Value of game acquisitions hits $12bn in 2014

Money spent on game industry mergers and acquisitions have totalled $12bn so far this year, according to research conducted by Digi-Capital.

The money spent up to Q3 was double the entirety of money spent on buyouts in 2013.

Deals included Facebook’s $2bn purchase of Oculus, Microsoft’s $2.5bn acquisition of Mojang, Amazon’s buyout of Twitch for $970m, Zhnongi’s $960m investment in FunPlus and the $1.6bn buyout of Giant Interactive.

The report noted that Microsoft’s purchase of Minecraft represent 8x the amount of revenue at the Swedish studio and 20x the amount of profit it made, while the Facebook/Oculus deal was worth 87x the revenue the VR firm is currently making.

The report noted however that despite the five billion dollar acquisitions, money spent on game companies was running at a similar rate to 2013, the previous record year.

US buyers accounted for half of the top ten game acquirers in Q3, equalling the number of Chinese firms. In 2013, US companies represented just one of the top ten game acquisitions, while six were from China and three from Japan.

The majority of mergers and acquisitions took place in the mobile sector, which also raised more money that any other sector in games. Technology and MMOs also dominated by value during this period.

Digi-Capital MD Tim Merel said the increase in mergers and acquisitions likely came about is returns on investment continued to rise in the game industry.

“Returns to games investors from exits are >11x the amount invested to Q3 2014, comparing acquisitions
to investments so far this year (excluding IPOs, which push returns even higher)," said Merel.

"While there is a time lag between investments and exits, comparing money flows by year helps track where the market is going.”

“Games investment returns hovered around 3x to 4x until 2007, plunging to 1x to 2x for 4 years after the
financial crisis in 2008. As mobile disruption accelerated in 2012 just 5 years after the iPhone launched,
games investment returns rebounded to 5x to 6x, before skyrocketing to >11x this year. Large deals
always impact market returns, but there is a consistent upward trend even without them.”