Jan 12, 2022 - Technology

2021 was "landmark year" for video game dealmakers

Borderlands 3 from Gearbox, a studio purchased in February for $1.3 billion. Screenshot: Gearbox

There were more than 1,100 acquisitions, investments and other financial deals in the games industry in 2021, making it a “landmark year for gaming,” according to a new report by industry tracker Drake Star.

Why it matters: Gaming’s COVID-driven player boom in 2020 was followed by an investment boom a year later, resulting in an industry flush with people who want it to thrive.

The numbers: While many deals don’t have dollar amounts tied to them, the report says disclosed deals totaled $85 billion. A partial breakdown:

  • $38 billion in mergers and acquisitions, including the voracious Embracer Group’s 22 deals in 12 months (beating out Tencent’s 16)
  • $13 billion invested in private companies, including $1 billion in Epic last April and from $100 million to $200 million to new studios That’s No Moon, Probably Monsters and Splitgate creators 1047 Games.
  • $3.6 billion went to Blockchain/NFT companies, including Animoca’s Sandbox, play-to-earn sensation Axie Infinity and Forte, which recently announced a partnership with Zynga.

The big picture: The volume and scale of the deals point to where gaming is heading.

  • Microsoft’s $7.5 billion acquisition of Bethesda, which was announced in 2020 and closed in 2021, paved the way for Xbox’s aggressive 2022, which is set to be capped with Bethesda’s signature exclusive game Starfield, meant to sell Xbox and its range of gaming services.
  • In 2021, mobile studios were the favored target for acquisitions — and that’s before 2022 started with Take-Two’s $12.7 billion bid for Zynga.
  • But the largest amount of disclosed private investment went to blockchain companies. That tracks with the idea that blockchain gaming is being driven by startups and companies outside gaming’s establishment.

The bottom line: All these deals show excitement, but they don’t inherently augur success.

  • For all the money poured into VR gaming over the past decade, that sector is still awaiting its breakthrough moment.
  • It's also worth noting that the biggest gaming hits can come from small teams, though it helps to have a huge backer. See: 2021 breakout Valheim, an upstart Viking game made by five people whose studio is partially owned by the massive Embracer.
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