Gaming mergers and acquisitions (M&A) and financings in 2024 grew 39% to $27.3 billion in disclosed deal value across over 967 transactions, according to a report by Drake Star Partners.
That’s a glimmer of bright news at a time when revenues appeared stagnant and game companies laid off more than 15,000 people. In fact, the GDC survey noted that in 2024, one in every 11 developers that got laid off.
Public markets showed signs of recovery with the Drake Star Gaming Index of leading public game companies growing 10.4% for the year, said Michael Metzger, partner at Drake Star Partners, an M&A consulting firm.
The reasons this is all financially healthy is the major components of acquisitions, private financings and stock market valuations all grew during the year, which was not the case in the weaker times.
“It was still a good year, a robust year with over $27 billion of deal value, which is up 39% over 2023 so that’s definitely a positive,” said Metzger. “Financing has two components. One is the private one, and the other is public. Companies can raise debt or raise more equity. The 39% number refers to more money that exchanged hands, a flowing of money into the ecosystem and then being used to grow inorganically. The remaining companies therefore become larger.”
M&A deals
M&A activity in 2024 experienced a 21% increase in deal volume over 2023, with 198 announced deals and $10.5B in disclosed value. As predicted, several high-profile M&A deals emerged from private equity firms, including EQT’s $2.8 billion acquisition of Keywords and CVC’s $1.1 billion purchase of Jagex.
Metzger focused on the fact that the number of M&A deals went up on the M&A front, while overall per deal value was about the same. Private financing deal values went up quite a bit, but much of that was the outlier of the Disney $1.5 billion investment in Epic Games. Without that deal, private financings would have more on the flat side.
Other major transactions included Playtika’s acquisition of SuperPlay for up to $1.95 billion (including earnouts) and Embracer Group’s $1.2 billion divestment of EasyBrain to Tencent’s Miniclip.
The report said the PC and console segment remained the most active in M&A with 53 deals, followed by mobile with 38 deals and platform and tools with 32.
Private placements
While M&A reflects what is happening on a macro level among big companies, the private investments show the health of the smaller startups. This picture was a little mixed.
A total of $4.8 billion was raised across 711 private placement deals, reflecting a 30% increase in total disclosed value but an 8% decline in deal count compared to 2023.
Major private financings included Epic’s $1.5 billion round led by Disney, along with significant raises for Infinity Reality’s $350 million rond, Build A Rocket Boy’s $110 million round, and Aonic’s $105 million round. Early-stage deals made up over 90% of total raises. Blockchain remained the most active segment with 250 deals, followed by platform and tools (133) and mobile (111).
The fourth quarter was slower in terms of the number of private financing deals done. Still, private equity firms are active in the market and there are more investors coming into the games from places like the Middle East. Those with successful exits will likely put more money back into games. Overall, that makes Metzger optimistic that the money will continue flowing into the game industry.
Investors secured more $1.8 billion as they raise dnew funds. That includes follow-on funds from A16z ($600 million), Bitkraft ($275 million), Vgames ($142 million), and Play Ventures ($140 million), along with new funds launched by Big Time ($150 million) and Beam Ventures ($150 million).
In terms of raising new funds, there were low points in the past few years, and now it’s a little bit of a rebound, Metzger said. “Vgames in particular had the biggest exit with the Playtika deal,” he said.
The most notable public deals included Shift Up’s highly successful IPO in South Korea and GameStop’s $3 billion fundraising.
On the public market side, the Drake Star Gaming Index, which tracks the top 30 global gaming companies on an equal-weighted basis, rose 10.4% for the year. It was driven by strong performances from Sea/Garena, DeNA, and Konami. Meanwhile, Corsair, WeMade, and Unity were the weakest-performing stocks in the index.
Q4 2024 results
In Q4 2024, there were 151 private placements in game companies, with a total of $650 million raised. That was smaller than the previous quarter (181 in Q3 2024) and a year ago (170 in Q4 2023). There were 47 deals in the blockchain sector, making it the biggest sector with about $200 million raised in the quarter.
Gaming M&A was also smaller in Q4, with 40 deals compared to 57 in the previous quarter and 44 in Q4 2023.
Outlook
Drake Star Partners has a very positive outlook of the gaming and tech market in 2025 with strategic consolidations, private equity interest, and an evolving regulatory landscape shaping deal activity.
As the valuations of listed gaming companies continue to rebound, the firm anticipate a significant uptick in M&A activity. Key buyers to watch include Savvy/Scopely, Tencent, Krafton, Keywords Studios/EQT, Jagex/CVC, Infinite Reality, and Sony, along with the newly separated Embracer companies once they are listed independently, such as Asmodee.
Private equity firms are expected to remain very active, with several publicly traded gaming companies potentially being taken private. Ubisoft could be among the larger candidates for a delisting in 2025, as it has hired strategic advisers, perhaps to take the company private.
With over $1.8 billion in new capital raised by funds in 2024, signaling renewed investor interest, Drake Star anticipates a strong pipeline of seed and early-stage financings, along with select mid-to-late-stage rounds.
Still, there are headwinds that make it difficult for some companies. There will be winners and losers, and Amir Satvat, the game job resource champion, noted that more than 9,800 people are likely to get laid off in games in 2025 — a smaller number than 15,000 last year but still significant.
“For some of those content-focused companies, it really heavily depends on either the sector they focus on your titles. Ubisoft is probably a unique story where just titles just didn’t perform. And there’s future launches are being pushed out into the future. That probably didn’t help,” Metzger said.
As result, Ubisoft saw a 46% decline in its valuation during 2024. That’s one reason it is still laying off people.
“It’s a mixed bag with those layoffs. It’s obviously very unfortunate for those people who got laid off, and some of those companies probably were just too big from hiring in the pandemic,” Metzger said. “I’m pretty bullish on the outlook for the next year, and it’s more like it’s a very positive sentiment around tech, m&a, tech IPOs in general, partially driven maybe by less regulation. It seems like it can get much worse, but hopefully it’s going to get better.”
And companies are often doing contradictory things themselves. Meta said it would lay off more than 3,000 people, with a focus on poor performers. But it also announced it could invest as much as $65 billion in AI.
“I believe that AI will actually continue to develop very, very rapidly. And if you talk three years out, I can see that those companies might be much more effective and actually even need less people,” Metzger said. “It’s positive if the companies can iterate faster.”
Key growth segments are expected to include AI, tech platforms, and blockchain, driven by the strong recovery of the crypto market this year and the new U.S. administration’s endorsement of digital assets.
With major releases such as the Nintendo Switch 2 and Grand Theft Auto 6 anticipated in 2025, the gaming industry is poised for significant growth in player engagement and revenues, Metzger said. This surge could further drive fundraising and M&A opportunities for gaming companies.
Of course, in perhaps either the short term or the long term, there’s a chance the game consoles and PCs could be hit with tariffs, given Donald Trump’s threat to impose tariffs on foreign trade. If that persists for a long time, it could wreck the company economy.
With public markets rebounding in 2025, Drake Star anticipates IPO-ready gaming companies to go public this year. The firm also anticipates the start of a wave of IPOs of Indian gaming companies.
