Video Game Spotlight

There is a feeding frenzy at the moment in social and mobile gaming. M&A is at an all-time high in this space, just as we predicted in our Annual Forecast Webinar back in January. This is particularly true in the social space, as weve seen major acquisitions recently by Zynga, Big Fish, and IGT. There is special interest at the moment in online casino gaming which will work to challenge Zyngas lead with their Zynga Poker, which presently has more than 30 million monthly users.

 

IGT is a casino slot machine manufacturer that bought Double Down for a reported $500M. Double Down is famous for its online casino game on Facebook, with more than 5 million monthly active users. This is a smart move for IGT, as it expands their gaming portfolio beyond the physical gaming floor, which appears to be slowing in growth. Last year they  acquired Entraction Holding AB to strengthen their position in the legalized online gaming market, so look for them to keep moving in the space.

 

Big Fish Games bought Self Aware Games for their mobile-social casino game, Card Ace: Casino; the transaction value was not disclosed. Online casino gaming is clearly the hottest social game space on the internet with Electronic Arts PopCap Games division launching Lucky Gem Casino, and Zynga adding more to their mix with Zynga Slingo and Zynga Bingo.

 

At the beginning of April, Accel Partners invested $14M in the social games company Dragonplay, best known for Live Holdem Poker Pro on Android.  They report more than 12 million installs and 2 million monthly active players.

 

So, what does all this mean?  Clearly, online and mobile casino games are popular and addictive, and some big bets are being placed in the social casino games market. And the homerun play is obvious when you ask how much more these companies would be worth if and when our State and Federal governments legalize online gambling.  

 

Lets look at some of the other activity in social and mobile games this quarter.

 

With lightning speed Zynga bought OMGPOP for a whopping $200M. This is what happens when you challenge Zyngas dominance on the gaming charts.  In 6 weeks OMGPOPs Draw Something, which is much like Pictionary, was downloaded 35 million times. Add this to 3 other acquisitions Zynga has made so far this year, and clearly this social gaming giant is on an acquisition rampage.

 

The pace at which these acquisitions can happen is increasing dramatically, so it pays to plan ahead and be ready to sell when Zynga comes knocking.

 

Social mobile and online game M&A is clearly leading in the video game space. Corum believes this wave of consolidation is just the beginning of an oncoming surge of opportunity to realize value in the video game industry. Not only is the casino sector hot, there is plenty of room for new innovative games like Draw Something to make a huge impact on the social game landscape.  Plan now for your companys optimal value outcome. Your company could be the next big acquisition.

Posted by , Executive Vice President on 12 June 2012
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