Sunday, 7 October 2012

Global Games Investment Review Q3 2012 Transaction Update - Games M&A beats all records

Digital investment bank Digi-Capital has just published the Q3 Transaction Update of its Global Games Investment Review 2012.

Commenting on the Update, Digi-Capital Managing Director Tim Merel said “Games M&A for 2012 is at a run rate 40% higher than 2011 (the previous record year), having delivered 105% of the transaction value of all of 2011 by the end of Q3 2012. As we anticipated, 6 of the 10 largest games M&A transactions to Q3 2012 were made by Chinese, Japanese and South Korean acquirers. The broader games investment and M&A trends from H1 2012 have continued through Q3 2012, with new emerging trends which could be borne out during Q4. Our prediction that the Zynga IPO might have been the high water mark for Social Games 1.0 investment has been validated, with the VC market moving sharply away from that sector. For public companies, the Update also details how companies in some sectors and geographies are trading at 12 month highs, while others are not enjoying the same level of appreciation by investors. The combination of accelerating M&A, changing investment and valuations has seen an acceleration in our Strategic Review and transactional work for games companies, including strategic pivots across sectors/geographies, sell and buy side M&A, and fundraising/investment to accelerate growth.

Monday, 2 July 2012

Digi-Capital Global Games Investment Review 2012 – Q2 Transaction Update

ConsolidationVille gets bigger, faster

This article first published in GamesBeat, GamesIndustry International and PocketGamer in July 2012.

Digital investment bank Digi-Capital has just published the Q2 Transaction Update of its Global Games Investment Review 2012.

As anticipated when the Review was published earlier in the year, 2012 is proving to be a bumper year for games M&A globally. Although we are only 6 months into 2012, games M&A has already reached 88% of the transaction value of all of 2011 (the previous record year). The first half of the year has also borne out our prediction that the Zynga IPO might be the high water mark for Social Games 1.0 investment. More than ever, now looks like the time for strong independent and larger, more established games companies to consider their strategic options.

Thursday, 31 May 2012

Does console have a future?

(This article first published on, GamesBeat and Gamasutra)

While recent headlines such as “Game sales crash!” and “Games retail collapses!” don’t paint a rosy picture, we believe the report of the death of console games is an exaggeration. Yet an uncertain future faces those console games companies that choose not to evolve rapidly.

The great games market split: the Big V revisited

In early 2010 there was strong reaction to our views that some console games publishers were "going down a very risky the long term...they run the risk of becoming like traditional media companues. Cash generative, but declining and cost driven." So we were not surprised by the even stronger reaction last year when we said that "the games market had fundamentally split into “Value” and “Volume” markets, both by sector and geography. The two speed market this is creating may have more rapid and profound effects on the games market than it did on the media market, with meteoric rises for some and slow going for others.” We called it the “Big V”:

Wednesday, 18 April 2012

Q1 Transaction Update of Global Games Investment Review 2012: ConsolidationVille accelerates

(This article first published on AllThingsD, People's Daily (China), GamesBeat, GamesIndustry International and Gamasutra in late April 2012)

Digital investment bank Digi-Capital has just published the Q1 Transaction Update of our Global Games Investment Review 2012 (available at

As anticipated in our Global Games Investment Review published earlier in the year, 2012 is proving to be a year for strong consolidation and investment across the games market. Although we only have one Quarter of data for 2012, trends are emerging compared to 2011.

The consolidation we anticipated in Social Games 1.0 has begun, and we are seeing substantial dealflow (both completed and in progress) of social games companies looking to sell themselves through the course of 2012. If the number of investors and management teams asking for our help is an indication, there could be major consolidation this year.

When you look at our Review, there are compelling reasons why this is happening. We think of total Daily Active Users (“DAU”) as a general proxy for revenue, and average DAU per game as a general proxy for profitability for social games companies. While this is open to interpretation, our comparison of the top 50 Facebook games companies below (see this chart with individual companies named in the full Review) indicates that some social games companies continue to do well in terms of revenue, profitability or both (e.g. Zynga, Wooga, King, EA, Peak Games). However our analysis also indicates that many social games companies might be struggling on one or both measures, which could be the catalyst driving consolidation in the sector.

Tuesday, 28 February 2012

ConsolidationVille: Social Games 1.0 M&A in 2012

(This article first appeared on TechCrunch,, Gamasutra and VentureBeat on 28th February and 1st March 2012)

Digi-Capital has just published its Global Games Investment Review 2012, and the free Executive Summary is available here. The complete 102 page review and individual sector reviews (mobile/tablet, social/casual, MMO, console, middleware and advertising) are available here.

Online/mobile games are forecast to grow the total video games software market in the 2015 financial year to $82 billion and take 50 per cent revenue share at $41 billion (14% CAGR 11F-15F). The acceleration in games investment and M&A also looks set to continue, driven both by underlying growth and fragmentation. However we see the big story as Social Games 1.0 M&A in 2012 - exit or consolidate (or you might miss the boat).

Games investment and M&A more than doubled in 2011

Games private placements grew value by 96 per cent to $2 billion, volume by 67 per cent to 152 transactions, and average fundraising round size by 17 per cent to $13 million. Together with Zynga ($1bn+) and Nexon ($1.2bn) IPOs, games investment value nearly quadrupled in 2011. Games M&A grew value by 160 per cent to $3.4bn, volume by 88 per cent to 113 transactions, and average transaction size by 38 per cent to $30.4 million.