Data & Research

As Facebook market slows, mobile social gaming companies now attract key investment

Digi-Capital forecasts 2012 as bumper year for M&A

As Facebook market slows, mobile social gaming companies now attract key investment
Investment bank Digi-Capital has published the Q1 2012 update for its Global Games Investment Review of 2012.

Its figures suggest that while the social gaming market is entering a period of consolidation, the mobile market will continue to attract investment throughout 2012.

The report states that 2011 was a record year for games investment, with 152 transactions generating $2 billion transaction value. The average transaction was $13 million.

In terms of mergers and acquisitions, 2011 saw 113 transactions, totalling $3.4 billion. The average deal was $30 million. 

Picking up pace

The figures for Q1 2012 show 38 transactions, which generated $248 million, at an average of $7 million.

That reduction in average transaction value stems from a decline in the social and casual sector, as the venture capital market "appears to have slowed down its frenetic pace of social games investment from 2011."

Facebook droop

Even social studios which attract high numbers of daily active users are struggling in terms of revenue and/or profitability, according to Digi-Capital's analysis of the top 50 Facebook games companies.

This, the report claims, is prompting consolidation in the social games market, and 2012 "could be shaping up as a bumper year for games mergers and acquisitions" as companies look to sell themselves.

Coupled with Zynga's recent $180 million acquisition of OMGPOP, this could lead to a change in 'operation investment dynamics' in social games, as companies attempt to churn out big hits in the hopes of being acquired at a similarly high cost.

Driving force

Meanwhile, mobile games, and mobile-social game companies in particular, are continuing to attract investment even as the wider social market moves into a period of consolidation.

In fact, in Q1 2012, mobile and MMOs have dominated in terms of investment, and mobile "could continue to be a driving force for games investment through 2012."

[source: Digi-Capital]

Staff Writer's news editor 2012-2013