It's near-impossible to go a week without a company either being acquired, sold or split apart in the games industry.
The conversation and decision-making that leads to an acquisition being made is one that doesn't take place simply overnight.
It's one that requires numerous pieces to be placed accordingly before the final go-ahead can be made. All that's normally shared will be the announcement, none of the inner workings.
So, to shed a little light on what goes on behind the scenes, PocketGamer.biz will be speaking to a variety of companies under our semi-regular Done Deal series, which will look into strategy, long-term goals and the ongoing hurdles of making an acquisition.
PocketGamer.biz: To start with, can you explain where the idea for the Ludia acquisition came from?
Josh Yguado: We consider Ludia to be one of the most creative mobile game publishers in the industry, having known and worked with their leadership for some time. Ludia’s world-class teams are the creative force behind many massively popular games like Jurassic World, Dragons: Rise of Berk and Teenage Mutant Ninja Turtles Legends, among others – all of which will become part of our portfolio once we complete the acquisition.
The main goal was to bring together two highly creative leaders in mobile gaming to further strengthen our market position...Josh Yguado
Over time, we’ve fueled our growth through a successful and scalable mergers and acquisition (M&A) strategy that involves acquiring assets and studios that have created deep entertainment experiences and leveraging Jam City Live – our technology platform – to improve game performance.
Given our familiarity with Ludia and the popularity of their games, we felt we could leverage our strengths to improve performance across their portfolio.
What were the main goals of this acquisition and how long did the acquisition take to go through?
The main goal was to bring together two highly creative leaders in mobile gaming to further strengthen our market position and global player network. Teaming up with Ludia adds compelling new intellectual property and gaming genres to our catalogue and advances our vision to create premium, social mobile games that are an enduring part of our players’ lives.
Our plan is to leverage our proven technology platform to enhance performance across Ludia’s portfolio and collaborate on exciting new projects, which will create new avenues for sustained growth. It’s important to note the acquisition of Ludia will be completed in conjunction with the SPAC (special purpose acquisition companies) transaction that will take Jam City public, which is expected to close later this year.
Were there any particular games that stood out in Ludia's library that helped convince Jam City to snap up Ludia?
Ludia has an extremely attractive portfolio of existing games as well as a robust pipeline of licensed IP games, which – in addition to their talent – is what makes them such a compelling business. Games like Jurassic World, Dragons: Rise of Berk, and Teenage Mutant Ninja Turtles Legends are just some of their top-performing franchises.
After acquiring Ludia, Jam City will have seven “Forever Franchises” (games with over $100 million in lifetime bookings), which are the foundation of our portfolio with more than 1.3 billion cumulative game installs. We couldn’t be more excited to partner with the Ludia team to capitalise on the huge addressable mobile gaming market, which includes more than 2.7 billion players and is expected to exceed $205 billion in revenue by 2023.
How do you think the Ludia acquisition will benefit Jam City going forward? Perhaps new hires, resources or significant growth?
In acquiring Ludia, we enhance our market position, game pipeline and global player network. We will also be better positioned to capitalise on the huge addressable mobile gaming market. Ludia has assembled a world-class creative team with expertise developing games that incorporate rich storytelling, narrative experiences and innovative augmented reality and geo-location-based technology.
Being able to go public more quickly than a traditional IPO will also enable us to complete our acquisition of Ludia quickly.Josh Yguado
Together, we believe we have the strongest pipeline of games in our company’s history and one of the best that we’ve ever seen across our industry. Among very promising in-house titles, we have exciting, new games in development with some of the world’s top third-party IP including HGTV, DC and Disney, which we believe have fantastic potential.
Once we fully integrate Ludia and capture anticipated synergies, we expect to be able to more than double the studio’s bookings in the following 18 months – very much in line with the last three of our acquired studios in recent years. Finally, it is worth noting that as we leverage analytics to realise network intelligence across our portfolio, there are economies of scale that will grow stronger over time.
Did you encounter any major hurdles during the process and if so, how were they addressed?
So far, the process has gone very smoothly. We are all aligned on the goals and what we want to accomplish, which makes the negotiation process seamless. The closing of the transaction is subject to customary closing conditions as well as the completion of Jam City’s merger with DPCM Capital.
How big of a part did the decision to go public play in the purchase of Ludia?
Going public is a logical next step in Jam City’s evolution, as it will provide us access to a permanent source of capital to supercharge our growth and advance our strategic priorities. A SPAC transaction was compelling because we were able to choose our partner, and it presented a more efficient way to go public from a cost and timing perspective.
Being able to go public more quickly than a traditional IPO will also enable us to complete our acquisition of Ludia quickly.
How do you expect the company's strategy to change under new ownership (if at all)?
Acquiring Ludia aligns with Jam City’s strategy to build and scale one of the world’s leading mobile entertainment platforms by bringing art – including storylines, characters and game mechanics – together with a powerful technology platform that leverages data to drive user acquisition and live game operations.
We also don’t anticipate that Ludia’s strategy will change. We recognise the value their talented team brings to the table and the incredible catalogue of critically acclaimed, top-grossing games that they’ve brought to market. By becoming part of Jam City, Ludia will be able to leverage our proprietary technology platform to enhance performance across its portfolio and we’ll also have the opportunity to collaborate on exciting new projects.
Do you think acquisitions in the mobile space will continue at the rate they did in 2020?
While it is impossible to predict exactly how the mobile gaming M&A market will continue to evolve, every media sector has undergone consolidation over time as those sectors have matured, including TV, film, music and console video games. We believe that mobile games will follow a similar course.
Although year to year there may be ups and downs in the pace of M&A, the industry is still much more fragmented than other media sectors and M&A will continue to drive that consolidation.
Should we expect further acquisitions for Jam City in the near future?
Overall, what’s important in any industry is that there’s a competitive balance.Josh Yguado
In addition to growing organically by introducing innovative new game franchises, Jam City has fueled growth over the years through a successful and scalable M&A strategy that involves acquiring assets and studios that have created deep entertainment experiences and leveraging our proprietary technology to improve game performance.
This will remain core to our future growth strategy and with access to a permanent source of capital, we will be even better positioned to execute on this objective.
Are mergers and acquisitions a good thing for the games industry as a whole?
Mergers and acquisitions are a natural part of any evolving industry and broader business ecosystem. There are a lot of smaller studios out there with amazing talent, ideas and IP that can benefit from the resources of a larger, well-capitalised company.
Part of our strategy is to identify these types of businesses and opportunities and determine if combining would be mutually beneficial. Overall, what’s important in any industry is that there’s a competitive balance.
What advice would you give to companies that are either looking to make an acquisition, or be acquired? What are the positives for both parties?
It comes down to the synergies between the companies that are merging. We look for companies whose teams, intellectual property, skillsets and strategies are complementary to our own so we can continue building out our robust team and platform.
The positives for both parties may vary from deal to deal, but generally, each side is gaining access to something they didn’t have before that supports growth and advances their core strategies.