THEMES Investment and M&A activity is warming up again. For example, Playtika has allocated up to US$1.2 billion for M&A over the next three years9, and EQT recently agreed to pay $2.8 billion for Keywords Studios to secure valuable IP and expand development capabilities10
.
Here are some of the key themes contributing to ripening investment and M&A activity:
1. IP IP is often shorthand for a game or title. In reality, however, a game is a complex patchwork of rights, especially when multiple rightsholders are involved (for example, Marvel licenses Spider-Man to Insomniac Games for development and to Sony Interactive Entertainment for publishing). Games also feature numerous intrinsic elements — storylines, characters, designs, graphics and immersive sounds — all eligible for IP protection. Ultimately, the litmus test of a game’s IP strength lies in its “fun factor”. If it is fun, the IP is strong, and the other themes set out below become more relevant. If not, its value diminishes. Established games and franchises remain highly sought after
(including those based on board games – such as Playtika’s purchase of SuperPlay’s Domino Dreams11
), although they
often take time and money to develop (AAA games sometimes have budgets in the hundreds of millions). Studios with less established IP but which are still generating profits are also desirable.
2. Younger gamers Nearly 80% of 2 to 18-year-olds are gamers, spending 30% of their entertainment time gaming. They prefer seamless play across devices, valuing the game experience over platforms, and virtual experiences where they can play, socialise, shop and customise content. Watch out for those that can adapt to meet these evolving needs.12 Comparisons may be made with the TV industry, which is also
adapting to younger audiences. In South Korea, TV producers use social media to test their content directly with consumers, which enables them to demonstrate ‘proven reach’ in pitches. This approach could soon influence the gaming world.
3. Transmedia opportunities Brands like Disney have long capitalised on transmedia experiences; companies like Sega are now following suit.13
4. Partnerships Strong IP may give rise to partnership opportunities inside and outside of gaming. Indie Pogo has partnered with multiple titles – characters and
settings have featured from more than 50 different titles (including Shovel Knight and VVVVVV) – and music collaborations, such as Fortnite with Ariana Grande and Travis Scottt, are popular. Brands are turning to games to reach new audiences. Brands
(including KFC) partnered with Fall Guys to create special costumes sold for to benefit Charity17
and IKEA partnered with Roblox to
launch The Co-Worker Game, offering paid virtual roles in IKEA’s virtual universe.18 Games companies are starting to overcome previous brand-related
reservations – they are attending brand-related events, such as Brand Licensing Europe, to find partners to de-risk projects and to reach new audiences.
5. Unexploited rights Strong IP may be ripe for further revenue exploitation, whether to secure the loyalty of existing gamers or to reach new audiences. For example, seeking to expand in-gaming monetisation opportunities (such as requiring payment to unlock additional content or gameplay, and loot boxes) or moving into other sales channels such as merchandising, toys and soundtracks.
6. AR, VR and the metaverse Younger gamers, seeking more immersive experiences, are likely to prefer games that incorporate evolving immersive technologies, such as AR, VR and the metaverse. Watch out for companies and games incorporating these developing technologies – two recent examples being Infinite Reality’s $350 million investment and $450 million acquisition of Landvault19
, and The Sandbox’s USD$20 million fundraising at a valuation of US$1 billion.20 NEXT LEVEL OPTIMISM AND HOW WE MAY HELP
As 2025 approaches, the gaming industry is poised for a resurgence. The evolving landscape offers opportunities for studios, investors and partners alike to redefine interactive entertainment.
Today,
narratives flow not only from books and movies to games, but also from games to movies and streaming shows. Recent hits like The Last of Us, Fallout and The Witcher have drawn new audiences – The Last of Us achieved 65 million viewers in two weeks14 show15
on Netflix behind Stranger Things.16
At Memery Crystal, our full-service team is here to support you at every step, from financings and exit events, to IP protection, data privacy and strategic partnerships, and to gambling matters (including in relation to prize contests and loot boxes). We are committed to ensuring that clients are equipped to thrive in this next level of gaming.
, Fallout became Amazon’s second most-watched TV and The Witcher became the second most-watched series
For list of footnotes please click here:
memerycrystal.com/MCVdevelopfootnotes
If you would like further information, please contact the authors or visit memerycrystal. com/gaming
October/November 2024 MCV/DEVELOP | 23
https://www.memerycrystal.com/gaming/
https://www.memerycrystal.com/MCVdevelopfootnotes/
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52
