Gaming 2013: Investment and M&A Analysis, Industry Trends,

and Market Outlook

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Published: Nov 2013 Pages: 41

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The gaming sector continues to represent a high growth and value sector within the

digital entertainment realm. However, certain sub-segments stand-out in terms of

anticipated high growth potential.

Investment trending in the gaming sector had reshaped to some degree in terms of

value vs. growth in the post-Zynga era. Investments in gaming indicated signs of

slumping, but gained confidence earlier in the year as evidenced by certain deal making

in terms of investment and M&A. Certain gaming sub-sectors, particularly mobile,

mobile-social, TV-integrated game, and middleware technology, have indicated promise

for 2014 and beyond.

This research evaluates the gaming investment and M&A trends during the period

2010-2013. The report analyzes the transition of gaming business models in different

gaming sectors and the impact on investment market. The role of alternative financing

as a bridge to institutional investment for the gaming sector including the trending

social, casual, and MMO categories. The report also evaluates major gaming M&A and

investment deals from the perspective of the impact on current landscape and

anticipated future market direction.

The report includes recommendations and guidance for gaming companies to attract

funding and investors to choose optimal gaming sub-sectors in 2014 and beyond. The

report coverage includes various usage modalities such as mobile, wireless tablet,

console, and PC, as well as the influence of middleware and advertising sub-sectors.

Target Audience:

Digital entertainment companies

Data and telecommunication service companies

Providers of digital content, commerce, and applications

Investment community including private equity and hedge funds

Gaming companies of all types including online, mobile, and console

Companies in Report:

Activision-Blizzard

AppGenius

Apple

Boomzap Entertainment

Caesars Interactive

Chillingo

Concept Art House

DeNA

Disney

Double Down Interactive

DraftKings

Electronic Arts

Epic

Facebook

GaiKai

Gamble World

Game Insight

GetFunded.com

Gigya

Gloops

Golden Fingers

Google

GREE

GungHo Entertainment

Hattrick

Heyzap

IBM

IGT

IMI.VC

Indiegogo.com

KakaoTalk

Kickstarter

King

Kwarter

Line

Microsoft

Mobage

MOVL

Natural Motion

NCSoft

Nexon

NgMoco

Nintendo

Playdemic

Playdom

Playfish

Playspan

Pokelabo

PopCap

Poppy

PrePlay

Robotoki

Rock Gaming

Rumble Entertainment

SecretNewCo

Shiver Entertainment

Sneaky Games

SoftBank

Sony

Supercell

Tencent

Twitch

Unity

Visa

WeChat

WhatsApp

Wooga

Zattikka

Zynga

Table of Contents:

1.0 EXECUTIVE SUMMARY 5

2.0 GAMING INVESTMENT TRENDS 2013 7

2.1 SECOND SCREEN INCLUDING MOBILE DEVICES AND TV 7

2.2 SOCIAL VS. GAME NETWORK 7

2.3 GAMING DEALS 8

2.4 POST ZYNGA ERA IN MIDDLEWARE GAMIFICATION & SOCIAL ELEMENTS

INTEGRATION 8

3.0 GAMING INDUSTRY TRASITION AND FRAGMENTATION ANALYSIS 9

4.0 GAMING SECTOR AND BUSINESS MODEL ANALYSIS 13

5.0 VALUE VS. VOLUME REGIONS 17

6.0 MERGER & ACQUISITION (M&A) REVIEW AND ANALYSIS 20

7.0 GAMING VENTURE CAPITAL (VC) REVIEW AND ANALYSIS 25

8.0 CROWDFUNDING TREND AND CASE ANALYSIS 27

8.1 KICKSTARTER PERFORMANCE 27

8.2 APPGENIUS WITH GETFUNDED.COM 28

8.3 POPPY WITH KICKSTARTER FOR AR GAMES 28

8.4 GOLDEN FINGERS WITH INDIEGOGO.COM FOR WRITEON GAME 28

9.0 INVESTMENT CASE ANALYSIS 29

9.1 IBM FOUNDER FAMILY ON PLAYDEMIC FOR SOCIAL GAME 29

9.2 ZATTIKKA ACQUISITION OF HATTRICK, CONCEPT ART HOUSE AND SNEAKY GAMES

29

9.3 SUPERCELL FUNDING AND TREND AROUND FREEMIUM MODEL 30

9.4 IMI.VC INVESTMENT FOR GAME INSIGHT 30

9.5 ROCK GAMING INTEREST ON CAESARS INTERACTIVE 30

9.6 NEXON INVESTMENT TO RUMBLE ENTERTAINMENT, ROBOTOKI, SHIVER

ENTERTAINMENT, AND SECRETNEWCO 31

10.0 CONCLUSION AND OPPORTUNITY ANALYSIS 32

10.1 OPPORTUNITY CHART BY GAMING SECTORS 32

10.2 OPPORTUNITY IN MOBILE AND TABLET GAMING PLATFORM 33

10.2.1 ONLINE AND MOBILE GAME COMPANY 33

10.2.2 CONSOLE GAME COMPANY 33

10.2.3 INDEPENDENT GAME COMPANY 33

10.2.4 TELECOM AND DISTRIBUTION COMPANY 33

10.2.5 VENTURE CAPITAL FIRMS 33

10.2.6 PRIVATE EQUITY FIRMS 34

10.3 OPPORTUNITY IN SOCIAL AND CASUAL GAMING SECTOR 34

10.3.1 ONLINE AND MOBILE GAME COMPANY 34

10.3.2 CONSOLE GAME COMPANY 34

10.3.3 INDEPENDENT GAME COMPANY 34

10.3.4 TELECOM AND DISTRIBUTION COMPANY 35

10.3.5 VENTURE CAPITAL FIRMS 35

10.3.6 PRIVATE EQUITY FIRMS 35

10.4 OPPORTUNITY IN MMO SECTOR 35

10.4.1 ONLINE AND MOBILE GAME COMPANY 35

10.4.2 CONSOLE GAME COMPANY 36

10.4.3 INDEPENDENT GAME COMPANY 36

10.4.4 TELECOM AND DISTRIBUTION COMPANY 36

10.4.5 VENTURE CAPITAL FIRMS 36

10.4.6 PRIVATE EQUITY FIRMS 36

10.5 OPPORTUNITY IN CONSOLE AND PC GAMING SECTOR 37

10.5.1 ONLINE AND MOBILE GAME COMPANY 37

10.5.2 CONSOLE GAME COMPANY 37

10.5.3 INDEPENDENT GAME COMPANY 37

10.5.4 TELECOM AND DISTRIBUTION COMPANY 37

10.5.5 VENTURE CAPITAL FIRMS 38

10.5.6 PRIVATE EQUITY FIRMS 38

10.6 OPPORTUNITY IN MIDDLEWARE SECTOR 38

10.6.1 ONLINE AND MOBILE GAME COMPANY 38

10.6.2 CONSOLE GAME COMPANY 38

10.6.3 INDEPENDENT GAME COMPANY 38

10.6.4 TELECOM AND DISTRIBUTION COMPANY 38

10.6.5 VENTURE CAPITAL FIRMS 38

10.6.6 PRIVATE EQUITY FIRMS 38

10.7 OPPORTUNITY IN ADVERTISING 39

10.7.1 ONLINE AND MOBILE GAME COMPANY 39

10.7.2 CONSOLE GAME COMPANY 39

10.7.3 INDEPENDENT GAME COMPANY 39

10.7.4 TELECOM AND DISTRIBUTION COMPANY 39

10.7.5 VENTURE CAPITAL FIRMS 39

10.7.6 PRIVATE EQUITY FIRMS 39

11.0 RECOMMENDATIONS AND GUIDNACE FOR 2014 AND BEYOND 40

11.1 GAME COMPANIES TO ATTRACT INVESTMENT 40

11.2 INVESTORS TO CHOOSE PROFITABLE SECTOR 41

Figures

Figure 1: Apps Category vs. Gaming Apps Usage 2013 9

Figure 2: Mobile Game vs. Non-Game Mobile App Revenue 2010 – 2013 10

Figure 3: Gaming Companies Spotted in the Market Fragmentation Chart 12

Figure 4: Communal Gameplay Trend 2013 13

Figure 5: Communal Game Revenue Trend 2013 14

Figure 6: Business Model Trend 2013 – 2016 15

Figure 7: Gaming Investment Trend in Sectors 2013 15

Figure 8: Selected Gaming Investment & Values 2013 16

Figure 9: Top Countries under Value vs. Volume Regions 17

Figure 10: Unique Natures of Value vs. Volume Markets 18

Figure 11: Gaming Revenue Trend in Regions 2007 – 2016 18

Figure 12: Global Video Games Revnue Trend 2007 – 2016 19

Figure 13: Global Video Game Investment vs. M&A Volume (ex-IPOS) 2005 – 2013 20

Figure 14: Global Video Game Investment vs. M&A Vloume (inc-IPOs) 2005 – 2012 20

Figure 15: M&A Volume Trend in Gaming Sectors 2012 21

Figure 16: M&A Volume Trend in Gaming Sectors 2013 21

Figure 17: Selected M&A Deal Value 2013 23

Figure 18: Selected Gaming Consolidation 2013 24

Figure 19: Game Sector among Total Mobile VC Ecosystem Q1 2013 25

Figure 20: Mobile Game VC Investment 2010 – till Q3 2013 26

Figure 21: VC Investment in Social Gaming 2010 – till Q3 2013 26

Figure 22: Kickstarter Performance by Game Sector vs. Value Range 2012 27

Figure 23: Gaming Sectors in Consolidation and Investment Chart 2014 and Beyond 32

Contact: Kabir Ahmad, Email: kabir@mindcommerce.com