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M&A Hitting New Highs, GamesBeat presentation

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Presentation given by Alina Soltys at GamesBeat - September 2014
Provides overview of strong Gaming M&A market along with discussion on trends affecting new areas of growth.

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M&A Hitting New Highs, GamesBeat presentation

  1. 1. San Francisco 2014 Alina Soltys Senior Analyst @CorumGroup GamesBeat: San Francisco 2014
  2. 2. @2C Corum – Sell Side Advisory Firm § Established in 1985. § Focused on transacFons in technology products and services businesses. § Professional staff drawn from senior posiFons at technology companies. § 300+ M&A transacFons. Over $7 billion in transacFon value. § 25+ year relaFonships with global soSware companies. § Most extensive database in the industry (approx. $25 million invested). § Integrated global operaFons; transacFons in 21 countries. § EducaFonal Leader, creator of the world’s most aended tech M&A conference, sponsor of the World Financial Symposiums, frequent guest on CNBC, MSNBC and other industry events. orumGroup GamesBeat: San Francisco 2014
  3. 3. @3C Overview Technology M&A Update Gaming M&A Update Driving Trends orumGroup GamesBeat: San Francisco 2014
  4. 4. @4C Technology Index: Quarterly Subsectors: VerFcal, IT Services, Internet, Infrastructure, Horizontal, and Consumer orumGroup GamesBeat: San Francisco 2014
  5. 5. @5C 41 39 33 Top Strategic Acquirers: 2013 -­‐ YTD 20 18 17 17 16 15 14 14 14 14 14 orumGroup GamesBeat: San Francisco 2014
  6. 6. @6C 41 39 33 Top Strategic Acquirers: 2013 -­‐ YTD 20 18 17 17 16 15 14 14 14 14 14 orumGroup GamesBeat: San Francisco 2014
  7. 7. @7C Top Strategic Acquirers: 2013 -­‐ YTD * orumGroup GamesBeat: San Francisco 2014
  8. 8. @8C RepresentaFve M&A TransacFons Acquirer: Facebook Target: Oculus RiJ Deal Value: $2 Billion Date: April 2014 Sold to Following the AcquisiQon Target: Carbon Design Group Acquirer: Oculus VR Transaction Value: Undisclosed Sold to Target: Jenkins Software (RakNet) Acquirer: Oculus VR Transaction Value: Undisclosed Sold to orumGroup GamesBeat: San Francisco 2014
  9. 9. Source: CBInsights @9C Bale of Chinese Giants: Tencent vs Alibaba § Invested $120M into Kabam – $1bn ValuaQon § Just in 2014, spent over $4B on 4 acquisiQons § Expanding beyond eCommerce § Invested into CJ Games -­‐ $500M (28%), Kakao Talk ($63M) & DST ($300M) § 40 investments since 2011 § Top Sectors: Gaming, social, photo, data mgmt. / data integraQon orumGroup GamesBeat: San Francisco 2014
  10. 10. @1C0o Bale of Chinese Giants Chinese internet companies led by Tencent Alibaba : AcquisiQons & Investments § Invested $120M into Kabam § Has spent over $4B on 4 acquisiQons in 2014 § Expanding beyond eCommerce 149 $17B § Invested into CJ Games -­‐ $500M (28%), Kakao Talk ($63M) & DST ($300M) § 40 investments since 2011 § Gaming top but also social, photo, data mgmt. & Value since 2012 According to Bloomberg rumGroup GamesBeat: San Francisco 2014
  11. 11. @1C1o Overview Technology M&A Update Gaming M&A Update Driving Trends rumGroup GamesBeat: San Francisco 2014
  12. 12. Sources include company filings and releases, industry databases and Corum Group. • Both • TransacQons @1C2o 100 90 80 70 60 50 40 30 20 10 0 $10.0 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 TransacFons in the Gaming Ecosystem Reported Gaming TransacFons TransacQon Value ($B) Billion Dollar + Total Deals 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 majority and minority deals included. relaQng to the gaming ecosystem were included, not limited to gaming studios. • Only announced or available deal values included. rumGroup GamesBeat: San Francisco 2014
  13. 13. $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 TransacFons in the Gaming Ecosystem Reported Gaming TransacFons TransacQon Value ($B) Billion Dollar + Total Deals 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 Average Deal Size: 5 Year Growth : 98.9% $42m to $84m YoY: 57% $53.5m to $84m Source: Corum @1C3o 100 90 80 70 60 50 40 30 20 10 0 Deal Volume Highest in 2 years Record 2013 & H1 2014 Excluded Billion $ TransacQons: • H2 2013 : $3.05B • H1 2014: $2.27B $150 $100 $50 $0 Average Deal Size Trending 2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1 in Millions rumGroup GamesBeat: San Francisco 2014
  14. 14. Asian Dominance Increased, Focused Regionally Top 7 of 10 Deals South Korean GameVil sets $150M+ for M&A / investment. Acquires Com2uS & Nine Wheels plus other partners. Source: Corum @1C4o Global TransacFons $1.53B for 51% $330M for 40% $1.4B for 6% Top 9 of 10 Deals (2012) (2013) ChangYou will invest $600M in mobile game developers $200M – AcquisiFon $200M – MarkeFng $200M – Rev Share rumGroup GamesBeat: San Francisco 2014
  15. 15. @1C5o Stranger than Usual Reverse Take-­‐Overs by tradi)onal companies entering gaming space Umbrella company spends $600M buying YouZu Glass company buys MMORPG developer WuShen for $150M Chinese ConstrucFon company spends $960M on FunPlus rumGroup GamesBeat: San Francisco 2014
  16. 16. @1C6o Cross-­‐PollinaFon between Industries Changyou: 51% stake in MoboTap for $91M Creator of Dolphin Web Browser Amazon: Acquired Twitch for $970m Partnership between Xiaomi & Ouya: Bringing new channel Qtles for Xiaomi’s MiBox & MiTV devices rumGroup GamesBeat: San Francisco 2014
  17. 17. @1C7o Overview Technology M&A Update Gaming M&A Update Driving Trends rumGroup GamesBeat: San Francisco 2014
  18. 18. @1C8o Messaging DominaFon + $25M Dedicated Gaming Fund + = 1B+ Users 10% Stake $100M IPO Raise Expected $100M Fund managed through Line Ventures rumGroup GamesBeat: San Francisco 2014
  19. 19. @1C9o Candy Crush Saga uniFng with WeChat Top 20 in US Top 80 in China Key Markets Exposed to Candy Crush through WeChat rumGroup GamesBeat: San Francisco 2014
  20. 20. Worldwide Console Spend $2B $2.5B MicrotransacQons $295M $352M in 2012 in 2013 Source: SuperData @2C0o Consoles adopFng FTP Model Revenue Growth (YoY) $30M+ in MicrotransacFons “Console-­‐tainment” rumGroup GamesBeat: San Francisco 2014
  21. 21. @2C1o Security Concerns Heightening Especially relevant to oumits with payment systems Mobile Is Here: Record amounts of internet traffic 97% of all mobile malware* *Predominately in Middle East & Asia Global TransacFons RoMaster rumGroup GamesBeat: San Francisco 2014
  22. 22. @2C2o AracFve Traits of Companies Industry Traits of AracFve Companies § Highest performers grow 100%+ annually while generaQng 20-­‐50% EBITDA margins § Spread across mulQple plamorms – developed in unison with the intent from beginning § ConQnuous, low-­‐cost development pushes to game – maintain player interest § AnalyQcs – key to improve and build upon performance; oJen in-­‐house systems Key Themes Driving Gaming M&A F2P Infrastructure Unique IP Proven MoneFzaFon Geographic Strength rumGroup GamesBeat: San Francisco 2014
  23. 23. Thank You www.corumgroup.com Alina Soltys For copy of the presentaFon: alina@corumgroup.com @CorumGroup GamesBeat: San Francisco 2014
  24. 24. @2C4o Top Asian Gaming Acquirers 10 10 50%+ Growth 4 4 50%+ Growth 235% Growth 3 3 2 2 1 1 1 rumGroup GamesBeat: San Francisco 2014
  25. 25. @2C5o Billion Dollar ConsolidaFon Spree Acquirer: Global Cash Access Target : MulQmedia Games Deal Value: $1.2B Deal MulFple: 5.5x Revenue Date: Sept 2014 Acquirer: Aristocrat Technologies Target: Video Gaming Technologies Deal Value: $1.3B Deal MulFple: 5.5x Revenue Date: July 2014 Sold to Sold to Acquirer: ScienQfic Games Target: Bally Technologies Deal Value: $3.3B Deal MulFple: 3.7x Revenue Date: July 2014 Acquirer: GTECH Target: IGT Deal Value: $6.4B (cash plus debt) Deal MulFple: 3.0x Revenue Date: July 2014 Sold to Sold to rumGroup GamesBeat: San Francisco 2014
  26. 26. Source: App Annie, Eilers Research @2C6o Social and Real Money Casino Companies Social Casino Game Market Share -­‐ 2Q14 21% 11% 9% Rest of Market** 41% 5% 6% 7% 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 rumGroup GamesBeat: San Francisco 2014
  27. 27. ConFnuously delivering new value to Gamers Service Concept All Encompassing MoneFzaFon is Key Top $100M+ Games Source: Wandoujia. April –November 2013 @2C7o Games as a Service • Players pay as they go & what they use -­‐ “FTP” • StarQng with trailer thru game play, online presence, community, etc. • Strong analyQcal soluQons and strategies • Keep the users coming back 90% FTP rumGroup GamesBeat: San Francisco 2014

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