Gaming Industry Saw $12.5B in Acquisitions in the Past 12 Months
The video game industry has seen more than $12.5 billion in developer and publisher acquisitions over the past 12 months, and here are five big reasons why.
VentureBeat reports that over $12.5 billion in acquisitions have been happening to various game companies during the past year. Based on a report from Digi-Capital, mobile and smartphone gaming have taken the top spot with over $4.6 billion in acquisitions. Other monumental acquisitions include $4 billion in massively multiplayer online games deals, $2.5 billion in game technology deals and $1 billion in console deals. Digi-Capital manager director, Tim Merel, claims that these high-end acquisitions, to which he calls a “consolidation crush,” are inspired by five main forces in the industry.
The first of Merel’s explanations of these acquisitions comes from mobile growth. Companies are starting to realize just how much money there is to be made from entertainment apps on mobile devices. Digi-Capital points out that mobile games generated $4 billion in revenue in 2011 and $16 billion in 2013, with an expected $33 billion in revenue to be made in 2017. As a result, corporations and conglomerates are purchasing mobile game companies before their huge boom.
Mobile cannibalization means that cellphones and tablet devices have tremendously downsized media usage on other platforms. Digi-Capital mentions that print media has decreased one-third of its entire profits, radio has dropped 14 percent and television is down 10 percent. It is believed that mobile apps will make up over two-thirds of the entire gaming market, which is expected to hit $100 billion in total revenue in 2017. Another one of Merel’s reasons for these inquisitions, regional realignment, stems from different mobile developers and publishers being immensely popular in one area of the world and not the other.
Legacy pivots originates from buyers who grew up with older markets trying to set a foothold in the future. One example of this would be Facebook’s decision to buy Oculus VR for $2 billion. In Asia, many telecom, book publishing and online game companies are all starting to acquire their own stakes in the mobile gaming market.
Lastly, the market cycle’s highs and lows of the different publicly traded companies means that its easier for developers and publishers to be bought out when the time is right. For example, Candy Crush Saga developer King went public while others, such as Giant Interactive did the opposite.
What does this ultimately mean for the gaming industry? Well, we can almost surely expect an huge growth in the mobile market over the next few years, with a lot of companies outside of gaming trying to make money from them while things are on the rise. Hopefully all this speculation doesn’t lead to another crash any time soon though.