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.