Although the tide could turn in the coming weeks with the expected approval of Microsoft’s $68.7 billion acquisition of Activision Blizzard, investment and M&A in the gaming sector declined again in the second quarter.
In a quarterly industry report provided to Deadline, DDM Games said the sector faced “macroeconomic headwinds of high inflation and recession fears, a prolonged crypto winter, bank failures, and slower global economic growth.” As a result, investment and M&A of $676 million fell 34% in value and 14% in volume from the first quarter. (View a snapshot of the company’s findings below.)
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In the first half of 2023 compared with the same period of 2022, total investments plunged 83% to $1.7 billion, with the number of transactions dropping by more than half. M&A moves dropped 98% to $700 million.
Along with the Microsoft-Activision deal, the July close of Savvy Games Group’s $4.9 billion Scopely acquisition will deliver a boost to third-quarter results, DDM noted.
The glum state of the IPO marketplace isn’t helping the game sector. The only IPO in the quarter, according to DDM, was that of VRFabric, a Polish VR games developer and porting service provider whose debut market capitalization was a modest $11.4 million. The sole offering compared with four IPOs in the first quarter, with IPO value falling 98% and volume 75% from quarter to quarter.
DDM’s methodology is to only include deals in which when the investment or acquisition closes, not when they are announced. With special-purpose acquisition companies [SPACs], the firm considers the investment value to be what was raised in the transaction, not the company valuation afterward.
Here is a summary of the company’s quarterly findings:
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