The game business has shown a modest return in the first quarter of 2024 in terms of investments, mergers & acquisitions, and IPOs, following a slow period in 2023. The quarterly DDM Games Investment Review reported that Disney’s $1.5 billion investment in Epic Games was a significant contributor to the overall increase in investments. Despite layoffs and business turmoil in the industry, there has been a return to cautious growth in deals in Western markets, excluding the massive Chinese games sector.
The report highlighted that the total number of investments and M&As in 2023 was inflated by a few major deals, such as Microsoft’s acquisition of Activision-Blizzard. However, overall dealmaking activity was subdued in 2023 compared to the peak interest seen in games during the pandemic. The report noted that there are no deals of the same scale as the Activision acquisition expected in 2024, but there has been a significant increase in investments in the first quarter of the year.
Disney’s investment in Epic Games came amidst a proxy battle with activist investors and marked a shift in strategy as Disney had previously focused on licensing its intellectual property franchises to external game developers. The partnership between Disney and Epic Games will involve the creation of a Disney-themed world within the popular gaming platform Fortnite. Overall, the first quarter saw a total of 178 investments in game companies, totaling $2.2 billion, representing a positive trend in the market.
Investors continue to show interest in companies developing blockchain-related games and technologies, resulting in $293 million being invested in 66 deals. Despite a slight decrease in value compared to the previous quarter, the interest in blockchain investments has been fueled by the growing popularity of Bitcoin ETFs. Mergers & acquisitions in the industry also saw a significant amount of activity in the first quarter, with over $2 billion in deals across 41 transactions.
The report also tracked exits, including IPOs, which saw a decline to just one IPO worth $7.2 million in the first quarter. This represented a significant decrease compared to the previous quarter but was consistent with pre-pandemic trends. Poland continued to be a prominent player in the gaming industry, with local company ConsoleWay debuting on the NewConnect Exchange. Additionally, $13.7 billion in new venture capital funds were raised by 28 funds, indicating continued interest in investing in the sector.
The report highlighted the success of Silicon Valley’s big names, such as Andreessen Horowitz’s a16z and Y Combinator, which raised a significant amount of capital for game-related investments. Blockchain-related game funds have also seen increased traction, with a16z fund comprising a significant portion of the total funds raised in this category. Overall, the gaming industry is showing signs of growth and investment activity, with various factors contributing to the positive trends in the market.
