Highlights

Americans of all ages are spending more on video games (link)

• People across all demographics are playing more games at higher frequencies, especially on mobile, but this trend also includes Nintendo, PlayStation, and Xbox
• An NPD report found that 4 out of 5 consumers in the US played a game in the last six months, and these consumers are spending 26% more time and 33% more money on games than in the same period last year
• Spending on video games for Americans 45 years old to 54 years old increased 76% while Americans age 55 to 64 increased their spending 29%

Call of Duty hits $3B in bookings in 2020, and Warzone’s Cold War version has been moved to December 16 (link)

• According to Activision Blizzard, net bookings for Call of Duty crossed $3B in 2020 and the new Call of Duty: Black Ops — Cold War version of Warzone has been delayed from December 10^th to December 16^th
• Year-to-date increases for the Call of Duty franchise include net bookings up over 80% and units sold through up over 40% YoY
• Over 200M people have played Call of Duty this year

Sony doubled TV ad spend for PlayStation 5 launch (link)

• Gaming brands have increased their TV ad spend in preparation for the holidays: November saw a 77% increase in estimated outlay, increasing to $50M from October’s $28M
• Over half of this increase is from PlayStation’s heavy promotion of the PlayStation 5 and Call of Duty: Black Ops — Cold War
• In total, 14 brands aired 75 spots over 4,900 times, resulting in 1.9B TV ad impressions
• Behind Sony, top ad spenders include Microsoft, Nintendo, Activision Blizzard, and EA

Animal Crossing: New Horizons becomes the fastest-ever game to sell six million copies in Japan (link)

• According to Game Data Library, Nintendo’s Animal Crossing: New Horizons has surpassed six million sales in Japan and is the fastest game to surpass this barrier
• Animal Crossing: New Horizons is the only the fifth game to hit this milestone in the Japanese market

Fortnite sees a record 15.3M players at the end of its Marvel event (link)

• Fortnite experienced a record 15.3M concurrent players during the finale of the battle royale Marvel event with an additional 3.4M tuning in through YouTube and Twitch
• While the Marvel event is over, Epic Games signaled that Fortnite has years to go with its hero-based storyline

Roblox given the go ahead to enter China (link)

• As reported by the South Morning China Post, Roblox has received a greenlight to enter the Chinese market
• Tencent will publish the game in China and received licenses for both Mobile and PC, but no release date has yet been provided

Genshin Impact brings in nearly $400M in first 2 months on mobile (link)

• According to Sensor Tower, Genshin Impact has brought in an estimated $393M in the first two months after its September 28 launch
• Genshin Impact was the #2 game in terms of generating revenue in the world, behind Tencent’s Honor of Kings
• The game’s success is global and signals that mobile players are looking for more substantial RPGs that can rival PC/Console offerings

M&A and Capital Raising

Swedish-based EG7 acquires Daybreak Game Company for $300M (link)
LionTree advised Daybreak Game Company on its sale to EG7

• Daybreak is a San Diego, CA based leading MMORPG video game developer and publisher

• • The Company possesses globally recognized third-party IPs, combined with valuable original IPs
  • The Company has deep expertise in the free-to-play and games-as-a-service business model, and their games feature a loyal user base comprised of ~178M registered users

• EG7 is a Sweden-based group of companies that develops, markets, publishes, and distributes video games for PC, Console, and Mobile

• • The Company owns a portfolio of other game developers, ad businesses, and software development companies including Big Blue Bubble, Piranha Games, Sold Out, Antimater Games, and others

• The transaction represents a large addition to EG7’s portfolio

• • Transaction Value: $300M

• • • $260M Up-Front Consideration ($160M cash / $100M stock)
    • $40M Deferred Cash Consideration
    • 9.7x Transaction Value/2020E EBITDA
    • As means to raise additional capital, EG7’s Board of Directors intends to carry out a new issue of shares in EG7 that amount in up to ~$190M through an accelerated bookbuilding procedure
    • Additionally, the Company has secured two debt facilities resulting in ~$110M in available capital

• • The transaction increases the size and profitability of EG7 with Daybreak’s loyal communities for existing IPs
  • Daybreak offers future upside through upcoming content releases, synergies across the group, and a strengthened team to identify and execute further M&A

Gaming platform Roblox acquires Imbellus assets ahead of IPO (link)

• Imbellus, based in Los Angeles, develops simulation-based tests that measure human thought processes
• The Company, which was valued at $57.5M in a 2018 private fundraising round, has talked publicly about its application as a substitute for standardized U.S. tests such as the SAT college entrance exam

EG7 acquires MechWarrior creator Piranha for $24M (link)

• Canadian games studio Piranha has been acquired by EG7 for ~$24M, with consideration of ~$16M in cash and ~$8M in EG7 stock
• Piranha will remain an independent entity within EG7
• Piranha’s top game, MechWarrior Online, has generated ~$60M in revenue since its release in 2013

Bigger Games secures $6M in seed funding (link)

• Istanbul-based mobile studio Bigger Games has raised $6M in seed funding
• The round was led by Index Ventures with additional participation from Play Ventures, Unity founder David Helgason, and former King COO Stephane Kurgan
• Bigger Games was founded by three former members of Peak Games and has achieved 75M downloads
• The Company will use the proceeds for development of additional casual puzzle titles

Microsoft acquires esports events firm Smash.gg (link)

• Microsoft has acquired esports events platform Smash.gg for an undisclosed amount
• Smash.gg indicated that current operations will be unaffected and that the platform will benefit from additional resources and support as part of the Microsoft Content Services team

Others

Dauntless studio Phoenix Labs adds new studios, ramps up work on new games (link)

• Dauntless developer Phoenix Labs keeps growing, as it announced the establishment of new studios in Montreal and Los Angeles
• The Company added 50 employees during 2020 and expects to have over 250 employees by the end of 2021
• André Roy, previously at Ubisoft, will lead the team at the Montreal studio and Omar Kendall, previously at Riot Games, will be product director at the Los Angeles studio, while Phoenix Lab’s Jing Wang will serve as general manager

Supercell cancels new casual match-three puzzler Hay Day Pop (link)

• Supercell has cancelled the development of its previously soft-launched match-three puzzler Hay Day Pop saying that the game did “not meet the standards” of the Company
• Hay Day Pop, a casual game, is different from the Company’s traditional portfolio of hardcore games

Krafton consolidates Pnix and Delusion Studio to form RisingWings (link)

• South Korean games firm Krafton has consolidated Pnix Inc. and Delusion Studio into a new mobile-focused studio named RisingWings
• The newly formed studio will focus on casual and midcore mobile titles while maintaining focus on previously developed titles including Golf King – World Tour and MiniGolf King

Sony teams with Epic to bring Kratos to Fortnite (link)

• PlayStation has teamed up with Epic Games to bring its iconic character Kratos, from the God of War franchise, to Fortnite
• The character can now be purchased as an in-game skin across all platforms, with additional Kratos-related content exclusive to PlayStation players

Gaming Public Multiples