It was a heck of a week for game company transactions, illustrating the huge opportunities in gaming and growing investor interest — as well as the fragility of game industry jobs.

Scopely bought FoxNext Games Los Angeles and Cold Iron Studios from Disney. Under that deal, Los Angeles-based Scopely picked up 200 developers at FoxNext Games LA and 50 more at Cold Iron Studios, but then it turned around and said it is selling Cold Iron Studios because Scopely is focused today on mobile games and not PC or console games.

Likewise, the fate of FoxNext Games’ Fogbank Entertainment, a San Francisco studio that made StoryScape, is up in the air. Disney chose not to sell this nascent studio to Scopely. I expect to hear more about its fate soon.

Again, some developers are celebrating as if they hit the lottery; others aren’t sure if they’re out of work. Playful, creator of Super Lucky’s Tale, had to lay off a bunch of its staff in Texas. That company raised a lot of money, but it found it had to adapt to a fast-changing world.


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For Scopely, this means it was doubling down on “being the partner of choice for big media companies and intellectual property holders,” said Tim O’Brien, chief revenue officer of Scopely, in an interview with GamesBeat.

The Funcom deal

Above: Conan Exiles.

Image Credit: YouTube

Meanwhile, rumors surfaced that Tencent was going to reduce its investments in games, at least in China. But Tencent sort of proved that wrong by announcing it would offer $148 million to buy the rest of Norway’s Funcom that it doesn’t already own.

Funcom makes the Conan series of games, and it is working on a title based on Frank Herbert’s Dune sci-fi classic novel. These are hefty games, not hypercasual mobile games, so it was an affirmation for the heart of PC and console games.

Storm8’s big payday

Storm8 leaders (left to right): Terence Fung, Perry Tam, Laura Yip,

Above: Storm8 leaders (left to right): Terence Fung, Perry Tam, Laura Yip, Chak Li, and William Siu.

Image Credit: Storm8

And we saw another interesting shift as a Nordic company bought a Silicon Valley company. Sweden’s Stillfront Games acquired mobile game publisher Storm8 for $300 million. The 70-person studio makes casual mobile games that appeal to women, such as its Property Brothers Home Design title.

That’s a recognition that some companies aren’t afraid to invest in mobile games, which mobile data and analytics firm App Annie says will be a $100 billion industry in 2020. Mobile games are 2.4 times bigger than spending on PC and Mac games and 2.9 times larger than the spending on console games.

But mobile games are a highly competitive and dangerous space. Storm8 itself had a rocky time in 2017, when it laid off 130 people. But it bounced back, as it had done time and again since Perry Tam and his friends started the company as a Facebook desktop game company in 2009.

Then 25, Tam saw the chance to pounce on the Facebook games gold rush and then make the leap to mobile games as the iPhone took off.

“My co-founders and I were saying, ‘Hey, why don’t we give this a try?’ We understood that gaming was a good thing. We were all gamers ourselves,” Tam said in an interview. “We hadn’t made games before, but we thought it would be a fun thing to do, so we got started.”

It took more than a decade, but Tam won the lottery this week.

And don’t forget esports

There were 33 esports acquisition deals in 2019.

Above: 33 esports acquisition deals happened in 2019.

Image Credit: Quantum Tech Partners

We got a flavor for the big picture that is happening hear from Quantum Tech Partners, a new financial advisory firm for games and esports. In an interview, the founders Alina Soltys and Jim Perkins told me that they saw esports as one of the hottest areas of investment in games. They said that firms invested $1 billion in the esports industry in 2019, and we saw 33 acquisitions in esports that amounted to $475 million in value during the year.

Quantum Tech Partners (which will speak at our GamesBeat Summit 2020 conference) expects esports revenues to hit $4 billion by 2022, far more bullish than some rival forecasters.

“We’re into the current disruption of the games industry right now. It continues,” Perkins said in an interview. “It’s generating a lot of opportunities for game development studios, technology platforms, and publishers. I haven’t seen this kind of disruption since the ‘90s, when we were working with some of the first-person shooter guys like Epic and id and 3D Realms.”

Soltys sees big forces at work, like the quest for Asian companies like Tencent and NetEase to move to the west. A lot of money is chasing developers, with something like 16 viable platforms for games competing with each other, where the platform owners realize that they need to get more developers on their platforms. New technologies like blockchain and quests to build more realistic graphics are contributing to the growth. Even VR is showing signs of life, Soltys said.

“What we’re also seeing more broadly is there’s a strong amount of activity from the top tech and top gaming companies out there. It’s picking up more recently,” Soltys said. “We’ve seen Google acquiring studios to support the Stadia effort. PlayStation is doing similar deals. Microsoft is doing similar deals. Facebook, Twitch, Epic, they’re really going out and helping build out that infrastructure layer for themselves, continuing to drive pathways there.”

The biggest deals across all of gaming recently.

Above: The biggest deals across all of gaming recently.

Image Credit: Quantum Tech Partners

Game investors are fueling new startups, and private equity firms are also coming in at the high end to make their own sizable investments to compete with the biggest company buyers.

“Now that we have companies that are steadily growing, certainly profitable, that helps the private equity guys come in and write checks. That’s also attracting interest and creating some interesting transactions in that space,” Soltys said.

So what’s the outcome in terms of jobs? Often, as is the case with Funcom, developers are starved for resources and can’t really step up their investments as much as they like. A buyer like Tencent will come in and invest more money in future projects like Dune. That’s good for developers.

But as you can see in the breakup of FoxNext Games, not everyone will benefit. The Game Developers Conference 2020 survey noted that in 2019, the game industry saw a lot more expansion than it saw reductions or outright closures (by a 5-to-1 margin). Of 4,000 people surveyed, only 1% of developers said their studios closed in 2019. 10% said their studios reduced jobs, and 49% said they expanded.

In past console cycles, that’s almost unheard of. Usually what happens is that sales die off in the last year of a console cycle, and that motivates the industry to move to new consoles. That’s happening this year with the launch of the PlayStation 5 and the Xbox Series X. But we aren’t seeing a bunch of closures at the moment.

Project xCloud is upon us.

Above: Project xCloud is upon us.

Image Credit: Microsoft

The reason may be that of the 16 platforms that are thriving for games now, only six of them are really consoles or portable console devices. The rest of the growing platforms reflect the expanding edges of the game industry, such as voice, VR, augmented reality, cloud gaming, mobile, the web/PC, and tabletop games.

As for this week’s deals, we don’t know the exact terms on these deals and what sorts of pressures existed for the owners and the buyers. But in each case, it’s a lot of money involved. And it means that gaming remains a very interesting investment for some of the biggest and most successful companies in the world.

And I’ll tell you what. I know that more deals are in the works. And the prices paid this week by these buyers — which are in the hundreds of millions of dollars — will seem low compared to what’s coming.

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