m&a hitting new highs, gamesbeat presentation
DESCRIPTION
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.TRANSCRIPT
@CorumGroup GamesBeat: San Francisco 2014
San Francisco 2014 Alina Soltys Senior Analyst
2 @CorumGroup GamesBeat: San Francisco 2014
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 a\ended tech M&A conference, sponsor of the
World Financial Symposiums, frequent guest on CNBC, MSNBC and other industry events.
3 @CorumGroup GamesBeat: San Francisco 2014
Overview
Technology M&A Update
Gaming M&A Update
Driving Trends
4 @CorumGroup GamesBeat: San Francisco 2014
Technology Index: Quarterly
Subsectors: VerFcal, IT Services, Internet, Infrastructure, Horizontal, and Consumer
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41 39
33
20 18 17 17 16 15 14 14 14 14 14
Top Strategic Acquirers: 2013 -‐ YTD
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41 39
33
20 18 17 17 16 15 14 14 14 14 14
Top Strategic Acquirers: 2013 -‐ YTD
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Top Strategic Acquirers: 2013 -‐ YTD
*
8 @CorumGroup GamesBeat: San Francisco 2014
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
9 @CorumGroup GamesBeat: San Francisco 2014
Ba\le 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
Source: CBInsights
10 @CorumGroup GamesBeat: San Francisco 2014
Ba\le of Chinese Giants
§ Invested $120M into Kabam
§ Has spent over $4B on 4 acquisiQons in 2014
§ Expanding beyond eCommerce
§ Invested into CJ Games -‐ $500M (28%), Kakao Talk ($63M) & DST ($300M)
§ 40 investments since 2011
§ Gaming top but also social, photo, data mgmt.
Chinese internet companies led by
Tencent & Alibaba :
149
$17B AcquisiQons & Investments
Value since 2012
According to Bloomberg
11 @CorumGroup GamesBeat: San Francisco 2014
Overview
Technology M&A Update
Gaming M&A Update
Driving Trends
12 @CorumGroup GamesBeat: San Francisco 2014
0
10
20
30
40
50
60
70
80
90
100
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1
Reported Gaming TransacFons TransacQon Value ($B) Billion Dollar + Total Deals
TransacFons in the Gaming Ecosystem
Sources include company filings and releases, industry databases and Corum Group. • Both majority and minority deals included. • TransacQons relaQng to the gaming ecosystem were included, not limited to gaming studios.
• Only announced or available deal values included.
13 @CorumGroup GamesBeat: San Francisco 2014
Source: Corum
0 10 20 30 40 50 60 70 80 90 100
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1
Reported Gaming TransacFons TransacQon Value ($B) Billion Dollar + Total Deals
TransacFons in the Gaming Ecosystem
Deal Volume Highest in 2 years Record 2013 & H1 2014 Excluded Billion $ TransacQons:
• H2 2013 : $3.05B • H1 2014: $2.27B
$0
$50
$100
$150
2009 H1
2009 H2
2010 H1
2010 H2
2011 H1
2011 H2
2012 H1
2012 H2
2013 H1
2013 H2
2014 H1
in M
illions
Average Deal Size Trending
Average Deal Size: 5 Year Growth : 98.9% $42m to $84m YoY: 57% $53.5m to $84m
14 @CorumGroup GamesBeat: San Francisco 2014
Asian Dominance Increased, Focused Regionally
Source: Corum
$1.53B for 51%
$330M for 40%
$1.4B for 6%
Global TransacFons
Top 7 of 10 Deals Top 9 of 10 Deals (2013) (2012)
ChangYou will invest $600M in mobile game
developers
South Korean GameVil sets $150M+ for M&A / investment. Acquires Com2uS &
Nine Wheels plus other partners.
$200M – AcquisiFon $200M – MarkeFng $200M – Rev Share
15 @CorumGroup GamesBeat: San Francisco 2014
Stranger than Usual
Reverse Take-‐Overs by tradi)onal companies entering gaming space
Glass company buys MMORPG developer WuShen for $150M
Chinese ConstrucFon company spends $960M on FunPlus
Umbrella company spends $600M buying YouZu
16 @CorumGroup GamesBeat: San Francisco 2014
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
17 @CorumGroup GamesBeat: San Francisco 2014
Overview
Technology M&A Update
Gaming M&A Update
Driving Trends
18 @CorumGroup GamesBeat: San Francisco 2014
Messaging DominaFon
Dedicated Gaming Fund
$25M
+ + = 1B+ Users
$100M IPO Raise Expected
$100M Fund managed through Line Ventures
10% Stake
19 @CorumGroup GamesBeat: San Francisco 2014
Candy Crush Saga uniFng with WeChat
Key Markets Exposed to Candy Crush through WeChat
Top 20 in US
Top 80 in China
20 @CorumGroup GamesBeat: San Francisco 2014
Consoles adopFng FTP Model
$30M+ in MicrotransacFons
“Console-‐tainment”
Source: SuperData
$2B $2.5B Revenue Growth (YoY)
$295M $352M in 2012 in 2013
Worldwide Console Spend
MicrotransacQons
21 @CorumGroup GamesBeat: San Francisco 2014
Security Concerns Heightening
Especially relevant to oumits with payment systems
97% of all mobile malware*
*Predominately in Middle East & Asia
Global TransacFons
RoMaster
Mobile Is Here: Record amounts of internet traffic
22 @CorumGroup GamesBeat: San Francisco 2014
A\racFve Traits of Companies Industry Traits of A\racFve 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
@CorumGroup GamesBeat: San Francisco 2014
Thank You www.corumgroup.com
Alina Soltys For copy of the presentaFon: [email protected]
24 @CorumGroup GamesBeat: San Francisco 2014
Top Asian Gaming Acquirers
Source: CapitalIQ, Last 2 years
10
10
4 4
3 3
2 2 1 1 1
50%+ Growth
50%+ Growth
235% Growth
25 @CorumGroup GamesBeat: San Francisco 2014
Billion Dollar ConsolidaFon Spree
Acquirer: Aristocrat Technologies Target: Video Gaming Technologies Deal Value: $1.3B Deal MulFple: 5.5x Revenue Date: July 2014
Sold to
Acquirer: GTECH Target: IGT Deal Value: $6.4B (cash plus debt) Deal MulFple: 3.0x Revenue Date: July 2014
Sold to
Acquirer: ScienQfic Games Target: Bally Technologies Deal Value: $3.3B Deal MulFple: 3.7x Revenue Date: July 2014
Sold to
Acquirer: Global Cash Access Target : MulQmedia Games Deal Value: $1.2B Deal MulFple: 5.5x Revenue Date: Sept 2014
Sold to
26 @CorumGroup GamesBeat: San Francisco 2014
Social and Real Money Casino Companies
21%
11%
9%
7% 6% 5%
Rest of Market**
41%
Social Casino Game Market Share -‐ 2Q14
SOCIAL ONLY
MOBILE ONLY
Real Money:
Legal: UK
Limited States: Delaware, Nevada, New Jersey
$2.7B Social Casino
Gaming Market
46%
20% on Mobile & Growing
of Top 100 Publishers have at least one social casino game
Source: App Annie, Eilers Research
27 @CorumGroup GamesBeat: San Francisco 2014
Games as a Service
Source: Wandoujia. April –November 2013
Top $100M+ Games 90%
FTP
ConFnuously delivering new value to Gamers
• Players pay as they go & what they use -‐ “FTP” Service Concept
• StarQng with trailer thru game play, online presence, community, etc. All Encompassing
• Strong analyQcal soluQons and strategies • Keep the users coming back MoneFzaFon is Key