Video game investment and acquisitions accelerated in the most recent quarter, according to investment firm Digi-Capital.
Tim Merel, managing director of Digi-Capital in London, said that the interesting trends emerging this year show that acquisitions of massively multiplayer online game companies are accelerating. Like it or not, bubble or not, video games appear to be moving faster into a golden age of funding and hype. Merel is one of the speakers at our upcoming GamesBeat conference in San Francisco on July 12-13.
One of the big transactions this year was the $350 million private equity investment in Germany’s Bigpoint, a maker of free-to-play online games with more than 190 million users. That deal valued Bigpoint, which makes titles such as Battlestar Galactica Online (pictured above), at more than $600 million.
Another major deal involved China’s Changyou, which bought a majority stake in Shenzhen 7Road Technology, another Chinese maker of online games, for more than $100 million. And China’s Perfect World bought Cryptic Studios from Atari for $49.8 million.
Merel said that social game investments are also increasing in volume and scale. He noted that Kabam has raised $115 million in two rounds since February. Germany’s Wooga, a Facebook game company, raised $24 million. CrowdStar raised $23 million and Funzio raised $20 million. On the acquisition side, Gree bought OpenFeint for $104 million. PapayaMobile raised $18 million and TinyCo raised $18 million. Rovio, the maker of Angry Birds, raised $42 million.
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The leading acquirers are the Chinese, Japanese and South Korean companies. Merel said that his current deal flow leads him to expect these trends to continue through the second half of 2011.
“We remain very bullish on online and mobile games growth and investment,” he said. “Now is a fantastic time. We are seeing significant appetite from Chinese, Japanese and South Korean games companies to acquire and invest in strong Western online and mobile games companies, but as our Chinese operating partner often reminds us building the right relationships remains critical.”
Merel said he believes there will be a “groundswell of games IPO activity” poised to come to the market in the next 12 to 18 months. He said he is bearish on the long-term outlook for the console game market, despite recent and anticipated hardware launches.
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