The numbers are big. Big with a capital “B” as in Billions.
In Q1 2014, gaming mergers and acquisitions (M&A) shook the industry with over $5 billion spent acquiring games companies, just shy of the entire 2013 spending.
If those numbers aren’t big enough, Digi-Capital’s latest report estimates the value of the mobile game industry alone will be $33 billion by 2017. Yes, the game industry has been rife with acquisitions in the last year and a half, even if they haven’t always played out very well.
Zynga’s recent purchase of Natural Motion made headlines earlier this year – a more hopeful acquisition than the fiasco that was OMGPop; Talkweb bought controlling stakes in Huorong Game; and a number of other major deals have fueled a valuation bubble.
Given that much of the growth and mergers are being driven by Asia , we thought we’d shine a little light on some of the big deals made in Korea this last year, and what they mean for the future of the country’s mobile gaming market.
Kakao, Gamevil, and CJ Making Moves
The last year has seen a number of high-stakes mergers in Korea, forming partnerships that will ripple across the game industry in all of Asia.
Gamevil and Com2Us
For a long time, these two mobile giants had a rivalry that played out in app store release schedules like clockwork. When one would release an RPG, the other would soon follow, often in the same month. But their points of contention ultimately provided them with common ground. First, there was a similar user base. Second, they both had a big enough reputation to remain independent from Kakao, avoiding its steep revenue cuts. The merger resulted in the creation of the Hive, a strategic move to provide a separate platform from Kakao.
Kakao and Daum
There is no telling what may ultimately result from the Kakao-Daum merger that was announced earlier this year, but there is obvious potential for broadening both social integration and advertising platforms. If Kakao manages to smoothly integrate their services (Kakao Story, Kakao Music, Kakao Page, etc.) with Daum and take advantage of Daum’s advertising platforms (Ad@m, TNK, Value Potion), it may prove to be one of the strongest mergers in Korea’s mobile game industry.
CJ and Tencent
Any discussion of the mobile industry in North East Asia is bound to bring up CJ and Tencent. Last year, Tencent bought a 26% stake in the company for $500 million. CJ’s diverse portfolio has proved to be a solid investment for Tencent, as CJ now has five games in the top 20 grossing charts on Google Play. How long can CJ’s dominance last? It’s hard to say. If Daum and Kakao manage a strong, successful partnership, then CJ will likely remain on top for a long time to come. Their early investments in the OTT platform have given them a major edge in the competition, and the money they are making hand-over-fist in the game market will only fuel their continuing dominance.