Drake Star’s gaming index rose to 15% as M&A does indeed seem to, “come back swinging”, but investment still remains somewhat slow.
That’s according to their Q2 2023 report, which reveals that M&A was rising slowly, with 44 deals compared to 43 in the previous quarter. However, this still remains much lower than 2022 where a whopping 83 deals took place. Singling out the major acquisition of Scopely by Saudi Arabian Savvy Games Group ($4.9bn), the report is optimistic that this upward trend will continue into the latter part of 2023.
There was a slight decline in the number of private financing deals in Q2, with “only” 196 compared to 200 in Q1, raising an estimated $700m. However, 80% of these private financing deals were for early-stage companies, a rise of ten percent from the previous quarter. This is the same as in Q2 2021 where 195 deals took place.
The report also notes the court ruling in favour of the Activision Blizzard acquisition by Microsoft. Although they had previously predicted the deal would close “in the coming months”, it seems that despite a difficult period of rulings and regulatory hassle, the year’s biggest deal by far may soon come to an end.
According to Drake Star, AI and tools continue to be a hot segment for investment - as they predicted in their last report - however, they also note that gaming and blockchain funds have been receiving less and less attention this year around. The number of M&A deals by region also seem fairly evenly weighted, with 11 in "Asia and others", 18 in Europe and 15 in North America.
The report of the week
While it seems that Drake Star’s earlier cautious declaration that M&A was on the way back into the limelight has been proven right, it’s going to be a much slower ride than before. However, it’s worth noting that as they point out, the Activision Blizzard deal is still a major focus of many analysts. We’ve seen a wave of M&A fever and stock rises in the wake of the court rulings in favour of the deal for many gaming companies, suggesting that it may be restoring a level of confidence in investors that encourages more cash flow into the industry once the deal closes.
While it may not be the adrenaline shot that some may have been hoping for, it’s clear that there’s a significant interest in early-stage companies and a cautiously growing optimism. It may be that after a very, very busy 2022 we’ll be waiting until near the end of the year for things to really heat up in the world of games and money.
