Digital Development Management (DDM) has released its latest report on investments, mergers, and acquisitions in the games industry, revealing a decline across the board in the second quarter. This follows a first quarter that was already the worst in over four years.
According to the report, investments in the games industry were down 34% to $676 million, while the number of deals tracked only decreased 14% to 127. The area most affected the decline was blockchain gaming investments, which experienced a sharp drop.
The report cites multiple factors contributing to this decline, including the prolonged crypto winter and the Securities and Exchange Commission’s (SEC) increased regulation of blockchain. These factors led to a significant decrease in blockchain gaming investments, reaching just $243 million across 45 investments, a decline of 38% compared to the first quarter.
In addition to the decrease in investments, mergers and acquisitions also saw a steep decline in the second quarter. The total value of these deals tracked DDM was $108 million, down 81% compared to the previous quarter, with the number of M&A deals dropping 76% to 31.
Initial Public Offerings (IPOs) in the games industry suffered even more, with only one relevant IPO during the quarter. The total market capitalization of IPOs in the second quarter decreased 98%, totaling just over $11 million. In contrast, the first quarter had four IPOs.
Despite the current downturn in investments, DDM believes there is hope for a turnaround. The third quarter is expected to see an increase in investments thanks to the $4.9 billion acquisition of Scopely Savvy Games Group and the pending $69 billion acquisition of Activision Blizzard Microsoft. If completed, the latter could make the full year a record-breaking one for gaming investments.
This report marks the weakest first half of gaming investments tracked DDM since 2016, highlighting the challenges faced the industry. However, with upcoming high-profile acquisitions and potential market growth, the outlook for the remainder of the year remains optimistic.
– Digital Development Management (DDM): A company specializing in digital media and technology consultancy, including investments and mergers in the games industry.
– Blockchain gaming: Games that utilize blockchain technology for features such as asset ownership and transparent transactions.
Sources: Digital Development Management (DDM) Report