Following the colossal amount of mergers and acquisitions in 2021, the start of 2022 has already ushered in the two largest games industry acquisitions of all time – Take-Two and Zynga and Microsoft and Activision Blizzard. This is only set to continue.
In our Done Deal series, we speak with companies to explore the decision-making behind acquisitions, the impact on both parties, and the effects on the industry as a whole.
PocketGamer.biz: To start with, can you explain where the idea for the acquisition came from?
Justin Montgomery: The idea of starting up a studio was a bit overwhelming as the different questions about what we know and do not know started to pile up. Lab Cave had been a long-time supporter of our Airnow Data tool and we knew the team well from their body of work and reputation within the industry.
Lab Cave seemed like an idealfit to the Airnow team to ensure that their AdTech would be well situated in the gaming market. Airnow wants to use their data in ways that really help game publishers. What better way to fully understand what a publisher needs than by having one onboard?
What were the main goals of this acquisition and how long did the acquisition take to go through?
Luis Bertó: For Lab Cave, it is to bring fresh content into Airnow’s rapidly expanding ecosystem, which exists to enable global publishers to understand their competition, acquire users, increase revenue and maximize security in a single place. In turn, Lab Cave will make full use of Airnow’s extensive technology, data, stronger toolsets, funding, and structure to strengthen its own capabilities.
Talks on the acquisition of Lab Cave began around May 2021 and a final agreement was reached in December 2021. The process has taken about six months.
How has this acquisition benefitted your company going forward? Perhaps new hires, resources or significant growth?
Jami Wardman: The acquisition has given new life to Lab Cave. We are in the process of hiring new talented people looking to be part of what we are creating. Lab Cave will grow its publishing division to ensure we can offer support to the developers who work with us. Many come to us with the same concerns about their go-to market strategy. As Lab Cave strengthens their offering to developers, we will be able to put our stronger games, as well as provide the post-launch support required. Additionally, this acquisition will strengthen our services division, allowing them the time to continue development of internal tools.
Did you encounter any major hurdles during the process and if so, how were they addressed?
Bertó: Keep in mind that Lab Cave and Airnow have been collaborating for years, so there is nothing better than two companies with the same vision and understanding of where the mobile gaming industry should go. So from even our first conversations on acquisition we have always been very clear that joining both businesses would make us much stronger.
The truth is that this whole process has been quite simple and, beyond the typical negotiations within an M&A operation of a technology company, the understanding has been excellent from the beginning.
How has the company's strategy changed under new ownership?
Wardman: The strategy has not changed so much as has been sped up or levelled up. Lab Cave has access to funding which will ensure that we will be able to focus on the future and where we want to go, instead of the constant day to day budgets. This funding will allow us to ensure the right strategy for each title. Additionally, we are aligned with Airnow’s strategy to bring new mobile games to the market, using all our tools available. We still plan to offer services to companies who need them, but more emphasis will be put on our publishing division.
Was there anything that has happened since the acquisition that you would change?
Bertó: Acquisitions are a huge undertaking, but so far everything is going even better than we expected. For a few months now, we have been immersed in the new era of Lab Cave as an Airnow PLC company. The truth is that we are enjoying the immediate synergy we have with all the other companies in the group. Moreover, thanks to this good harmony, we are convinced that we can carry out our strategic plans much sooner than expected.
Are mergers and acquisitions a good thing for the games industry as a whole?
Montgomery: Difficult question.
Overall, yes. There is some concern about homogenizing the industry by having a select group decide what will make it to the market and how it will monetize. However, before the pandemic the market was fragmented. There were a lot of companies working on similar projects which has led to small variations in games, some with a larger impact than others.
Consolidation allows smaller companies to have less worry about cash flow and more concerns about getting content into the market. Content and the users who consume it are the most important aspects for companies in the mobile space.
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?
Bertó: It is vital that the management of the companies that wish to merge "speak the same language" and share the same vision and strategies for the future. In my case, this is what made me go for Airnow when we first met. It was very satisfying to see that we shared the same enthusiasm and passion in the gaming industry.
In an industry like mobile gaming, where you have to constantly adapt, evolve and even anticipate, first of all you have to take the time to identify who might be your right partner for an acquisition. Not only is the entry of fresh capital important, but it is also necessary to know the capacity for growth and scalability that a company can achieve if it joins forces with another.