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M&A is coming back swinging in 2023, Drake Star report concludes

New report offers key insights into changes in the VC climate for Q1
M&A is coming back swinging in 2023, Drake Star report concludes
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Drake Star’s latest Global Gaming Report saw their index up by 12%, with slower but consistent M&A deals and a much sunnier outlook for Q2 and the second-half of 2023.

The report notes that although deals for Q1 were less - down to 43 compared to 76 in Q4 2022 - many top buyers were still active, such as Savvy/ESL (Vindex), NetEase (Skybox Labs) and Embracer (Captured Dimension and All Caps). The most active venture capital firm was actually BITKRAFT for Q1, followed by Andreessen Horowitz, Play Ventures and Griffin Gaming.

Drake Star’s outlook for Q2 meanwhile offers a highly positive note.

Both the Savvy acquisition of Scopely ($4.9bn) and Sega’s purchase of Rovio ($776m) offer a highly positive outlook as we move further into 2023. They anticipate that the ongoing Activision-Blizzard acquisition will finally close in the “coming months” while further suggesting M&A activity will rebound properly in the second half of 2023.

They also note that private financings remained relatively steady with more than 200 deals, slightly down from 212 last quarter with these deals raising an estimated $1.3B. Over 70% of the deals were early-stage financings.

And for the latter parts of 2023, Drake Star point to AI, VR and AR as being the hot investment segments.

Drake spreading its wings

Drake Star’s report confirms what many have already been saying, that Q1 2023 has been relatively slow. However, as they note for Q2, a major turnaround seems to be in effect. We may still be seeing the hangover from the Christmas period - a time of unease in the early months of 2023, with companies across tech making job cuts which have spread into mobile gaming.

However, with Savvy splashing massive cash and major gaming presence Sega stepping into mobile with their acquisition of Rovio - the importance of which cannot be understated - there's a shot of adrenaline into a lethargic market and Drake Star are predicting the second-half of 2023 will see a return to high M&A activity.