Technology has taken Sports and Gaming to a tipping point in cultural importance with new gear, viewing devices, wearable devices, networked venues, and instant measurement, stats, context and commentary. Video game revenue has surpassed Hollywood box office receipts for years. Now sports dominate the top-rated global broadcasts and social media. These two entertainment avenues are converging. Video games are becoming a spectator sport driving Amazon’s $1B acquisition of Twitch, and sports are becoming more interactive via the growing multi-billion dollar industry of fantasy sports.
This disruption drives M&A. Gaming acquisitions hit an all-time high in 2014, almost doubling to $10B in transactions, with megadeals like Minecraft by Microsoft for $2.5B and Oculus VR by Facebook for $2B. Deals are catching up in sports, spread across the ecosystem in statistics, advertising, fantasy and motion tracking headlined by the rollup of Stats LLC and Bloomberg Sports by Vista Equity. Gambling is driving value in both areas, as people demand participation, business models mature and jurisdictions loosen regulations. The acquisition of Big Fish Games by Churchill Downs for nearly $1B came together at that crossroads of sports, gaming and gambling. Expect more collisions as this disruptive trend drives consolidation.