Drake Star’s Gaming Index Sees a Rise of 15% in Q2 2023
The latest report by Drake Star reveals that the gaming industry’s mergers and acquisitions (M&A) sector is showing signs of recovery. While the pace of investment remains slow, there was a slight increase in the number of deals in Q2 2023, with 44 deals compared to 43 in the previous quarter. However, this is still significantly lower than the record-breaking 83 deals that occurred in 2022. Noteworthy among the Q2 M&A activity is the major acquisition of Scopely by Saudi Arabian Savvy Games Group for a whopping $4.9 billion. Drake Star remains optimistic that the upward trend in M&A will continue throughout the latter part of 2023.
Private financing deals, on the other hand, experienced a slight decline in Q2, with 196 deals raising an estimated $700 million compared to 200 deals in Q1. However, the report highlights that 80% of these private financing deals were for early-stage companies, representing a ten percent increase from the previous quarter. This mirrors the number of deals that took place in Q2 2021, where 195 deals occurred.
The report also mentions the court ruling in favor of Microsoft’s acquisition of Activision Blizzard. Despite facing regulatory challenges, the deal is expected to close soon, making it the biggest deal of the year. This development adds to the overall positive outlook for the gaming industry.
According to Drake Star, artificial intelligence (AI) and tools continue to be a popular segment for investment, aligning with their previous report’s predictions. However, gaming and blockchain funds have received less attention this year. In terms of regional distribution, the number of M&A deals is fairly balanced, with 11 deals in “Asia and others,” 18 deals in Europe, and 15 deals in North America.
Analysis: Slow Recovery and Cautious Optimism
While Drake Star’s earlier prediction that M&A would make a comeback has proven accurate, the road to recovery seems to be a slow and steady one. The notable exception is the Activision Blizzard acquisition, which has garnered significant attention and sparked stock rises in the gaming industry. This suggests that investors are gaining confidence and could lead to increased investments in the industry once the deal is finalized.
Although the recovery may not be as rapid as some may have hoped, there is a clear interest in early-stage companies, indicating a cautiously growing optimism. It is possible that after a busy year in 2022, the gaming industry may experience a surge in activity towards the end of 2023.