Gaming Deals Activity Report Q1-Q3’2021

Oct, 2021 Gaming Deals Activity Report Q1-Q3’2021Continued growth despite market turbulenceIn collaboration with1

Private InvestmentsM&APublic OfferingsQ1’21—Q3’21 Closed Deals Tracked$57.7B2Note: (*) announced transactions are not included in the charts and graphs; see Methodology & Glossary p. 19 Value of Closed Deals*, $mNumber of Closed Deals*By Deal Type$57.7B667667By Target SegmentGamingPlatform&TechEsportsOtherTOTAL$57.7Bvalue of 667 closed deals$62.4Bvalue of 700 deals (closed + announced)

Executive Summary$43.4Bvalue of 382 closed deals3$48.1Bvalue of 408 deals(closed + announced) —There were 667 transactionsclosed in Q1-Q3’21 (compared to 664 deals in 2020FY) with the total deal value of $57.7B, and 33 announceddealsstill in process. Cumulative value for both announced and closed transactions accounted for $62.4B○Par to the course, the Gaming segment was the biggest one, occupying 75% of the total deal value, and 57% of the total closed deals number—Q1-Q3’21 shows a 2.5x growth YoY in terms of the cumulative deal value ($57.7B vs. $22.7B), and a 46% growth YoYin the number of deals (667 vs. 457), with substantial upsurge in all categories, including M&As ($27.9B vs. $8.4B), public offerings ($21.2B vs. $9.6B) and private investments ($8.6B vs. $4.7B)—224 M&As provided for nearly half (48%) of the closed deal value. Public offeringssaw 59 transactions, accounting foraround 37%of the total value. Private investments contributed15% with 384 closed deals—Q1-Q3 saw a record $8.6Bof private placements, with the late-stage deals accounting for 78% of the value. The two largest funding rounds of Q3’21 were Sorare Series B ($680m), and Discord Series B+ ($500m) —Public offeringssaw only 4 deals in Q3’21 with the sum value of $4B, which alongside some companies’ share price drops suggested uneasy gaming market conditions. However, the cumulative public deal value for Q1-Q3’21 still showed 120% YoY growth, across 59 deals—As for M&As, both the value and the deal number shortened, compared to the previous quarters of 2021. Q3’21, though, still shows heavy-hitter results with $5.4B across 69 deals, adding to Q1-Q3’21 being 3x bigger value wise, and 1.5x bigger deal number wise YoY—Blockchain gaming section is truly on fire: Q3’21 alone got an outstanding $1B+ deal value across 16 deals, while the cumulative Q1-Q3’21 deal value of $1.56B represents an overwhelming 34x growth YoY. The biggest rounds of Q1-Q3’21 are Sorare Series B ($680m), Dapper Labs Series B+ ($250m), and Forte Series A ($185m)—The top-15 gaming VCslist invested approximately $2.5B of disclosed deal valuein Q1-Q3’21, displaying a continued venture interest in the gaming industry. Bitkraft still leads the chart with 17 closed deals, followed by Galaxy Interactive andMakers Fund—Tencent continued steaming the strategictrain, closing a total of 69 deals for Q1-Q3’21 with the overall disclosed deal value of $1.5B. In Q3’21, the company increased its investment focus on the Mobile segmentGAMING ONLY

Public Offerings Activity—After the rapid surge of public offerings in the first half of the year, we observed only four dealsin Q3’21—However, Q3’21 has granted us the biggest Public Offering YTD—$3.75B IPO of South Korean gaming holding Krafton, the creator of PUBG franchise. Other notable value driving dealsof 2021 include Bilibili PIPE ($2.6B), ironSource de-SPAC ($2.3B), AppLovin IPO ($2.0B), and Playtika IPO ($1.9B) —In Q2’21 we observed the public offerings activity stop its 12-months growth rally, and experience a significant drop in the number of deals, with the downward trend continuing in Q3’21. The trend suggests the turbulent times for the industry leaders, with many public gaming companiesexperiencing a share price declineNote: (*) only closed Q1-Q3 2021 deals are reflected in the graphs;The amount doesn’t include Tencent fixed-income offerings of $4.04B and Roblox direct listing closed during H1’21Public Offerings in the Video Games Industry*4Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

Private Investment Activity—For Q1-Q3’21 private investments show a significant growth compared to Q1-Q3’20, reaching $8.6B with 384 closed deals, and providing +83% YoY growth in transaction value,and +47% YoY growth in the deal number respectively—Late-stage deals continue to be the main contributor in Q3’21, accounting for 78% with massive $3.07B raised capitalacross 20 deals; meanwhile, early-stage deals accounted for 13%of the value ($518m across 72 deals), while corporate deals added 9%with 28 deals—The most notable transactions in Q3’21, contributing almost 45% of all deal value, were Sorare ($680m), Discord ($500m), Jam City ($350m), and Dapper Labs ($250m)Private Investments in the Video Games Industry5Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

M&A ActivityNote: (*) only closed deals are reflected in the graphs (excl. Sumo Group and other deals)—We see continued robust M&A activity in Q3’21 with 69 closed transactions, and 30 deals announced and pending closing○Other notable deals, announced in Q3’21 (but not closed during the quarter) include SpinX ($2.19B), Sumo Group ($1.27B), StarLark ($525m), and Jawaker ($205m)—Mobile gaming sector was the core driverof the deal activity in Q3’21, accounting for 84% of total valuewith only one closed mega-deal —$1.4Bacquisition of mobile sports game developer Playdemicby Electronic ArtsM&As in the Video Games Industry*6Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

Top-15 VC Funds by Deal Activity in Q1-Q3’217Rank*Venture Capital Fund# of total dealsTotal deal value**, $m# of leading dealsLeading deals value**, $mSelected lead deals1Bitkraft Ventures17267.313122.5Immutable, Resolution Games, Anzu, Starform2Galaxy Interactive16479.5589.0Bad Robot Games, 1047 Games3Makers Fund11444.76181.2Dream Games, Ramen VR, Lightheart Entertainment4VGames12125.3913.8Candivore, Boom Corp.5Hiro Capital841.2732.2Double Loop, Snowprint, Keen Games, Twin Suns6Index Ventures6819.54308.5Dream Games, Discord, Rec Room7Ludus Venture Studio96.675.6Hey Games, Maestro Game Studio, Jambox, Paxie Games8Griffin Gaming Partners6274.52237.0Forte, Overwolf9WePlay Ventures73.673.6Hero Concept, UDO Games 10Konvoy Ventures738.4413.1Carry1st, StageZero11GEM Capital68.358.3VEA Games, Vestan, Unfrozen, Weappy, Gameram12Lumikai413.4413.4All-Star Games, Loco13EQT Ventures217.5217.5Colossi Games, Hiber14Play Ventures7106.621.2Clickwork Games15Andreessen Horowitz (a16z)6564.114.6Yield Guild GamesNote: (*) based on internal weighted average ranking system; (**) based on investments with disclosed deal value

—For Q1-Q3’21 the top-15 strategic investors have closed the total of134 corporate and M&A deals(+30 deals in Q3’21) with$23.4B in total value(+$2B in Q3’21)—There weretwo significant transactions in Q3’21:—Electronic Arts closing the acquisition of Playdemic for $1.4B—MTG completing the acquisition of PlaySimple for $510m—Aside from Tencent, which closed 16 deals in Q3’21, the most active strategic investors in Q3’21 were:—Embracer Group, announcing/closing additional 11 deals, including such notable transactions as CrazyLabs, Bytex, Fractured Byte, Slipgate Ironworks, and 3D Realms—MGVC (MY.GAMES), closing 5 deals: WideView Games; Vox; The Breach Studio; Mamboo Games; Tworogue Games —Sony acquiring 2 more studios: Nixxes and Bluepoint Games—In Q3’21, Tencent displayed more activity in the Mobile segmentwith 8 closed deals, rather than in the PC&console segment (4 closed deals). The company’s major area of investment was China, with 14 closed deals in the regionTop-15 Strategic Investors by Deal Activity in Q1-Q3’21*8Note: (*) including recently announced and unclosed transactions;(**) based on 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 tooRank**Strategic Investor# of dealsDisclosed Value, $mDeal TypeInvestment Focus1Tencent incl. subsidiaries691 500M&As, CorporatePC&console, Mobile, Cloud2Embracer Group183 151M&AsPC&console, Mobile 3Sony11400M&As, CorporatePC&console, Tech4ByteDance54 021M&As, CorporateMobile, VR5Electronic Arts 44 700M&AsPC&console, Mobile6Stillfront Group5513M&AsMobile, PC7Zynga4775M&AsMobile, PC&console8Unity Software5320M&As, CorporateTech9Microsoft 17 500M&AsPC&console 10MY.GAMES / MGVC930M&As, CorporateMobile, Cloud11Epic Games6100M&As, CorporateTech, PC&console12Take-Two Interactive4378M&As, CorporatePC&console, Mobile 13Keywords Studios 4123M&AsOutsourcing 14AppLovin11 000M&AsTech, Mobile 15MTG2699M&AsMobile, Esports

RankSell-side advisor# of deals*Deal value, $m**Transactions152 515CrazyLabs, Reworks, PlaySimple, Easybrain, Jagex (exclusive)234 165Ludia, Moonton Technology, Tonic Games (exclusive)329 600ZeniMax Media (exclusive), Glu Mobile (non-exclusive)411 400Playdemic (exclusive)511 200Codemasters (exclusive)61200+Super Free Games ($150m upfront + estimated earn-out; exclusive)71450Aspyr ($100m upfront + $350m earn-out; exclusive)81130+Innova (exclusive)912 100Glu Mobile (non-exclusive)1011 378Gearbox (non-exclusive)Top-10 Sell-side Advisors by Deal Activity in Q1-Q3’21*9Note: (*) the table includes closed games deals with control sale and transaction size (incl. earn-out) higher than $80m only; (**) estimated deal size

Q1-Q3’21 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 see a tremendous growth in the blockchain section of the industry: the total number of deals for Q1-Q3’21 has jumped 3.4x YoY(41 vs. 12), while the total deal value has 34x’d YoY ($1.56B vs. $46M)—so theinvestor interest in the potential future of blockchain games cannot be any more obvious—The biggest Q3’21 blockchain dealsare Sorare Series B round of $680m (Europe’s biggest ever Series B, and the largest ever in the NFT space, both accurate for Q1-Q3’21), followed by Dapper Labs Series B+ round of $250m, and Immutable Series B round of $60mBlockchain Gaming Deals in the Video Game Industry**10Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

—There was heavy concentration in Seed rounds (~55%), but check sizes were usually small (~$3M/deal), and made up 4% of all the YTD deal value. That basically showcases that investors are ok getting in early through private token sale rounds, but are also cautiously skeptical—Enjin was the only one with a rather large $18.9M seed round through the sale of its new EFI token to build a NFT dedicated blockchain layer on the Polkadot network (an emerging Layer 1)—70% of the total YTD deal value was in various Series A/Bacross a total of 11 deals. The most notable were Sorare at $728M (Series A + B), Forte at $185M (Series A), Mythical Games at $75M (Series B), and Immutable at $60M (Series B)—Other notable Series B+ deals included Dapper Labs $250M and Animoca Brands ~$140M—Sorare’s massive funding is driven by two key points: first, it opens up an entirely new and legitimate secondary sales market for football, and second, it provides the massive TAM of football fans around the world to engage with their favorite teams in a completely newway—What’s common between Forte, Mythical Games and Immutable is that they’re all working towards building blockchain/token integration platforms of sorts —though it should be noted that the latter two also publish their own games, and are their own platforms’ customer. This is similar to Dapper Labs, and this is also why Enjin received a relatively large seed round funding—Animoca Brands is definitely an odd one out, as its strategy is closer to that of an aggregator and investor. They’re leveragingtheir 15 years of F2P experience to acquire genre-specific game studios, sign licensing agreements, and build content into their studios’ games with NFT components—One final and very unique investment is that of Yield Guild Games (YGG). This is a blockchain gaming guild that purchases very expensive blockchain gaming assets and rents them out to time-rich players from developing countries primarily, so that they can play-and-earn and profit share with YGG—Overall, it is quite clear that the companies commanding the largest funding rounds are the ones who are seizing the moment to build platform layerson which the future of blockchain games could live. Companies purely focused on building a blockchain game are getting significant attention too, but check sizes are much smaller. All that said, the absolute biggest takeaway is that blockchain gaming has clearly arrived, and the next 2-3 years of building will be pivotal to the future of the spaceQ1-Q3’21 Blockchain Gaming Deals —Presented by Naavik* 11Note: (*) the following analysis has been provided by Naavik consulting firm, based on InvestGame data

Gaming Companies12

Gaming: Investment Activity 13Note: (*) Investment Activityincludes Private Investments and PIPE, OtherQ1-Q3: Value of Deals, $mInvestment Activity* in the Gaming SectorCorporateVCPIPE, Other—Gaming investment activity in Q1-Q3’21 shows almost similar performance compared to Q1-Q3’20 with the total deal value of $6.5Band significant growth in terms of the transaction amount with 222 closed deals (+55% YoY)—Late-stage deals accounted for almost 65% of total deal valuein Q3’21: Jam City $350m round; Tilting Point series B round of $235m, Virtuous $150m round, and $120m Genvid Holdings series C round—Early-stage deals amounted for 55% in the total number of transactions with 38 closed dealsincluding one mega-deal: ProbablyMonsters series A round of $200m—Tencent was the main contributor with 10 closed deals among a total of 19 deals in corporate segment (28% of total number of deals in investment activity)Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

Gaming: Late-stage VC & Corporate14Late-stage VC & Corporate Activity in the Gaming Sector, in $mQ1-Q3: # of Late-stage DealsMultiplatformPC&ConsoleVR/ARMobileNote: (*) Includes $150m Series B round of gaming outsourcing firm Virtuos—In Q1-Q3’21 Late-stage VC & Corporate demonstrated strong results: $3.8B in deal value (+58% YoY) and 84 closed transactions (+147% YoY) —With 12 closed deals in Q3’21 for the overall amount of $1.2BLate-stage VC accounted for almost 82% of total transaction value and 39% in deal numbers respectively—In September, Jam City raised $350m in equity and debt financing from Netmarble, Kabam, and other participants—US-based free-to-play games publisher Tilting Point raised $235m in its first-ever equity financing—Singapore-based AAA game development service provider Virtuos received an investment of $150m. The round was led by Baring Private Equity Asia—Tencent continues to be the major player in corporate investment activitywith 10 deals closed in Q3’21, and 42 deals in Q1-Q3’21—Mobile segment continueв its trend and remained the largest segment of investment in Q3’21, accounting for almost 61% of the total number of dealsQ1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

—In Q1-Q3’21 M&A activity in gaming reached a new recordwith the total deal value of $25.1B in 138 deals, compared to $6.9B and 92 deals in Q1-Q3’20—Even though compared to Q1’21, Q2’21 and Q3’21 continued a declining trend in transaction value, there are 26 M&A announced deals to be closed in the foreseeable future with a value of more than $4.7B:—Netmarble acquires SpinX Games for $2.19B—Sumo Group acquisition by Tencent for $1.26B—Mobile segment contributed almost 97% of total deal value with 14 closed transactions in Q3’21, compared to 31% and 58% in Q1’21 and Q2’21 respectivelyGaming: M&AsLargest Mergers and AcquisitionsClosedDateTargetBuyerSize*, $mPlatformStatusMar’21ZeniMaxMicrosoft7 500PC&consoleclosedMar’21Moonton ByteDance4 000MobileclosedApr’21GearboxEmbracer1 378PC&consoleclosedApr’21Glu MobileEA2 100MobileclosedSep’21PlaydemicEA1 400Mobileсlosed-SpinXNetmarble2190Mobileannounced15Note: (*) deal size includes earn-out considerationsM&A Activity in the Gaming Sector, in $mQ1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

Gaming: Exits Activity16Note: (*) Exits include M&As, direct listings; SPACs, and IPOsExits* in the Gaming Sector—The cumulative deal value for Q1-Q3’21 is $34B across 152 deals, compared to ‘just’ $7.6B across 100 deals in Q1-Q3’20, presenting a shattering 4.5x growth YoYin deal value—We saw an increasein deal value and almost same number of gaming exits*, with $8.7B (45 closed deals) in Q3 against $16.9B (61 deals) and $8.6B(46 deals) in Q1 and Q2 respectively; while one might see the downward trend as a somewhat anticipated market correction, there are plenty of pending deals slated to be closed in Q4, so expect it to be a prolific one—The biggest exit of Q3 is the twice postponed Krafton IPO($3.75B), followed by Playdemicacquisition by EA ($1.4B), and the Reworks —Playtika deal ($600m)—Gaming Q3’21 had a decrease in the number of public exits with 3 transactions vs 4 in Q3’20, which may partially reflect recent changes in the investors’ mood after the booming 2020Q1’20Q2’20Q3’20Q4’20Q1’21Q2’21Q3’21

Appendix17

Methodology & Glossary18InvestGame tracks closed transactions (unless otherwise noted) in the Video Games industry with target-companies having core business operations related tothevideo 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 atthe 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 investmentsControl MinorityLate-stage VCCorporateEarly-stage VCPublic offeringsPIPE, otherFixed incomeIPO, SPACDeal 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 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 stockDeal Type Terms Glossary Target’s Sector OverviewGamingPC & СonsoleMultiplatformMobileOutsourcingVR/AREsports & OtherEsportsHardwareOtherCash-relatedPlatform & TechPlatformTechVR/ARBlockchain-powered

InvestGamePatreon19The free version of this report includes general market + Gaming segment data. To get the data on Platform&Tech, Esports, andOther deals data, please contact us at digest@investgame.net.We’ve added a new Patreonoption called Digest+, placing your logo in each of our future weekly digests, which unite over 1,100 industry professionals from all over the world.

S&P’s Disclaimer Notice:Reproduction of any information, data or material, including ratings (“Content”) in any form is prohibited except with the priorwritten permission ofthe relevant party. Such party, its affiliates and suppliers (“Content Providers”) do not guarantee the accuracy, adequacy, completeness, timeliness or availability of any Content and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, orforthe results obtained from the use of such Content. In no event shall Content Providers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of the Content. A referencetoa particular investment or security, a rating or any observation concerning an investment that is part of the Content is not a recommendation to buy,sell or hold such investment or security, does not address the suitability of an investment or security and should not be relied on as investment advice. Credit ratings are statements of opinions and are not statements of fact.Copyright © 2021, S&P Global Market Intelligence (and its affiliates, as applicable).Disclaimer20This report is intended for general information purposes only and is educational in nature; it is not a solicitation or an offerto buy or sell any financial instruments or to participate in any particular trading strategy. Nothing in this document constitutes a personal recommendation, legal, orother professional advice.You agree that you shall not copy, revise, amend, create a derivative work, provide to any third party, or in any way commercially exploit anyInvestGame research, and that you shall not reproduce data in any form or by any means, without the prior written consent ofInvestGame.This document is for distribution only as may be permitted by applicable local laws. It is not directed to, or intended for distribution tooruseby,any person or entity who is a citizen or resident of or located in any state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject InvestGame to any registration or licensing requirement within such jurisdiction.

InvestGame team is doing its best to provide you with Global Gaming Deals yearly and quarterly reports. You know them: here’s the one covering the first half of 2021, here’s the one on Q1 2021, and the huge 2020 Gaming Investment Overview. We also make weekly email digests covering all the gaming deals (subscribe!), and occasionally cover the biggest deals on our website.If you like what we do, please support us on Patreon.We would like to extend a huge thank you to our friends at Naavikfor covering the Blockchain Gaming Deals part of this report!Thank you, and stay safe!Message to Readers21Subscribe to:TwitterDigestPatreon!