Weekly News Digest #33

Last week, Enad Global 7 (STO: EG7) published its Q2’24 quarterly report, where the company disclosed the terms behind the recent Singularity 6 acquisition made through its subsidiary Daybreak.

The deal included a $5m upfront payment and 50% of net cash flows to be paid over the next five years as earn-out consideration. Additionally, EG7 has pledged to invest up to $10m in Palia, the MMO game developed by Singularity 6, with the condition that the investment must be fully recouped before any contingent payments are made.

The exit is less than ideal considering that Singularity 6 raised a total of $49m since its inception in 2018 and has downsized from approximately 200 employees at its peak in 2023 to around 70 employees (including 40 developers) at the time of acquisition. The studio was founded by Aidan Karabaich and Anthony Leung, both former leads at Riot Games.

Read the InvestGame research, which was conducted in collaboration with GDEV, for more insights on studios founded by ex-Riot employees, their fundraising history, and performance to date.

Feature sponsored by $GDEV

Anyone familiar with the investment landscape knows that even the most compelling idea requires an experienced and powerful team to attract investors. The recent announcement of Spectre Divide by Mountaintop Studios—a studio founded by former members of highly acknowledged gaming studios such as Naughty Dog, Blizzard, and Riot Games—sparked our attention. We aimed to explore how alumni-led startups navigate today’s challenging landscape and whether these ‘AAA-quality’ teams have forged fresh unicorn stories.

While many other prominent teams could have been the focus of this analysis, such as ex-Activision Blizzard (e.g., founded Frost Giant Studios, Velan Studios) and ex-Epic Games (e.g., Lightforge, Noodle Cat Games), we chose to concentrate solely on Riot due to the particularly active role ex-Rioters have played in securing funding in recent years. Since 2020, investors have deployed almost $0.5B capital across 37 rounds, backing roughly 30 studios founded by ex-Riot employees.

Are ex-Rioters raising more than the industry average? When did investment activity reach its peak? Are studios founded by former Riot employees still attracting capital? Have any of these VC-backed startups achieved significant success? Let’s find out!

For a quick overview, refer to our PDF featuring the essential data points from this article:

For the full read, visit our website.

We thank MY.GAMES and Xsolla for supporting this digest.

MERGERS & ACQUISITIONS

South Korean gaming holding Krafton (KRX: 259960) has acquired Japan-based games developer Tango Gameworks from US-based developer Bethesda Softworks, a subsidiary of Microsoft (NASDAQ: MSFT). The deal includes the rights to the Hi-Fi Rush IP. Tango Gameworks was among the studios slated for closure due to Bethesda’s new strategy of focusing on “high-impact titles” despite the game’s success.

UK-based outsourcing company Keywords Studios (LON: KWS) has acquired UK-based outsourcing company Wushu Studios for an undisclosed sum. The deal was financed through cash and an existing credit facility, including an earn-out condition. This acquisition is part of Keywords’ strategy for global expansion. Wushu forecasts an adjusted Revenue of $16m for the fiscal year ending in Aug’24.

Cyprus-based PC & Console games developer Owlcat Games has acquired Cyprus-based games publisher META Publishing for an undisclosed sum. META is focusing on co-op multiplayer titles. This deal is part of Owlcat’s strategy to diversify into the games publishing business. Additionally, the company has signed deals with Serbia-based Emotion Spark Studio and Poland-based Another Angle Games.

UK-based games publisher Reforged Studios has acquired UK-based PC & Console games developer Ground Shatter and UK-based multiplatform games developer Extra Mile Studios for an undisclosed sum. The company announced plans to make another acquisition later in 2024. Blazing Griffin veteran Peter van der Watt and Rockstar veteran Colin Anderson founded Reforged Studios.

VENTURE FINANCING

Portugal-based multiplatform games developer FRVR has raised $12.7m in a funding round led by Iberis Capital, with participation from Hiro Capital, Indico Capital Partners, and Lince Capital. The funds will support the development of Forge, the company’s proprietary AI-powered game creation platform. The platform aims to simplify the creation and distribution process for game developers. In addition, the company underwent a reorganization. Thus, the former CEO took the role of CTO. Quentin Staes-Polet was appointed as the new CEO.

Cyprus-based PC & Console games developer Eschatology Entertainment has secured $11.3m in a Series A funding round led by Krafton, with participation from The Games Fund and GEM Capital. The funds will fuel the development of the company’s debut title, a post-apocalyptic Wild West FPS currently in pre-production. The company previously raised $4m in a Seed round in Nov’22 for this title.

US-based web3 games developer Autoverse Studios has secured $8m in a funding round from undisclosed investors. The funds will support the development of the F2P web3 drag-racing title Auto Legends. The game is currently in closed alpha testing and will be available on PC & Console and mobile platforms. The company’s executive chairman is the founder of Cie Games and the developer behind the mobile racing titles Racing Rivals and Car Town.

Web3 platform PlaysOut has secured $5m in a funding round from Kenetic Capital, Chainer Consultants, VentureSouq, and other investors, valuing the company at $70m. The company plans to release its mini-games platform in Q1’25. Additionally, PlaysOut has partnered with TON Play to release various mini-games on the Telegram network. This partnership is part of recent agreements, including deal with Tencent.

UK-based web3 gaming ecosystem Kokomo Games has secured undisclosed funding in an angel round from DAO Jones and various angel investors. The funds will be used to enter the web3 gaming market. Veterans from Activision and Riot Games founded the company.

Czech-based web3 gaming platform GAMEE has secured undisclosed funding in a round from TON Ventures. The company will integrate the TON-based ecosystem into its own Telegram Mini Apps. As part of Animoca Brands (ASX: AB1), GAMEE previously raised a Seed round in Feb’22.

UAE-based web3 games developer Tokyo Beast has secured an undisclosed sum in a funding round from various angel investors. The company is developing its proprietary web3 technology for gaming and has also launched its own AAA-games token.

FUNDRAISING

Cyprus-based game developer Mad Crusader has launched a $30m incubation program to transform ten AA premium PC game concepts into new IPs with cross-media franchise potential. Investors will gain equity stakes in the individual games and their associated franchises.

US-based IT corporation Alphabet (NASDAQ: GOOG) has begun accepting applications for Google Play’s Indie Games Fund from developers in Latin America. The company will invest $2m in developers who have already launched a game on Google Play or any platform. Selected developers can receive between $150k and $200k each. The application period will remain open until mid-Sep’24.