The video game industry is “showing signs of recovery” after “record layoffs, closures and business turmoil.”
This is according to DDM's Games Investment Review, which reports “a considerable rebound” in investments, recovering lost ground in 2023.
While mergers and acquisitions (M&A) remain “low” (even discounting last year’s anomalous $68.7 billion generated by Microsoft’s acquisition of Activision) and no quarter in 2023 topped $1.3 billion, both the first and second quarters of 2024 “have each reached more than $2.2 billion.”
DDM suggests that the half-yearly rebound suggests that in the first half of 2024 alone, investments totaled $8.1 billion, almost doubling the $4.5 billion investment volume seen for the whole of 2023.
However, while the second quarter was “excellent for gaming investments,” the report's authors say M&A totaled $845 million across 40 deals, which is “a dramatic decline quarter-over-quarter” (-59% in value and -5% in volume from the first quarter's $2.1 billion across 43 deals).
IPOs also suffered as no companies had a public debut in Q2 2024, breaking a nearly five-year streak of at least one company going public per quarter dating back to Q3 2019.
“When we look at our dataset, which covers 16 years of gaming investments, M&A and IPOs, I can't help but feel excited about the near future,” said Mitchell Reavis, manager of DDM Games Investment Review.
“The past year has been a really unstable time for the gaming industry, and with the resurgence of investment in games, it seems that the restructuring is coming to an end.
“While M&A and IPOs are down marginally compared to the previous quarter, values are down simply due to the lack of disclosed deals,” Reavis added.
“Unfavourable conditions have allowed companies to take a more strategic approach by not disclosing the purchase price of a company. As studio finances become more stable, we expect more values to be disclosed, which will drive major exits currently in the pipeline, such as EQT Group's £2.2bn acquisition of Keywords Studios and the potential IPO of Animoca Brands in 2025.”