Savvy Games Group's CEO on M&A, China and rising Eastern influence

Savvy Games Group has fast become one of the most influential operators in the games business, backed by billions from Saudi Arabia.

It owns Monopoly Go developer Scopely, which includes an entire network of global teams. Scopely itself has snapped up the team behind Pokémon Go and more recently a majority stake in Pixel Flow Loom Games, valuing the Türkiye studio in excess of $1 billion.

It’s also a rich backer helping prop up the esports scene right now with ownership of the ESL FaceIt Group (EFG) and a 30% stake in Hero Esports.

Speaking to PocketGamer.biz, Savvy CEO Brian Ward says the group avoids describing itself as a holding company. While it speaks to the Scopely team each week - almost every day, in fact - about their operations and mutual goals, it wants its teams to be relatively autonomous and independent.

“So we’re hands on in that respect,” he says, adding: “We have a three-tier operating model that we employ internally where the most mature assets like Scopely get a very light touch."

Meanwhile, it has more input for EFG - particularly during last year’s restructure - and new teams like Steer see Savvy a lot more hands-on.

Federated operating model

Ward says under the terms of the Scopely acquisition, the publisher can conduct its own transactions with its own cash and approval processes “under certain limits” - though he doesn’t reveal what those limits are. The recent Loom Games deal was done “entirely on their own”.

“They look at 800 or 900 deals a year, so we couldn’t get involved in and be useful to that process even if we want to,” he states.

After over four years in business, Ward says he’s more convinced than ever of utilising a federated parent operating model, where they keep businesses independent and autonomous, without giving them the burden of adapting to new circumstances, people and governance measures.

As well as companies it has direct ownership of, Saudi Arabia’s Public Investment Fund has also transferred shares in Take-Two (worth $3bn ahead of the slated GTA 6 launch this year), as well as shares worth approximately $12bn in Nintendo, Bandai Namco Holdings, Square Enix Holdings and others over to Savvy. Ward says this was the plan from the outset, so the move doesn’t change its strategy.

He says, though, that it gives Savvy some comfort and ability to plan for future M&A.

“Theoretically you could use some of those assets as liquidity for funding M&A deals,” Ward explains. It also presents potential collaboration and commercial opportunities, though he says on the latter it probably doesn’t move the needle all that much.

China calling?

Discussing future acquisitions, we ask about the reported $6 billion deal for China-based Mobile Legends developer Moonton, which has since been all but confirmed by reports from Reuters and Bloomberg.

Ward didn’t comment, though said Savvy’s strategy is to look for, find, and combine with its existing assets genre or category leading titles - especially where it doesn’t already operate.

“So in that sense, if you look at Moonton’s business, yes it would be great.”

Ward says the lucrative opportunity available in China is an opportunity for Savvy, with a lot of teams in the country “looking for good homes”. “Scopely is a talent magnet at the moment for a lot of talent like that,” he adds. The publisher last year acquired Perfect World’s Chengfeng Studio in a $34.5 million deal.

On opportunities in the UGC space and growth platforms like Roblox, Ward says Savvy looks at all opportunities, but refers to this currently as an adjacent space, rather than its core area of focus. While no recommendations have been made to the board in areas like UGC, Savvy continues to keep an eye on the market and other growth sectors in games.

Console, Esports and UGC opportunities

Ward has made no secret of Savvy’s interest in the console and PC space.Ward says Savvy is still interested, though states there’s never been a completely obvious target or pathway for that. Separately, Saudi Arabia's PIF has acquired publisher EA in a $55bn deal, along with a minority consortium that includes Affinity Partners and Silver Lake.

“I've begun to think about it differently in the last few months from the perspective of the strength and core competencies that we already have in free-to-play live services, which is sort of the mobile side, of course.

“But rather than thinking about mobile East, mobile West, PC and console [East and West], and begin to think of it as a continuum of building off live services capabilities from mobile into PC and console. So it's more of an evolution rather than this check box exercise.”

We ask if that means Savvy isn’t looking at big single-player experiences, but rather multiple ones, Ward says “yes, exactly”.

“I think that's more of a natural evolution for us building up strength, as opposed to a fully separate add-on that's not in our wheelhouse.”

What about esports? Saudi Arabia, and by extension Savvy, has been a key backer for competitive gaming. Ward says it’s still interested in investments in the space, but doesn’t think there’s much more actionable deals it could do.

“I think we’ve pretty much done what we needed to do.”

Ward remains bullish on esports, however. “We’ve made a lot of progress towards becoming what we expect to be EBITDA positive this year and cash flow positive next year, which is pretty significant.”

He adds: “I’m also encouraged by the macroeconomic investment and interest in esports as evidenced by the significant increase, 30% to 50%, in all the metrics on the World Cup from last year compared to the prior year."

Eastern influence

Savvy’s growing operations, combined with PIF’s own investments outside the group, as well as Chinese developers seeing more global success, is seeing industry power move from West to the East. Particularly as major companies like Scopely and EA get snapped up, while Tencent owns a key stake in Ubisoft.

We ask Ward what he thinks this means for games as a cultural export, with Western consumers perhaps more used to a more regional perspective. He says it could mean new genres, new business models and other culturally relevant opportunities for gaming.

“That’s one of the things that we think about a lot in Saudi. Part of our interest in China is not only are there great developers there that have category expertise that exceeds in some cases talent anywhere else, but they're also very good at telling their own history and lore through our medium.

"A lot of us understand more about Chinese ancient war, battles, generals and so forth than we ever thought we would - through games. And the Koreans, too, have done this.

“There are thousands of years of human history in the Middle East that’s not been told through our medium. There are stories about Aladdin and Ali Baba and the Forty Thieves, but nobody has taken advantage of that opportunity to tell more culturally relevant stories for a big market in MENA, that also might be of interest to people outside of MENA.”