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2022 was the second-biggest year for games industry investments, mergers, and acquisitions, according to the latest report from Digital Development Management (DDM).
The firm tracked $51.5 billion in gaming deals last year, led by Take-Two’s purchase of Zynga ($12.7 billion), Unity’s deal for IronSource ($4.4 billion), and Sony’s acquisition of Bungie ($3.7 billion).
That’s down 31% from the record $74.5 billion in gaming deals DDM tracked for 2021. One big factor that contributed to the downturn was the regulatory hold-up around Microsoft’s acquisition of Activision Blizzard, which would have added $68.7 billion to the total on its own.
Beyond that, DDM blamed the downturn on “a crypto winter, macroeconomic headwinds, high interest rates and inflation, and recession concerns.”
While the total value of gaming deals last year dropped by almost one-third, the actual number of deals was nearly equal to 2021, down 3% to 1,182 transactions.
As for where investments are being made, DDM said 27% of the fourth quarter’s bets were in mobile, with 26% from console/PC, 18% in the tech/other category, and 12% in esports.
DDM said blockchain investments were notably slower in the fourth quarter, with 37% fewer deals dropping a combined 57% in dollar value compared to the previous year’s fourth quarter.
Blockchain investor rounds were also smaller in 2022, with an average of nine investors in each round compared to 15 over the course of 2021. For the fourth quarter alone, the blockchain funding rounds averaged just four investors.
Looking ahead, DDM notes that 2023’s deals total will swing wildly depending on whether the Microsoft-Activision Blizzard deal gets approval.
Beyond that, the firm noted other factors that could impact this year’s investment scene, from Saudi Arabia’s $38.7 billion gaming hub strategy on the upside to China’s ongoing restrictions in the tech area and shrinking game revenues as a potential drag on investment and acquisition deals.
Despite the downturn in blockchain investments, DDM still expects them to continue “representing a sizeable portion” of the deals and dollar value in each quarter.
