The Transform Technology Summits start October 13th with Low-Code/No Code: Enabling Enterprise Agility. Register now!

Game industry acquisitions grew dramatically in the second quarter, putting 2012 on track to break records for game M&A deals, according to investment bank Digi-Capital. But investment into new game startups slowed somewhat in the first half of the year.

Just six months into the year, games M&A is already at 88 percent of the transaction value for all of 2011, which was the previous record year. In the first six months of the year, Digi-Capital has tracked 51 transactions worth $3 billion in transaction value. The average value of each transaction was $59 million. The firm tracked 113 transactions in 2011 worth $3.4 billion, with an average value of $30 million. That means we’re seeing fewer transactions, but the values are higher.

“More than ever, now looks like the time for strong independent and larger, more established games companies to consider their strategic options,” said Tim Merel, managing director at Digi-Capital and a speaker on the investments panel at our GamesBeat 2012 conference next week in San Francisco.

The categories with the most activity are massively multiplayer online (MMO) games, social and casual, mobile, and middleware.


Three top investment pros open up about what it takes to get your video game funded.

Watch On Demand

In the first six months of 2012, there were 73 investments in game companies that generated $481 million in transaction value at an average of $7 million.

In 2011, there were 152 transactions worth $2 billion at an average investment of $13 million. The transaction volume is down by 4 percent, and the transaction value is down 51 percent. If this trend persists, then the game investment level for 2012 might return to the respectable level of 2010, the second-highest year on record.

Mobile, middleware, and MMO investments led the way, while the decline in transaction value was largely due to fewer social and casual deals. That makes sense in that Zynga dominates that category on Facebook and new startups have been steering into mobile instead. In 2011, social and casual constituted 57 percent of the transaction value and 32 percent of transaction volume, but they’ve constituted only 11 percent of the transaction value and 6 percent of the transaction volume so far this year. Merel predicts consolidation to continue in the social and casual space.

Mobile games investment accounted for 31 percent of the game investment transaction value and 49 percent of transaction volume. Mobile will likely continue to drive deals for the rest of the year. Games middleware (and gamification, or the use of game mechanics in non-game applications) were 33 percent of the transaction value and 18 percent of transaction volume. Gamified education and health are growing.

MMOs were 22 percent of the transaction value and 12 percent of transaction volume, largely because of the attraction of the free-to-play model, where users play for free and pay real money for virtual goods. Chinese, Japanese, and South Korean acquisition and investment continues to be a big part of mobile, mobile-social, and free-to-play MMO both domestically and internationally.

GamesBeat 2012 is VentureBeat’s fourth annual conference on disruption in the video game market. This year we’re calling on speakers from the hottest mobile, social, PC, and console companies to debate new ways to stay on pace with changing consumer tastes and platforms. Join 500+ execs, investors, analysts, entrepreneurs, and press as we explore the gaming industry’s latest trends and newest monetization opportunities. The event takes place July 10-11 in San Francisco, and you can get your tickets here.

[Image credits: economic collapse and Digi-Capital]



GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. How will you do that? Membership includes access to:
  • Newsletters, such as DeanBeat
  • The wonderful, educational, and fun speakers at our events
  • Networking opportunities
  • Special members-only interviews, chats, and "open office" events with GamesBeat staff
  • Chatting with community members, GamesBeat staff, and other guests in our Discord
  • And maybe even a fun prize or two
  • Introductions to like-minded parties
Become a member