Public game companies’ stock prices saw a surge in the first quarter of 2021, with the Drake Star Gaming Index increasing by 12% compared to the S&P 500’s 7%, as reported by Drake Star Partners. However, as the number of acquisitions decreased drastically from 76 to 43, the scale of the industry’s weakening became evident. Michael Metzger, partner of Drake Star Partners, discussed the current state of the gaming world with GamesBeat. He stated that the blockchain gaming industry, strong in the past, had dropped from 50% of all deals in the past to now a mere 20%. Metzger attributed this issue to the slump in cryptocurrency costs, low NFT prices, a weak economy, the lack of high-level blockchain games, low audiences, and scandals of the FTX nature.
Savvy Gaming Group began the new year with the acquisition of Scopely for $4.9 billion. Now, SEGA has followed this lead with the $776.2 million offer for Angry Birds maker Rovio. The gaming and blockchain sector experienced an influx of funds with over $13 billion raised in 2022, although cautious behavior of limited partners has led to a decline in new fund announcements. Over 200 private financings were documented in Q1, with over 70% designated as early-stage investments. Bitkraft Ventures led the list of most active VCs, followed by Andreessen Horowitz, Play Ventures, and Griffin Gaming.
The Drake Star Gaming Index, an equal-weighted index of the top 25 market-valued gaming companies, experienced a rise in LTM P/E and EBITDA multiples by 21% and 12%, respectively. Drake Star expects this bullish market to encourage M&A purchases, with numerous public game companies investing in smaller studios. It is also predicted that several listed gaming companies will be taken over by private equity firms this year.
Drake Star Partners is a global merchant banking company specializing in digital media, technology, and gaming investments, with over 35 years of both transaction and industry-related experience. Founded in 2009 and based in New York, Drake Star Partners focuses on media and technology oriented investments throughout the US and internationally. The firm’s current team includes a range of professionals previously active in venture capital, finance and corporate banking, as well as industry professionals, who are dedicated solely to growing their investments and helping their clients succeed.
