Video games are a thriving industry that regularly drives big-ticket mergers and acquisitions (M&A) each year.

Over the last five calendar years, the value of M&A deals in the gaming sector reached $192.7bn. The key themes driving these deals included online gaming, mobile gaming, online gambling, and social media.

Video games attract big-ticket M&A deals every year

GlobalData’s thematic analysis of M&A deals announced in 2022 reveals that when measured by deal value, cloud, gaming, and connectivity were the top three themes driving deals, followed by big data, social media, and cybersecurity, which drove the top 100 M&A deals by deal size.

In 2022, we saw some of the biggest deals in the video games industry, including Microsoft’s $68.7bn bid to acquire Activision Blizzard, Take-Two Interactive’s $12.7bn acquisition of Zynga, Sony’s $3.6bn purchase of Bungie, and Savvy Gaming’s $1bn acquisition of ESL. The trend persists in 2023 with Savvy Gaming buying Scopely for $4.9bn, followed by Sega’s acquisition of Rovio for $776m.

Why are video games companies so attractive?

The consistent growth in gaming M&A deals is attributable to multiple factors, including:

  • Talent and technology: With the increasing complexity of video games, companies need to have the best developers and designers to create high-quality games that can capture the attention of gamers. M&A is a strategy for companies to acquire talented game developers, game designers, and other personnel who can provide a competitive edge.
  • Intellectual property: Most successful video game franchises are built on unique technologies, such as game engines, motion capture systems, and artificial intelligence. By acquiring these technologies, companies can gain a competitive advantage and create better games that stand out in the market.
  • Market share: The video games industry is a hyper-competitive market, with companies constantly vying for market share. As a result, M&A activity can be a means for companies to gain a larger market share, expand their product portfolio, and diversify their revenue streams. Larger companies can expand their offerings and access new markets and audiences by acquiring smaller game studios or publishers.
  • New themes: A trend driving M&A activity in the video game industry is the rise of new gaming platforms and technologies, such as cloud gaming, augmented and virtual reality, mobile gaming, and metaverse. Companies from both tech and non-tech sectors are seeking to make positions in emerging disruptive themes, and the easiest way to excel in a theme is to acquire one that is already established within it.

Will the trend continue in the coming years?

Video games will see robust M&A activity in the next five years. Key M&A drivers will be the growing need for game publishers to expand their user bases, improve user engagement, create content by incorporating emerging technologies, and diversify monetisation strategies.

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The traditional demands to add games and users will also fuel M&A activity in the video games market. In addition, non-gaming companies from sectors like advertising, retail, and tourism will also expand into the video games market through acquisitions.

The growing emphasis of tech giants (e.g., Microsoft, Amazon, Tencent) and disruptors (e.g., ByteDance, miHoYo, Niantic) on mobile gaming, cloud gaming, esports, augmented reality, virtual reality, and the metaverse will intensify M&A activity across the video games industry.