobile & Growing of Top 100Publishers have at least one social casino game Source: App Annie, Eilers Research
- 25. 25 Billion Dollar Consolidation Spree Acquirer: Amaya Gaming Target: Rational Group Ltd. Deal Value: $4.9B Deal Multiple:3.5x* Revenue Date: June 2014 Sold to Acquirer: AristocratTechnologies Target: VideoGaming Technologies Deal Value: $1.3B Deal Multiple:5.5x Revenue Date: July2014 Sold to Acquirer: GTECH Target: IGT Deal Value: $6.4B (cash plus debt) Deal Multiple:3.0x Revenue Date: July2014 Sold to
- 26. 26 Games as a Service Source: Wandoujia. April –November 2013 Top $100M+ Games 90% FTP Continuously deliveringnew value to Gamers • Players pay as they go & what they use - “FTP”Service Concept • Startingwith trailer thru game play, online presence, community, etc.All Encompassing • Stronganalytical solutions and strategies • Keep the users coming back Monetization is Key
- 27. 27 Consoles adopting FTP Model $30M+ in Microtransactions “Console-tainment” Source: SuperData $2B $2.5BRevenue Growth(YoY) $295M $352M in 2012 in 2013 Worldwide Console Spend Microtransactions
- 28. 28 Security Concerns Heightening Especially relevant to outfits with payment systems 97% of all mobile malware* *Predominatelyin Middle East & Asia Global Transactions RoMaster Mobile Is Here: Record amounts of internet traffic
- 29. 29 Attractive Traits of Companies Industry Traits of Attractive Companies Highest performers grow 100%+ annually while generating 20-50% EBITDA margins Spread across multiple platforms – developed in unison with the intent from beginning Continuous, low-cost development pushes to game – maintain player interest Analytics – key to improve and build upon performance; often in-house systems KeyThemesDrivingGamingM&A F2P Developer Services Regional M&A Past Growth Stage Geographic Strength
- 30. Thank You www.corumgroup.com Alina Soltys For copy of the presentation: [email protected]