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“Q5 bump” could boost M&A activity in 2023

A bump in app installs and in-app purchases over the holiday season could bolster the industry
“Q5 bump” could boost M&A activity in 2023
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A rise in app installs and in-app purchases in the December-January holiday season, unofficially known as Q5, could signify a coming boom in M&A activity, reports Digiday.

The period often sees a significant boost in mobile gaming revenue, as consumers worldwide take advantage of the rise in free time to spend more time gaming. The mobile gaming industry has seen a significant bump for three years running, and in Q5 2022 installs increased 5% compared to the average for H2 2022. January saw a further boost of 22%.

January also saw a significant increase in in-app purchases, which stood at 12% above the H2 average.

“There could certainly be some behaviours and patterns that emerge during this time period that favour gaming more,” said Random Logic Games CEO Hank Patton. “Certainly more than a productivity kind of app would expect, when people aren’t working and are home trying to take a break.”

“The kind of increase in net revenue that we see comes as a result of rapidly acquiring users at a much lower cost than was available for the last six weeks before the Q5 period,”

Good news for M&A

Patton states that the boom can help game makers find new acquirers, helping them to scale.

“The high-level rationales are going to continue to be what EA and Take-Two did, in terms of expanding their mobile footprint, because the market favours diversification across platforms,” said FunPlus Chief Business Officer Chris Petrovic. “Much like the movie business, you have to have scale in order to weather the downturns, and also to be able to invest in future growth — and we’re seeing that bearing itself now.”

The potential for an increase in M&A activities could be welcome news to small studios eyeing up potential acquisitions, and this could be further bolstered by these companies’ strong performance during Q5. Should these companies continue to show a strong performance going forward, they may be prime acquisition targets throughout the year.

We maintain a list of the biggest mobile gaming acquisitions of all time.

(Image: Onur Binay via Unsplash)