Gaming Deals Activity Report 2021
Download PDFJan, 2022 ’21
Gaming Deals Activity
Report 2021
Smashing Previous Records
1
In collaboration with
Supported by
Private investments
M&A
Public offerings
FY’21 Closed Deals Tracked
$71.3B
Note
: (*) announced transactions are not included in the charts and graphs; see Methodology & Glossary p. 24
Value of Closed Deals*, $m
Number of Closed Deals*
By Deal Type
$71.3B
937
937
By Target Segment
Gaming
Platform&Tech
Esports
Other
TOTAL
$71.3B
value of 937 deals
(closed)
$80.4B
value of 967 deals
(closed + announced)
2
$1 000 1%
$4 570 7%
45 5%
Executive Summary FY’21
$52.1B
value of 486 closed
deals
$54.3B
value of 504 deals
(closed + announced)
FY’21 was yet
another record-smashing year
for the Video Games industry, in which total
closed deals value surpassed $71.3B
(2.1x growth
YoY) across the whooping number of
937 transactions
(1.4x growth YoY), plus the
additional $9.1B in 30 announced deals
. Thus, the total
value for both announced and closed transactions
reached a new record of $80.4B
Video Games industry continued to prosper across all segments and all type of deals through FY’21:
—
Exit activity remained bullish
, with M&As setting a new record of $34.5B value (vs. $12.6B in 2020) across 309 closed deals, representing
almost half (48%) of the total deal value. Just 9 mega-deals (defined as deals with the value above $1B) accounted for 65% of all M&A deals
closed in FY’21.
Mobile still holds the largest share
in acquisitions, occupying nearly half of the deal value ($16.9B, or 49%), with
PC&console coming in second ($11.6B, 34%)
—
As for
Public offerings
, there was
a 1.6x increase in the deal value
($24.8 vs. $15.6B), while the number of transactions slightly declined
(68 vs 82), with the three biggest deals including Krafton $3.75B IPO, BiliBili $2.6B PIPE, and ironSource $2.3B SPAC
—
Private investments doubled in the deal value
($12.0B vs $5.9B), and made a healthy step up in the number of closed deals (560 vs. 363),
with the Late-stage transactions accounting for 72% of the value. The investment focus had also noticeably shifted to Blockchain gaming,
with the segment occupying 26% of the private capital raised in FY’21
—
The Gaming sector remained the hottest one and more than double
the $24.5B
value recorded in 2020 reaching
$52.1B
and occupying
73% of the total deal value
and 52% of the total closed deals number;
followed by Platform&Tech sector
, holding 19% of the deal value
(or
$13.6B
) and 32% deals share (or 304)
Blockchain gaming had the absolute breakthrough year
: the total deal value blasted off 68.1x YoY ($3.1B vs $46m), with the total deal count
growing 11.3x YoY (135 vs 12); the major drivers were Forte $725m Series B, Sorare $680m Series B, and Dapper Labs $250m Series B+
FY’21 was
another remarkable year for the gaming VC
ecosystem, with $891m capital raised by gaming-related funds throughout the year
(vs. $690m in FY’20). In fact, 4 out of top-5 funds announced plans to, or raised funding. The
top-15 gaming VCs invested $4.3B
of the
disclosed deal value in FY’21, across 160 deals, showcasing
an ever-growing venture interest in the gaming industry
. BITKRAFT Ventures
yet again led the VC chart with 30 closed deals of $345m total value, followed by a16z and Makers Fund
For the first time ever,
Embracer nudged Tencent
from the first place in our Strategics rating, closing a total of 26 deals with the overall
disclosed deal value of $6.7B, announcing such notable deals as Asmodee ($3.1B), Gearbox (up to $1.4B), and Easybrain (up to $0.8B)
GAMING ONLY
3
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
M&A Activity
Note
: (*) only closed deals are reflected in the graphs (excl. Sumo Group and other deals)
M&As in the Video Games Industry*
—
In FY’21, M&A value roared to the new annual records, showing growth in all segments, with
2.7x increase in the deal value
reaching $34.5B across 309 closed deals, compared to the
total value of $12.6B across 218 deals in FY’20
—
Gaming sector continued to hold its position as the major contributor
(87% of total M&A value) with 2.8x annual growth in the deal value ($29.9B vs. $10.7B);
Platform&Tech
sector
took up
second place
with $3.9B (vs. $1.4B), while Esports accounted for $0.3B (vs. $0.1B)
—
While there were only two $1B+ deals (Leyou and Peak Games) in FY’20, mega-deals became a more regular occasion in FY’21 with 9 transactions, two of which were public takeovers
(Codemasters and Glu Mobile)
—
Looking at the M&A activity in FY’22, we can affirm that the
aggressive M&A activity will continue
, as
we have already witnessed 3 mega-deals’ announcements, with the total
value of $85B
: Activision Blizzard acquisition by Microsoft ($68.7B); Zynga acquisition by Take-Two Interactive ($12.7B); and Bungie acquisition by Sony ($3.6B)
4
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
Private Investment Activity
—
In FY’21, VC and Corporate placements demonstrated a record
$12B invested through 560 deals
, showing a 2x YoY growth in deal value, and a 1.5x YoY growth in the number of closed
transactions driven by growing interest from financial and strategic investors
—
Late-stage deals
saw a 2x growth YoY in total raised capital
($8.6B vs.
$4.2B in FY’20); meanwhile, FY’21 Early-stage deals saw an average of $7m/round, showcasing growth against
$4m/round in FY’20; the number of
Corporate transactions nearly doubled
, with 98 deals in FY’21 vs. 50 deals in FY’20
—
FY’21 was characterized by multiple outsized rounds for highly valued businesses, with such notable deals as Epic Games $1B funding round, Roblox pre-IPO Series H $520m, and
blockchain gaming companies Forte $725m Series B and Sorare $680m Series B
—
Gaming sector continue to dominate
the investment activity with
$5.9B
(vs. $3.4B in FY’20), accounting for almost half of the total private investments value, while
Platform&Tech
took
second place
and continued growing with
$4.8B
and 40% of total value (vs. $1.7B and 29% in FY’20). This is greatly influenced by the
outstanding interest in Blockchain gaming
, with
the total value of investments increasing from $38m in FY’20 to $3.1B in FY’21
Private Investments in the Video Games Industry
5
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
Public Offerings in the Video Games Industry
—
Despite the
noticeable decrease in the total number of deals
from 82 in FY’20 to 68 in FY’21, the total deal value
demonstrated a significant 1.6x growth
, and reached $24.8B in
FY’21
(vs. $15.7B in FY’20)
—
Gaming sector contributed
65% (or $16.3B)
of the total deal value in FY’21, holding the same ratio as in FY’20
—
Platform&Tech deal value increased by 24% YoY
($4.9B), mainly affected by two GameStop PIPEs, for the total amount of $1.7B, and Skillz private offerings of $0.6B
—
Esports sector total deal value increased from $0.1B to $0.3B in FY’21
—
Compared to FY’20, which had only 3 transactions with $1B+ value, in FY’21 we witnessed
8 mega-deals
, which together contributed almost
59% of the total deal value
:
—
4 IPOs: Krafton ($3.75B), AppLovin ($2B), Playtika ($1.88B), Devolver Digital ($0.95B);
—
2 PIPEs: BiliBili ($2.6B), GameStop ($1.1B);
—
1 deSPAC and 1 fixed income: IronSource SPAC ($2.3B), and Roblox ($1B) offer of senior unsecured notes
Public Offerings Activity
6
Top-15 VC Funds
Rank*
Venture Capital Fund
# of total
deals
Total deal
value**, $m
# of leading
deals
Leading deals
value**, $m
Selected lead deals
1
BITKRAFT Ventures
30
345
19
186
Immutable,
Resolution Games, Anzu,
Starform
2
Andreessen Horowitz (a16z)
15
1763
8
458
Forte, Dapper Labs, Yield Guild Games
3
Makers Fund
19
579
8
198
Dream Games, Ramen VR, Lightheart Entertainment
4
vgames
14
270
11
14
Candivore, Boom Corp.
5
Galaxy Interactive
20
710
6
94
Bad Robot Games, 1047 Games
6
Griffin Gaming Partners
13
1103
6
250
Forte, Overwolf
7
Hiro Capital
10
78
8
59
Double Loop, Snowprint, Keen Games, Twin Suns
8
Konvoy Ventures
11
220
7
33
Carry1st, StageZero
9
Index Ventures
7
965
4
309
Dream Games, Discord, Rec Room
10
Play Ventures
15
324
5
12
Clickwork Games
11
Ludus Venture Studio
9
6
7
6
Hey Games, Maestro Game Studio, Jambox, Paxie
Games
12
WePlay Ventures
7
4
7
4
Hero Concept, UDO Games
13
The Games Fund
6
7
6
7
Kek Entertainment, Hypemasters, Purple Games
14
GEM Capital
6
18
5
8
VEA Games, Mundfish, Unfrozen, Weappy, Gameram
15
Lumikai
4
13
4
13
All-Star Games, Loco
Note
: (*) based on the internal weighted average ranking system; (**) based on investments with disclosed deal value
7
$50m
$75m
Gaming VC Activity
—
FY’21 proved
another remarkable year for the gaming VC
, with
$891m capital raised by gaming-related funds throughout the year
(+29% vs. FY’20)
—
Strong exit activity and high returns environment led to healthy
capital commitments for both new (e.g., The Games Fund) and
established (e.g., vgames) gaming funds
—
In fact, 4 out of the top-5 funds announced plans to, or raised
funding
—
BITKRAFT remained the most active gaming VC fund, leading 19 deals
and participating in 30 deals during FY’21
—
Andreessen Horowitz (a16z) took the second place, leading such
notable rounds in the blockchain space as Sky Mavis ($152m Series B),
Mythical Games ($150m Series C), and Sandbox VR ($37m Series B)
—
In November, Andreessen Horowitz announced plans to raise a
gaming-focused fund
—
The third place belongs to Makers Fund, which co-led $155m Series B
round of Dream Games, and participated in its $255m Series C round
—
Galaxy Interactive, which previously held the third place in FY’20, is
now 5th, and recently announced $325m interactive-focused VC fund
—
To read more about each VC fund, please visit
InvestGame
$891m
$690m
Raised by Gaming
Funds in FY’21
Raised by Gaming
Funds in FY’20
8
$325m
$141m
$135m
$235m
$100m
Fund Size, FY’21
Fund Size, FY’20
$90m
$75m
$50m
$165m
$60m
$50m
$30m
Top-15 Strategic Investors*
Note: (*) including recently announced and unclosed transactions;
(**) based on the internal weighted average ranking system, this rating
reflects most active strategics, thus the deal value alone does not guarantee the top spot — the number of deals is substantial too
Rank**
Strategic Investor
# of
deals
Disclosed
Value, $m
Deal Type
Investment Focus
1
Embracer Group
26
6 682
M&As
PC&console, Mobile,
Board Games
2
Tencent incl.
subsidiaries
77
3 114
M&As,
Corporate
PC&console, Mobile
3
ByteDance
6
4 037
M&As,
Corporate
Mobile
4
Unity Software
7
1 945
M&As,
Corporate
Tech
5
Electronic Arts
4
4 700
M&As
PC&console, Mobile
6
Zynga
7
775
M&As
Mobile
7
Microsoft
1
7 500
M&As
PC&console
8
Sony
12
224
M&As,
Corporate
PC&console, Tech
9
Take-Two Interactive
7
378
M&As,
Corporate
PC&console, Mobile
10
Scopely
5
1 100
M&As,
Corporate
Mobile
11
AppLovin
2
2 000
M&As
Tech, Mobile
12
Stillfront Group
6
513
M&As
Mobile, PC&console
13
Epic Games
7
100
M&As,
Corporate
Tech, PC&console
14
MTG
2
699
M&As
Mobile, Esports
15
Keywords Studios
6
142
M&As
Outsourcing
—
As strategic investors picked up the pace amid frothy market valuations,
and investors/founders pushing ahead with liquidity events, investment
activity reached new heights. For FY’21, the top-15 strategic investors
closed or announced
the total of 181 corporate and M&A deals
(vs. 104
deals in FY’20) with
$32.8B in total value
(vs. $20B in FY’20)
—
Embracer Group took the first place
, budging Tencent, with the total
deal value of $6.7B, including several transactions in new segments, such
as board games (Asmodee for $3.1B), and comics (Dark Horse), in order
to not only diversify its revenue streams, but also expand its vast IPs
portfolio
—
In FY’21, Tencent
closed and announced 36 deals in the Mobile
segment
(47% of all Tencent deals),
and 22 deals in PC&console
(29%),
including the takeover of Sumo Group for $1.3B
—
Other notable investors include:
—
ByteDance — 6 deals, together with the second largest deal of FY’21,
Moonton Technology acquisition for $4B
—
Electronic Arts — 4 deals, with Glu Mobile and Codemasters
takeovers among those
—
Unity Software — 7 deals, including acquisition of Peter Jackson’s
Weta Digital for $1.6B
—
As we transition into 2022, we believe that the increasing
M&A trend will
continue
, and there potentially
will be more public takeovers
, as we
have already witnessed several remarkable announcements (not included
in the table) in Q1’22 from Microsoft, Take-Two Interactive, and Sony
—
To read more about about strategics, please visit
InvestGame
9
Top-10 Sell-side Advisors*
Note
: (*) the table includes closed games deals with control sale and transaction size
(incl. earn-out) higher than $80m only; (**) estimated deal size
10
Rank
Sell-side advisor
# of deals*
Deal value,
$m**
Transactions
1
8
4 115
Unknown Worlds, StarLark, Jawaker, CrazyLabs, Reworks, PlaySimple, Easybrain
2
3
10 870
ZeniMax Media, Glu Mobile
, Sumo Group
3
3
4 165
Ludia, Moonton Technology, Tonic Games
)
4
1
2 100
Glu Mobile
5
1
1 400
Playdemic
6
1
1 378
Gearbox
7
1
1 200
Codemasters
8
1
1 000
GSN Games
9
1
450
Aspyr
($100m upfront + $350m earn-out; exclusive)
10
1
200+
Super Free Games
($150m upfront + estimated earn-out; exclusive)
Gaming Companies
11
—
Gaming investments showed a 43% growth in the deals count
,
and
reached 273 transactions
,
with the deal value demonstrating a slight increase of 5%, accounting for $8.4B
ー
VC deals showed a significant growth of 85% YoY ($5.3B) in the total deal value, with its share noticeably increasing from 36% in FY’20 to 63% in FY’21; this was mainly driven by the
number of deals rising from 115 to 185, and the average deal size from $24m/round in FY’20 to $31m/round in FY’21
ー
Corporate transactions stayed on almost the same level, with the total value of $0.6B (7%), compared to $0.5B (6%) in FY’20. However, Corporate segment doubled the number of
deals, closing 71 transactions in FY’21
ー
Due to the huge NetEase second listing of $2.7B (which counted for 58% of the total PIPE and Other value in FY’20), and the absence of the equivalent deals in FY’21, the overall PIPE
and Other value decreased by 45% YoY ($2.5B) in FY’21, with its share also decreasing from 58% to 30%
—
Despite a visible decrease in the deal value from 78% ($6.2B) in FY’20 to 59% ($4.9B) in FY’21,
Multiplatform continued to hold its position as the main contributor segment
. Mobile
share
increased from 16% ($1.3B) in FY’20 to 26% ($2.2B)
, mainly due to the significant growth of the deal count to 139 deals (61% in FY’21), and the increase in the average check from
$19m/round in FY’20 to $23m/round in FY’21. PC&console share tripled in value from $0.3B to $0.9B
—
Tencent continued its reign as one of the most active strategic investors,
with 49 closed deals (vs. 11 deals in FY’20)
, which accounted for approximately 18% of the total number of
Gaming Investment deals
Investment Activity* in the Gaming Sector
Gaming: Investment Activity
Note
: (*)
Investment Activity
includes Private Investments and PIPE, Other
FY’21: Deals Value, $m
Corporate
VC
PIPE, Other
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
12
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
—
In FY’21, the
Gaming segment showed tremendous results
, with a 2.5x growth of the total deal value, hitting $40B across 204 deals (+30% YoY)
—
M&A deals were the key driver in the exits activity, even with the overall share decreased from 93% ($10.7B) in FY’20 to 75% ($29.9B) in FY’21. Meanwhile, FY’21 saw a significant
upsurge in public exits, with only
15 deals
contributing
25% of total deal value ($10B)
,
compared to
11 exits
in FY’20 with the total value of
$0.9B
—
Mobile segment is the biggest one in terms of the total deal value, with
$21.8B
(vs. $6.9B in FY’20), contributing 55% (vs. 59% in FY’20). PC&console came second, with its share
remaining almost the same (32% vs. 31% in FY’20), despite the
3.5x growth ($12.7B in FY’21)
—
There were 6 deals (vs. only 1 deal in FY’20, Peak Games acquisition) with the total value of more than $2B+, together contributing almost 54% ot the total value:
—
4 acquisitions: ZeniMax Media ($7.5B); Moonton Technology ($4.0B); SpinX Games ($2.2B); and Glu Mobile ($2.1B)
—
2 IPOs: Krafton ($3.75B), and AppLovin ($2.0B)
Gaming: Exits Activity
Note
: (*)
Exits
include M&As, direct listings, SPACs, and IPOs
Exits* in the Gaming Sector
13
Gaming: Early-stage VC
Note
: (*)
Includes $150m Series B round of gaming outsourcing firm Virtuos
Early-stage Investment Activity in the Gaming Sector, in $m
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
—
Early-stage investments heavily intensified in FY’21
, with the total of 154 deals (1.5x YoY), and a record $1.1B capital raised (2.5x YoY)
—
FY’21 average deal value increased 1.8x YoY ($7.9m/round vs. $4.5m/round), which indicates
investors’ growing confidence in the Gaming sector
—
114 Seed rounds were closed, constituting 74% of the total number of deals (vs. 73 deals, or 70% in FY’20);
40 Series A rounds amounted for $741m
, or 67% of the total deal value (vs.
$304m, or 69% in FY’20)
—
There was a significant shift of investment focus in FY’21, with
Mobile segment ranking first
$463m across 75 deals (vs. $149m across 43 deals in FY’20). It’s followed by PC&console with
$321m across 30 deals (vs. $85m across 24 deals in FY’20), with Multiplatform coming third ($256m across 36 deals), while it was the hottest segment in FY’20 ($177m across 20 deals)
—
This had, of course, a lot to do with the fact that FY’21 saw several large Series A rounds in Mobile, with the biggest being Tripledot raising $78m, Homa Games and Dream Games both
raising $50m, and Libra Softworks and Comunix both getting $30m; for context, the biggest Early-stage deal in Mobile in FY’20 was Lockwood Publishing Series A $25m round
—
In FY’21, Turkey has truly emerged as the global hub for gaming, with 3 out of top-10 Early-stage deals by sie were closed by Turkey-based companies
Details value, $m
Number of deals
14
Gaming: Late-stage VC & Corporate
Late-stage VC & Corporate Activity in the Gaming Sector, in $m
FY’21: # of Deals
Multiplatform
PC&Console
VR/AR
Mobile
Note
: (*)
Includes $150m Series B round of gaming outsourcing firm Virtuos
—
Late-stage VC & Corporate
showed highly enduring results
in FY’21
: $4.8B of the deal value (1.6x YoY) across 102 transactions (2.1x YoY)
—
Multiplatform
remains
the hottest investment segment
with $2.3B in raised capital (49%), chased by Mobile ($1.7B, 36%). However,
Mobile segment is noticeably growing
,
which is showcased by the FY’20 respective ratios: 70% for Multiplatform, and 25% for Mobile
—
The number of Corporate deals nearly doubled in FY’21 (71 vs. 34), with the total deal value rising to $557m (vs. $487m)
—
Late-stage VC made up 88% ($4.2B)
of the total deal value, and
30% of the deal number
,
with the biggest transactions of the year including:
—
Epic Games mind-blowing $1B round at a $28.7B valuation (included an additional $0.2B strategic investment from Sony)
—
Roblox raising $520m at a $29.5B valuation in a round led by Altimeter Capital and Dragoneer Investment Group
—
Jam City $350m Series B+ round by Netmarble, Kabam, and others; Moon Active $300m Series B+ round by Insight Partners and Andalusian Private Capital; and Niantic
$300m Series B+ round led by Coatue
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
16
Number of deals
15
Late-Stage
Corporate
Details value, $m
Number of deals
Gaming: M&As
Note
: (*) deal size includes earn-out considerations; (**) announced in Jul’21
M&A Activity in the Gaming Sector
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
—
In FY’21, the Gaming segment showed
a 2.8x growth
in the M&A deal value, compared to FY’20,
and
reached $29.9B across 189 deals
(+29% YoY)
—
Despite a small decrease in total ratios from 61% in FY’20 to 56% in FY’21,
Mobile segment
remained the main contributor
with a total value of $16.8B, showing a robust growth of 2.6x,
vs. $6.5B in FY’20
—
PC&console increased its share to 39%, with the total value of $11.6B in FY’21, compared to
$6.5B in FY’20 (34%)
—
Public takeovers became a noticeable part of the M&A activity
, with 3 deals in FY’21 (vs. 2 deals
in FY’20), for the total value of $4.6B (vs. $1.5B in FY’20). As consolidation trend intensifies, there are
less large- and mid-cap private gaming companies on the market, hence Public takeovers will most
probably continue to happen. We can already witness several significant deal announcements, for
the total value of $81.4B in 2022: Activision Blizzard ($68.7B); Zynga ($12.7B)
16
Largest Mergers and Acquisitions
Closed
Date
Target
Buyer
Size*,
$m
Platform
Status
Mar’21
ZeniMax
Microsoft
7 500
PC&console
closed
Mar’21
Moonton
ByteDance
4 000
Mobile
closed
Apr’21
Gearbox
Embracer
1 378
PC&console
closed
Apr’21
Glu Mobile
EA
2 100
Mobile
closed
Sep’21
Playdemic
EA
1 400
Mobile
сlosed
Oct’21
SpinX
Netmarble
2190
Mobile
closed
Jan’22**
Sumo Group
Tencent
1 263
PC&console
announced
Platform&Tech
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
—
The total deal value for FY’21 is $13.6B across 304 deals, compared to $7B across 156 deals in FY’20, presenting a 2x growth YoY
—
Public offerings with only 6 deals
(vs. 10 in FY’20)
generate the total value of $4.9B in FY’21
(vs. $3.9B), which accounted for 36% of the total sector value (vs. 56% in FY’20).
Private
placements with 224 deals
of $4.8B of value (2.8x YoY)
constituted 35% of total value
(vs. 24% in FY’20)
—
The market M&A activity in Platform&Tech sped up: in FY‘21, there were
74 M&A deals with a 2.8x value growth to $3.9B
(29% of total value), compared to 36 deals with a combined value of
$1.4B (20% of total value) in FY’20. The sector’s most active strategic investors were Unity with 7 M&A deals, with the second place taken by Epic Games (5 acquisitions), and the third one
shared by Azerion and Niantic, with 4 deals each
—
The 3 biggest deals represented almost 48% of the total deal
value
in FY’21:
—
Bilibili $2.6B PIPE
—
ironSource $2.3B SPAC
—
Unity’s acquisition of Weta Digital for $1.6B
—
The sector’s strong performance is directly connected to the increasing investor’s excitement over blockchain and NFT technologies, which boomed during FY’21 with $3.1B across 135 deals.
Read more on that further in the Blockchain gaming section (p. 19-20)
Platform&Tech
Platform&Tech
in the Video Game Industry
18
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
Blockchain Gaming Deals — Presented by Naavik*
Note
: (*) the following analysis has been provided by Naavik consulting firm, based on InvestGame data;
(**) only closed deals are reflected in the graphs
—
We continue to see
massive growth in the Blockchain gaming
section of the industry: the total number of deals for FY’21 skyrocketed to 11.3x
YoY (135 vs. 12), while the total deal value was even stronger at 68.1x YoY ($3.1B vs. $46m). This underscores
huge amounts of investor interest
in the potential future of blockchain games, and uniquely enabled business models
—
The
biggest Q4’21 deals
were Forte’s $725m Series B (the largest Blockchain gaming related funding round of 2021, led by Sea Capital and Kora
Management), followed by Sky Mavis $152m Series B and Mythical Games $150m Series B rounds, both of which were led by a16z
Blockchain Gaming Deals in the Video Game Industry**
19
—
In FY’21 there was
heavy Seed rounds concentration
(72%), and average check sizes remained small (~$3m/deal); however, there was a
marked increase in
investor FOMO
and comfort with jumping in early, as shown by the fact that
Seed round %
of the total quarterly deal number
increased
to 78% in Q4’21 (vs. 55%
in Q3’21), while
Seed round %
of the total quarterly deal value
increased
to 12% in Q4’21 (vs. 2% in Q3’21)
—
More than
a third of all Seed deals were above the ~$3m/deal average
, with Enjin, OP Games, DeHorizon Foundation, Genopets, and Unix Games getting $8m+
check sizes. Meanwhile,
90% of the total FY’21 deal value
was in Series A/B/B+/C rounds across 29 deals. The top 5 were Forte at $910m (Series A + B), Sorare at
$680m (Series B), Dapper Labs at $250m (Series B+), Mythical Games at $225m (Series B + C), and Sky Mavis at $152m (Series B)
—
Forte’s astronomical $910m raise gripped the attention, especially because they’re quite low-key about their offering. While many think Forte’s value lies in its game
developer blockchain integration and tokenomics services, we believe Forte’s long-term edge is more captured in its technology around guaranteed marketplace
liquidity, complete deobfuscation of the blockchain layer to developers/players, and off-the-shelf regulatory/compliance (AML, KYC, etc.) solutions
—
One blockchain gaming company that has shown rapid vertical integration is Sky Mavis, raising $152m led by a16z to show for it. Even though
Axie Infinity
economy
is struggling, Sky Mavis efforts with Ronin (a Layer 2 scaling solution) and Katana (a DEX) provide the technology stack for onboarding other game developers to
build on top of. It’s possible that
Axie Infinity
will just be the means to a much grander end
—
Even though news outlets centered Mythical Games $225m raise around
Blankos Block Party
and their concept of ‘Playable NFTs’, the bigger business opportunity
here is in some part similar to that of Sky Mavis. Their technology layer (Mythical Economic Engine and Mythical Marketplace) will eventually be licensed out to other
developers to create their own player-owned economies
—
The Sandbox raised additional $93m in its quest to build a land-based UGC platform. It’s a big idea with lots of funding and partners, but despite the multi-billion
dollar valuation of its tokens, there’s minimal user and developer interest. This may change, as the platform offers incentives and slowly starts opening the platform
more broadly, but it’s fair to say that expectations for virtual land platforms in the metaverse have never been higher
—
Overall, it is clear that the
companies commanding the largest funding rounds are the ones who are seizing the moment to build platform layers
on which the
future of blockchain games could live. Companies purely focused on building a blockchain game are getting attention too, but check sizes are much smaller. All that
said, the hype behind the space has clearly been high over the last quarter. If 2021 was the year of blockchain gaming’s arrival,
2022 will likely be the year of
tempering expectations
. And it will start with addressing the biggest elephant in the room — regulation
Want more alpha about the blockchain gaming ecosystem every week? Check out Naavik’s
premium blockchain gaming research
! Use INVESTGAME promo
code at checkout for -10% off.
Blockchain Gaming Deals — Presented by Naavik*
Note
: (*) the following analysis has been provided by Naavik consulting firm, based on InvestGame data
20
Esports
21
Q1’20
Q2’20
Q3’20
Q4’20
Q1’21
Q2’21
Q3’21
Q4’21
Details value, $m
Number of deals
Esports
—
FY’21 saw a 1.6x increase in Esports total deal value, reaching $1B, while the number of deals remained stable (102 in FY’21 vs. 103 in FY’20)
—
Q1’21 showed unusually increased activity in the deal value, with $0.4B across 40 deals, including Nazara Technologies IPO, which raised around $80m
—
The biggest deal in the sector was the acquisition of Allied Esports’ World Poker Tour by Element Partners for $105m, which was closed in Q3’21
—
Private Investments generated almost half of the total deal value in the segment with $465m (vs. $420m for FY’20); however, the number of the deals decreased by 11% from 63 to 56
in FY’21
—
M&A shows a significant growth of 3x in deal value and reached $281m (28% of sector value) across 35 closed deals (vs. 23 deals with a total value of $95m in FY’20)
—
Despite a decrease in quantity (11 deals in FY’21 vs. 12 in FY’20), the total value of Public offerings increased by 2.6x to $280.3m (25% of sector value), compared to $98m raised
during FY’20
—
With the COVID-19 restrictions easing, and the overall higher interest in Esports, investment activity growth tendency will continue in FY’22; this can be already proved with several
large announced deals in the sector, including the acquisition of MTGs ESL Gaming by Savvy Gaming Group for $1.1B, and FaZe Clan and ReKTGlobal SPACs
Esports Deals in the Video Game Industry
22
Appendix
23
Methodology & Glossary
InvestGame tracks closed transactions (unless otherwise noted) in the Video Games industry with target companies having core business operations related
to the video games market. Please note that we do not track pure gambling and betting companies. All deals values are given in U.S. dollars or converted to U.S.
dollars at the prevailing spot rate from the closing date of transaction.
The private data contained in this report is based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.
Sources
include public media, our business partners, data provider S&P Capital IQ, and market insights. The information, opinions, estimates, and forecasts contained herein
are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Private
Investments
Control
Minority
Late-stage VC
Corporate
Early-stage VC
Public
Offerings
PIPE, other
Fixed income
IPO, SPAC
Deal Types Overview
M&As
—
Control M&As
— mergers and acquisitions
resulting in the change of control (50%+
ownership)
—
Minority M&As
— sale of a minority stake in
the business
—
Early-stage VC
— pre-seed, seed, and
Series A rounds with a lead VC fund
—
Late-stage VC
— Series B, Series C, and
later-lettered venture rounds
—
Corporate Investments
— investment with a
lead investor being corporation
—
IPOs
— the process of company going public
including IPOs, SPACs, and direct listings
—
Fixed-income
— debt-related instrument
with fixed payments and interest payments
—
PIPE, other
— private investment in public
equity, direct share issue, and other
transactions with publicly traded stock
Deal Type Terms Glossary
Target’s Sector Overview
Gaming
PC & Сonsole
Multiplatform
Mobile
Outsourcing
VR/AR
Esports
& Other
Esports
Hardware
Other
Cash-related
Platform
&Tech
Platform
Tech
VR/AR
Blockchain-powered
24
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