The mergers and acquisitions of games fell 3% to $ 11.5 billion in 2024, but the collection of funds doubled, according to a Quantum Tech Partners report, an M&A advisory firm.
And when it comes to 2025, the winds are changing in a generally favorable direction, said Alina Lastys, a quantum tech partners partner, in an interview with Gamesbeat.
Gaming M&A was flat and was carried out mainly for some large offers, such as the purchase of EQT keywords for $ 2.8 billion and the Playtika superplay acquisition for up to $ 1.95 billion. Totals for 2024 and 2023 translate into a couple of flat years after the explosion during pandemic in an era of interest rates of zero percent that stimulated the agreements.
The mergers and acquisitions and the collection of funds are positive indicators for the growth of an industry, since they mean that capital flows to the industry and veterans that are charged. But it is not always “good news.”
It is a case in which the financial winds of the industry did not blow in the same direction as employment trends. The activity of the agreement in the collection of funds, for example, but the layoffs for 2024 exceeded 15,000. In total, it is estimated that 34,000 jobs were lost in the last 2.5 years, and only this month is hiring to start matching the dismissal rate, said Amir Satvat, champion of work resources of the game, this week. In summary, while 2024 was a terrible year for job losses and studies closures, it was a better year than the previous one for investments.
“We expect subtle growth in 2025 and there are a couple of factors there. I think the factors are that the balances in all areas are much healthier. There is a lot of effective both when focusing on the right projects, reducing the size of the equipment and the divestment of things that probably did not make sense in the first place, “said Soltys.
Companies that have cash have scale and income, and they are likely to seek to acquire. Quantum Tech Partners is one of the multiple companies that report financial results by 2024 in games, and the data is not always aligned since different companies count in different ways. Others who have published the 2024 reports are Drake Star Partners, Konvoy Ventures and Hiro Capital.
“We have had a significant truck in the conversations of buyers looking for high quality assets that have income and have profits. Therefore, it has returned to the basic concepts in terms of quality, companies attract quality care and how to discover how to build a quality company. “
A better perspective for finance
The strategic reasons for making agreements are improving, and that is a trend that could contribute to the impulse of the industry, said Soltys. Growth has become the motivator, although some are made for reasons such as payments to key people.
“By 2025, we see the activity in mergers and acquisitions and fundraising,” said Lastys. “The great drivers include the Switch 2 and the launch of Grand Theft Auto VI hopefully at some point in this year. That will bring more wide attention. ”
In 2024, there were 996 fund collection agreements. The average increase per agreement was $ 27 million, about double last year. In 2024, the total average quarterly financing was $ 4.3 billion, better than $ 2 billion in 2023 and $ 4 billion in 2022. In the last five years, more than $ 93 billion have been raised in the last five years in recent five years. The largest investment in 2024 was Disney investing $ 1.5 billion in epic games.
“As for investments, investments in general, but it does not seem. If he talks to someone in the industry, everyone is struggling with the collection of funds. VCs are much slower to move. The editors are much slower to implement. They are implementing smaller verification sizes, but the data shows that we have double in the collection of total funds of an early stage to growth until late, ”said Lastys.
She added: “What you see is that the average increase by agreement is also doubled. And so we have gone from a place where most of the offers were approximately $ 12 million last year on average, they are now $ 27 million and the quarterly activity has been constantly double in 2024 versus 2023. If you think about that, that does not This is what you hear day by day in conversations, at least with early stage companies. “
An explanation for this: in 2023, approximately 25% of all funds were for new early game companies. This year, there has been a truck, but only 15% went to the initial stage offers. Then, the largest truck has been in the offers in the late stage, Soltys said.
In 2024, much of the activity of mergers and acquisitions was driven by the unraveling of Abrapers, where he has been selling divisions to pay his debt. For example, the Easy Brain Division sold to Tencent Miniclip for $ 1.2 billion, approximately 10% of the activity of the agreement in 2024.
Web3 companies raised around $ 1.76 billion in 2024 in 325 agreements. The transaction value increased by 52% and the counting of agreements increased by 17%. The largest increases were $ 350 million for infinite reality, $ 140 million for Zentry, $ 80 million for ID Planet, $ 50 million for SPFWEB3Meta and $ 43 million for Azra Games.
“Infinite reality also had a massive round in January ($ 3 billion collected),” said Soltys. “They are using that capital to buy to build a large Metverse platform.”
Public valuations
Quantum Tech Partners also calculates a global game index based on the valuations of some of the public games companies.
Companies negotiate with health three times income and 13.2 times EBITDA (profits before interest, taxes, depreciation and amortization), a profitability measure. Companies have more than $ 60 billion in cash.
“The public pairs group for games is healthy. It is in a healthy place. Go up year after year. It is a wide group of companies that include western and oriental developers, as well as some of the engines companies. And so, he has been tracking very well, ”said Soltys. “I think the important piece here is the cash in the balances. Around $ 20 billion of those $ 60 billion are only from Tencent. ”
Quantum Tech Partners does not include the income of the games or the cash available in companies such as Apple, Google and Microsoft. The lower part of the market was around October 2022, although things are still below the crazy peaks during the pandemic in 2021 and 2020.
“That should lead to more activity. I think multiple revenues are healthy. Ebitda is certainly healthy at 13.2 times. And the devil is really in the details of each individual business and the history of growth. But from a general lens perspective, he is in a healthy place. “
Independent development successes
While many more games are being published now, there are some indies that stand out as winners.
The successes for the small budget games that reached the bases of the big fans included the animal (a developer who sold more than one million copies), chained (one DEV, 5.6 million copies), dark and dark (25 developers, Three million copies), Balatro ((one development, five million copies), stately gentlemen (a developer, 2.7 million copies) and Palworld (10 developers, 100 million copies).
“Being indie means that your budget is smaller, and today we need smaller budget games and simply delight the public. How do you delight to an audience? Well, you don’t need to have photorealist rays and open worlds that are bigger than our land to get attention. “
Emerging opportunities in games
Eastern content like Black Myth: Wukong sold well, as did the remassers of the games that players played in the 1990 110 million monthly active users. Roblox had $ 864 million in LTM and Fortnite developer exchange rates paid $ 352 million in developer payments. Roblox and Fortnite’s combined total was $ 1.2 billion paid to developers in 2024.
“As we observe where the industry grows, there are still many blue oceans there, and alternative platforms largely represent these opportunities, such as Roblox, UEFN and HTML5 games,” Soltys said.
And Telegram, which has 950 million cryptographic players, came out of nowhere as a massive force in web 3 games. The games grew from 1% of the Telegram audience in 2023 to 20% in 2024. Discord is also approximately 90% of the players and those are another 200 million players, he said.
The distribution is still important in games and playgrounds are struggling to reach the players through alternative applications stores, given the control of Apple and Android stores. That means that 30% of the game development income will pay the big platforms. That is a great impact and game companies have not escaped it, despite the antitrust litigation of epic games and governments around the world.
Geopolitically, one of the great changes that Soltys VE is the growth of publication decisions and financing decisions taken both in South Korea and Japan. Sony, for cases, has changed many financial decisions to Japan. These types of companies tend to continue investing in hard or good times. China could see continuous struggles given the nature of its market, and the rates wars will not help.
“One of the things that has been surprising to us is the slowness of using AI in the Games, where it is generally seen that the games are at the forefront of technology,” said Soltys. “AI feels as if it moves so fast through all games, and there is great resistance. I understand why from certain perspectives. “
