Digi-Capital, an investment bank for games, apps, digital media/services and tech/telecoms across America, Asia (China, Japan, South Korea) and Europe, has published the Q3 2013 Update of its Global Games Investment Review.
Commenting on the Review, Digi-Capital Founder Tim Merel said:
“It’s no secret that mobile Internet is disrupting technology markets, with Gartner forecasting that mobile apps revenue will grow 5x from $15B in 2012 to >$70B in 2016. With over 70% of global apps revenue from games in 2013, and forecasts that Asia will dominate global mobile/online games revenue (China 32%, South Korea 12%, Japan 10% by 2016F), mobile and Asia continue to drive games growth going forward.”
Merel predicts that over 70% of 2013’s global apps revenue will come from games. With the 5x growth prediction from 15B in 2012 to >$70B in 2016, well, that is a staggering amount of money flowing from mobile gaming/apps. He further elaborated that (as usual), the Chinese, Japanese and South Korean markets were the biggest contributors to the growth, so much so that these markets were starting to aggressively buy into the western games markets.
"Following a similar pattern to 2012, 8 of the 10 largest games M&As to Q3 2013 were made by Chinese, Japanese or South Korean buyers. With high revenue growth, profitability and valuations from core domestic markets, the major and emerging Asian companies have been buying quality games businesses at home and abroad at valuation multiples higher than their Western counterparts. Deep Asian relationships are now critical for investors in games companies considering exits.
In the last 12 months there has also been a trend for Asian technology, media and telecoms companies to acquire mobile games and tech companies, as part of their defensive and growth strategies to deal with mobile disruption. Many Asian companies are looking to invest in or acquire Western mobile games companies to leverage in domestic markets, or globalise themselves to publish Asian mobile games in Western markets."
Merel made the very interesting observation that: "Since 2012 institutional and corporate investors have struggled to take advantage of the high growth, profitability and returns in mobile games, with a major gap between investment demand and supply.”
It seems that investors are reluctant to buy into the boom of the mobile gaming market. Another very interesting trend is the transaction value comparisons between gaming markets. Mobile is much bigger than all the markets, with PC and console beneath tech/gamification. The investment comparisons shows that the MMO markets received more investment than the PC and console markets, with mobile again at the top.
Traditional gaming is in for a big surprise with the continued growth of mobile gaming, especially as investment in mobile gaming swallows more and more of the investment market. Why do you think mobile gaming is doing so well, or do you think the trend will decline?
Source: Games Press
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Please note that the opinions expressed in this article are those of the author and not MWEB Connect (Pty) Ltd