M&A value increased a massive 206 percent between 2020 and 2022, according to a new report by InvestGame.
“The past three years have marked a cycle of robust investments and growing deal activity, which has far exceeded previous periods, and transformed the industry landscape,” reads the report.
“As the economy cools down and the gaming deal activity follows the trend, we have passed the peak wave and are now gradually entering a new phase of the investment cycle.”
2020 saw 218 deals worth a combined $12.7 billion, with a 199% year-on-year increase to $37.7 billion over 318 deals in 2021. A further increase in 2022 saw $41 billion over 222 deals.
While M&A activity remained strong over the period, managing a smaller (but still significant) increase in 2022, this success isn’t mirrored across other types of deal. Private investments almost doubled in 2021 compared to 2020, rising 103% from $5.9 billion over 361 deals to $12 billion over 562 deals. However, this fell 16% in 2022, reaching $10.1 billion over 538 deals.
Public offerings, meanwhile, rose 58% from $15.7 billion (82 deals) in 2020 to $24.5 billion (68 deals) in 2021, before falling 82% to $4.6 billion (22 deals) in 2022, highlighting a sharp downturn in the sector.
An optimistic future?
The report notes that there has been a “truly unparalleled inflow of investment in the industry recently, surpassing any previous historical levels in both number (over 1460) and the value ($28 billion) of deals.” However, the data suggests fewer deals, and lower amounts in late-stage rounds. However, early-stage activity will continue to grow. Notably, recent IDFA changes have led to more investment in PC, console, and cross-platform developers, while mobile game makers have struggled to attract investment in the wake of IDFA changes.
2022 saw the peak of M&A’s, with $41 billion closed deals and a further $70 billion in announced deals. However, 2023 is predicted to see a marked slowdown, while remaining above pre-pandemic levels. It’s worth noting that one of the proposed deals in 2022, namely Microsoft’s acquisition of Activision Blizzard, would exceed the total value of M&A’s in 2022 by 67%, showcasing the continued growth potential of the market.
“Despite the short-term turbulence, the deal activity will remain strong: there is potential for a few significant deals to occur in 2023, as the industry continues to consolidate, supported by strong investors’ interest and enough cash to pursue transformative deals.”