To invest, seed investors have to believe that some other investors will be ready to commit Series A and Series B rounds to their startups. And those investors have to believe that exits are possible, mostly through acquisitions. But the investments have still been flowing, and it looks like games are faring better than other forms of entertainment in Hollywood. One of the paths is obvious: Smaller companies can sell out to strategic investors.

Initial public offerings

Game deals in Q1 2020.

Above: Game deals in Q1 2020.

Over the last decade, game IPOs have gone through three-year repeating cycles where one huge year leads to two quieter ones. The last high came in the record year for game IPOs in 2017, with substantially low games IPO activity in 2018 and 2019. With the way the stock market is going — down because of the coronavirus — you can bet that we won’t see many IPOs this year, Evdokimov said.

According to the three-year repeating cycle, Evdokimov said we should theoretically anticipate growth in total money raised through IPO at the start of 2020.

Nevertheless, only one tracked IPO happened on March 4, by the video game holding company Nacon, previously the gaming division of BigBen Interactive, which encompasses activities carried out as a publisher-developer of video games and a designer-distributor of premium gaming accessories.


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The IPO of Nacon on the regulated market of Euronext Paris allowed the company to successfully raise about $109 million.

Evdokimov said we should have expected growth in game IPO activity at the start of 2020. But the IPO window closed quickly as the enormous volatility hit the stock market.

Starting the end of February, all entertainment software companies saw a significant drop in share prices, followed by a gradual increase over the last several weeks from March 20 onward.

The uncertainty raised from a sharp decrease in oil prices and the coronavirus outbreak has reshaped the 2020 IPO timeline. Assuming markets will stabilize in the second quarter, more companies will tentatively target fall IPOs. Nevertheless, it’s going to be a dreadful year for public offerings as fears about the scale of the macroeconomic downturn will hurt investor sentiment and impact public markets.

Optimism for what lies ahead

Above: Stocks of game companies fell during the pandemic — then rose.

Image Credit: Sergei Evdokimov

Evdokimov found some reason to be optimistic. First, he noted the strong surge in interest around video games during the pandemic. It has led to an increase in video game sales worldwide, a boost in the amount of time spent playing, and higher numbers for live game streaming.

As more and more people around the world self-isolate and get introduced to the world of interactive entertainment, he expects more new gamers to become accustomed to playing and eventually paying in video games. Not only does he project the short-term positive dynamics, but also long-term favorable changes in the gamer audience.

Second, M&A activity will probably grow. The recent announcement made by Embracer Group (formerly THQ Nordic) of raising $164 million to make further acquisitions of development studios and publishers is a positive indicator.

Finally, he said today’s venture industry is more sustainable and liquid relative to the previous economic downturns. Plenty of VC funds (Play Ventures, Makers Fund, London Venture Partners, Bitkraft, etc.) and huge private equity groups (Andreessen Horowitz, KKR, SilverLake, and Blackstone) are interested in entertainment. On top of that, corporate venture capital funds are putting additional capital in the gaming startups. Growth in the secondaries market (i.e. secondary public offerings where shareholders can sell to others) also provides more liquidity opportunities for stakeholders.

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