Mobile games industry M&A heads into overdrive – Craig Chapple, Sensor Tower

As the mobile games market matures, M&A activity continues to ramp up globally.

Recent eyebrow-raising deals include Zynga’s $1.8 billion acquisition of Toy Blast and Toon Blast developer Peak Games, AppLovin’s big deal for Game of War and Mobile Strike developer Machine Zone, and Scopely’s acquisition of Marvel Strike Force developer FoxNext Games.

That’s not to forget other deals such as Ubisoft’s purchase of idle game specialist Kolibri Games, Stillfront’s move for Storm8, and Miniclip’s reported purchase of Ilyon, as well as numerous other market moves.

Some deals have a more obvious fit than others. Zynga’s deal for Peak Games makes the US publisher one of the leaders in the casual space, growing its daily average users on mobile by more than 60 percent, and adding approximately $50 million a month from user spending to its portfolio, according to Sensor Tower Store Intelligence estimates.

AppLovin, an ad network-cum-games publisher, is expanding its presence from a hyper-casual games leader with Lion Studios to the midcore market through Machine Zone, with an established team and former giant that will hope to return to its former glories.

While these deals represent a many potential benefits to their publishers, ultimately they offer ready-made revenue to add to their bottom-line, and expertise that’s hard to cultivate.

What’s interesting from these deals is a shift from big publishers setting up their own new studios for international expansion, and moving toward increased M&A activity (though not entirely, of course). As studios around the world have become more astute at the mobile business and areas such as live operations, these skills have become more valuable in a highly competitive market.

Back in 2016, Zynga set up a studio in Finland to work on FarmVille 3, one of its flagship IPs, likely to take advantage of the impressive talent pool in the country and its capital Helsinki. But since then it has embarked on an aggressive acquisition push for existing highly successful studios, including Gram Games, Small Giant Games, and now Peak Games.

The likes of Tencent and NetEase have also notably made big moves over the years, investing in Western studios and forming key partnerships – including Activision and Tencent TiMi Studios’ work on Call of Duty: Mobile, and Blizzard’s partnership with NetEase on Diablo Immortal.

One market trend we’ve previously noted is how, while mobile gaming revenue continues to rise, games outside of the top ten are picking up an increasingly bigger share. But with more companies at the top becoming interlinked, we could see less companies dominating.

What will be particularly interesting to see in future is how many of the console/PC publishers and former mobile giants – that have only recently made tentative M&A moves or lack a coherent strategy in the space – will be able to compete in future. New studios will always come and create a big new hit, but good M&A opportunities for the big players are becoming increasingly hard to come by.

Craig Chapple is mobile insights strategist, EMEA at mobile intelligence firm Sensor Tower and was previously senior editor at PocketGamer.biz.

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