Booming M&A Gaming Market
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Transcript of Booming M&A Gaming Market
San Francisco 2014Alina SoltysSenior Analyst
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Corum – Sell Side Advisory Firm Established in 1985.
Focused on transactions in technology products and services businesses.
Professional staff drawn from senior positions at technology companies.
300+ M&A transactions. Over $7 billion in transaction value.
25+ year relationships with global software companies.
Most extensive database in the industry (approx. $25 million invested).
Integrated global operations; transactions in 21 countries.
Educational Leader, creator of the world’s most attended tech M&A conference, sponsor of the World Financial Symposiums, frequent guest on CNBC, MSNBC and other industry events.
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Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup
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Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup
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Technology Index: Quarterly
Subsectors: Vertical, IT Services, Internet, Infrastructure, Horizontal, and Consumer
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41
39
33
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1817 17
1615
14 14 14 14 14
Top Strategic Acquirers: 2013 - YTD
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Top Strategic Acquirers: 2013 - YTD
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Top Strategic Acquirers: 2013 - YTD*
*
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Representative M&A Transactions
Acquirer: FacebookTarget: Oculus RiftDeal Value: $2 BillionDate: April 2014
Sold to
Following the Acquisition
Target: Carbon Design Group
Acquirer: Oculus VRTransaction Value: Undisclosed
Sold to
Target: Jenkins Software (RakNet)
Acquirer: Oculus VRTransaction Value: Undisclosed
Sold to
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Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup
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Reported Gaming TransactionsTransaction Value ($B) Billion Dollar + Total Deals
Transactions in the Gaming Ecosystem
Sources include company filings and releases, industry databases and Corum Group.• Both majority and minority deals included.• Transactions relating to the gaming ecosystem were included, not limited to gaming studios.• Only announced or available deal values included.
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Source: Corum
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2009H1
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Reported Gaming TransactionsTransaction Value ($B) Billion Dollar + Total Deals
Transactions in the Gaming Ecosystem
Deal Volume Highest in 2 years
Record 2013 & H1 2014
Excluded Billion $ Transactions:
• H2 2013 : $3.05B
• H1 2014: $2.27B
$0
$20
$40
$60
$80
$100
$120
in M
illio
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Average Deal Size Trending
Average Deal Size:
5 Year Growth : 98.9% $42m to $84m
YoY: 57% $53.5m to $84m
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Asian Dominance Increased, Focused Regionally
Source: Corum
$1.53B for 51%
$330M for 40%
$1.4B for 6%
Global Transactions
Top 7 of 10 Deals Top 9 of 10 Deals(2013)(2012)
ChangYou will invest $600M in mobile game
developers
South Korean GameVil sets $150M+ for M&A / investment. Acquires Com2uS &
Nine Wheels plus other partners.
$200m –Acquisition$200m –
Marketing$200m -- Rev Share
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Top Asian Gaming Acquirers
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4 4
3 3
2 2
1 1 1
50%+ Growth
50%+ Growth
235% Growth
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Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup
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BRICS Growing Up
BRIC outpacing Downloads and Revenues by 2.7x compared to US & Asian Markets
Brazil and Russia are growing rapidly!
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BRICS Growing Up - Brazil and Russia
Source: PwC
Russia
$460M in 2011
$1.5B in 2014E
Latin America
$1.4B in 2013
$1.8B in 2016E
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BRICS Growing Up - Brazil and Russia
Source: PwC
Online Gaming 2nd largest in
Europe
Hits Top 5 for iOS and Google Play in 2013
Mobile penetration & long commutes
drive further growth
Brazil gaming market 5th
largest in the world
Consoles prohibitively
expensive, push users to FTP on
Mobile & PC
Russia
$460M in 2011
$1.5B in 2014E
Latin America
$1.4B in 2013
$1.8B in 2016E
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Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup
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Messaging Is Disruptive
WeChat Upgrade
adds games, emoticons &
mobile payment system
Line filed to go
public in Tokyo
Feeling the Pinch, March Year end -10%
3 mo. after releasing Kakao Games, monthly revenue soared 9x to $35M
396 Million + Players
Monetizing similar to
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Messaging Apps Driving Adoption
Rank 2013
Game
1 모두익마줌 for Kakao
2 Million Arthur
3 마구마구2013 for Kakao
4 Wind Runner for Kakao
5 Devil Maker for Kakao
6 Puzzle & Dragon
7 카드뫼샨샵략지
8 Everytown for Kakao
9 Clash of Clans
10 Hello Hero for Kakao
KoreaTop iOS Games
Rank 2013
Game Publisher
1 Puzzle & Dragons GungHo Online
2 LINE Bubble! LINE
3 Pokopang LINE
4 LINE POP LINE
5 LINE WIND runner LINE
6 LINE HIDDEN CATCH LINE
7 LINE JELLY LINE
8 Princess Punt Sweets GungHo Online
9 LINE PLAY LINE
10 Temple Run 2 Imangi
JapaniOS & Google Play Downloads
+ + =950M+ Users
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Candy Crush Saga uniting with WeChat
Key Markets Exposed to Candy Crush through WeChat
Top 20 in US
Top 80 in China
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M&A Making Huge Impact in OTTAcquirer: FacebookTarget: WhatsAppDeal Value: $19 BillionLatest User Counts: 465M
Sold to
Acquirer: AlibabaTarget: TangoDeal Value: $215M
Received funding
Acquirer: RakutenTarget: ViberDeal Value: $900MLatest User Counts: 100M
Sold to
Dedicated Gaming Fund$25M
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Social and Real Money Casino Companies
21%
11%
9%
7%6%5%
Rest ofMarket**
41%
Social Casino Game Market Share - 2Q14
SOCIAL ONLY
MOBILE ONLY
$2.7B Social Casino
Gaming Market
46%
20%
on Mobile & Growing
of Top 100 Publishers have at least one social
casino game
Source: App Annie, Eilers Research
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Billion Dollar Consolidation Spree
Acquirer: Amaya Gaming Target: Rational Group Ltd. Deal Value: $4.9BDeal Multiple: 3.5x* RevenueDate: June 2014
Sold to
Acquirer: Aristocrat Technologies Target: Video Gaming Technologies Deal Value: $1.3BDeal Multiple:5.5x RevenueDate: July 2014
Sold to
Acquirer: GTECHTarget: IGTDeal Value: $6.4B (cash plus debt)Deal Multiple: 3.0x RevenueDate: July 2014
Sold to
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Games as a Service
Source: Wandoujia. April –November 2013
Top $100M+ Games
90%FTP
Continuously delivering new value to Gamers
• Players pay as they go & what they use - “FTP”Service Concept
• Starting with trailer thru game play, online presence, community, etc.All Encompassing
• Strong analytical solutions and strategies
• Keep the users coming backMonetization is Key
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Consoles adopting FTP Model
$30M+in
Microtransactions
“Console-tainment”
Source: SuperData
$2B $2.5B Revenue Growth (YoY)
$295M $352M in 2012 in 2013
Worldwide Console Spend
Microtransactions
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Security Concerns Heightening
Especially relevant to outfits with payment systems
97%of all mobile
malware*
*Predominately in Middle East & Asia
Global Transactions
RoMaster
Mobile Is Here: Record amounts of internet traffic
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Attractive Traits of Companies
Industry Traits of Attractive Companies
Highest performers grow 100%+ annually while generating 20-50% EBITDA margins
Spread across multiple platforms – developed in unison with the intent from beginning
Continuous, low-cost development pushes to game – maintain player interest
Analytics – key to improve and build upon performance; often in-house systems
Key Themes Driving Gaming M&A
F2PDeveloper
ServicesRegional
M&A
Past Growth Stage
Geographic Strength
Thank Youwww.corumgroup.com
Alina SoltysFor copy of the presentation:[email protected]