After “record-breaking layoffs, closures and business turmoil” in the first half of 2024, the video game business is showing signs of recovery, according to a new report from DDM Games.
DDM, the acronym for Digital Development Management, is an agency that offers representation, consulting and investment services and regularly conducts studies of the sector.
Each of the first two quarters of the year saw investments of over $2.3 billion, a stark contrast to 2023, when no quarter was above $1.3 billion. The first half’s total of $8.1 billion across 488 investment transactions brings the total to a two-year high and has already surpassed the 2023 total of $4.5 billion. (See chart below.) The first half was led by investments such as Disney’s $1.5 billion investment in Fortnite DDM noted that game maker Epic Games and GameStop’s $2.1 billion stock sale came after a surge in meme stocks.
Despite the upturn, the report expresses concern about low M&A activity. The $2.9 billion total from 82 deals in the first half of the year fell 61% in value and 5% in volume compared to the same period in 2023. (The decline occurred even when excluding Microsoft’s $68.7 billion acquisition of Activision Blizzard.)
IPOs also suffered, as not a single company went public in the second quarter. This was the first quarter since 2019 in which not a single gaming company went public.
While the trends in mergers and acquisitions and IPOs are not particularly encouraging, Mitchell Reavis, manager of the DDM Games Investment Review, sees reason for optimism for the rest of 2024 and 2025.
“When you look at our dataset, which spans 16 years of gaming investments, mergers and acquisitions, and IPOs, I can’t help but be excited about the near future,” he said. “The last year was a really turbulent time for the gaming industry, and with the resurgence in gaming investments, the shakeout seems to be coming to an end.”
Reavis added: “The adverse conditions have allowed companies to be more strategic by not disclosing the purchase price of a company. As studios’ finances become more stable, we expect more value to be disclosed, encouraging the big exits currently in the works, such as EQT Group’s acquisition of Keywords Studios for £2.2 billion ($2.8 billion) and the potential IPO of Animoca Brands in 2025.”
Here is a multi-year chart of video game investment:
