After some weak results in the past few years, gaming M&A hit its highest quarterly deal value in nearly two years and recovered from a dip in the fourth quarter of 2024, according to Drake Star Partners.
On top of that, Q1 2025 saw 149 private placement investments in game companies, totaling $3.5 billion in disclosed deal value. Four new game funds were announced in the quarter, and Drake Star Partners‘ Michael Metzger (who will do a fireside chat with Playtika’s Craig Abrahams at our GamesBeat Summit 2025 event) said in an interview with GamesBeat that the firm believes M&A activity in games will gradually pick up over the rest of 2025.
“M&A deal value was at a two year high, at $4.4 billion in deal value, including the financing in public at $13 billion. M&a activity also bounced back from a lower Q4,” said Metzger. “We were at 48 deals versus 40 deals at Q4 last year. And it obviously was great to see two larger deals happening.”
He added, “I think was also exciting to see that the Roblox ecosystem consolidation is accelerating with Voldex raising a good amount of money, I think, from Shamrock and Raine doing the Brookhaven deals. And there are a lot of a lot of other deals in the making in the Roblox ecosystem, similar to that.”
He said it was exciting to see Tencent and Krafton become active, with deals happening from France with Ubisoft to India with Nautilus Games. He noted that $3 billion of the fundraising in the quarter was based on Infinite Reality, which has a $15 billion valuation, but who is putting money into it is a mystery. (I was only told it was a high net worth individual by Infinite Reality).
Public markets showed signs of recovery with the Drake Star Gaming Index growing 16.4% since the end of 2023, followed by a correction and quick recovery in early April as the global tariffs and trade war situation unfolded.
Gaming M&A activity rebounded in Q1 2025, with 48 announced deals totaling $4.4 billion in disclosed value. This marks the highest quarterly deal value in nearly two years and a strong recovery from the dip seen in Q4 2024.
Scopely’s $3.5 billion acquisition of Niantic’s games division was the largest gaming deal of Q1 and the biggest since Scopely itself was acquired by Savvy for $4.9 billion in 2023. Other notable mobile M&A activity this quarter included Tripledot’s reported $900 million acquisition of AppLovin’s games division, Miniclip’s acquisition of German mobile studio Lessmore, and Krafton’s purchase of Nautilus Mobile.
The largest private placement (where one private firm invests in another) was a reported $3 billion investment received by Infinite Reality at a valuation exceeding $12 billion. Other notable financings included rounds for Turkish mobile developers Grand Games and Good Job Games. As part of the Scopely transaction, Niantic Spatial secured $50 million, while mobile adtech firm Bigabig raised $25 million from MobilityWare, and AI game developer BeyondOS closed a $20 million round. Later stage financings for gaming studios continues to be challenging.
The number of financing rounds has steadily fallen and it may be bottoming out, he said. In early 2023, there were more than 200 deals, 190 in early 2024, and now 152 in Q4 and 149 in Q1 2025, Metzger said.
“It seems to have stabilized, which is also very positive for private placements,” he said.
New gaming funds announced in Q1 2025 included Tilting Point’s user acquisition fund ($150 million), Arcadia Gaming Advisors ($100 million), Skillz ($75 million) and Laton Ventures ($50 million). Metzger said he expects more funds to be formed this year.
The most active investors over the past year included Bitkraft, Play Ventures, and A16z (Andreessen Horowitz) for larger funds and Tirta, The Games Fund, and GEM Capital at the seed stage. Krafton, Tencent, and Samsung led strategic activity, while Animoca, Spartan, and Big Brain were the most active in blockchain gaming. Top acquirers included Savvy/Scopely, Tencent, Playtika, Tripledot, Infinite Reality, and MTG.
Asmodee had a successful IPO post-Embracer spin-off, while Ubisoft raised $1.25B from Tencent following speculations of a full sale. AMD, GameStop, and Logitech announced major debt deals.
The Drake Star Gaming Index of public game companies rose 16.4% since the end of 2023. SEA/Garena, DeNA, and Konami were the top performers, while Ubisoft, Unity, and WeMade lost most in value.
Outlook for 2025
“We anticipate a gradual uptick in M&A activity over the rest of the year. Key buyers to watch include Savvy/Scopely, Tencent, Krafton, Keywords Studios/EQT, Jagex/CVC, Infinite Reality, Sony and Asmodee,” Drake Star said in the report.
Private equity firms are expected to remain very active, with several publicly traded gaming companies potentially being taken private.
Key growth segments are expected to include AI, tech platforms, and blockchain. Later stage financings will likely continue to be challenging. Among the public markets, Tencent said it would invest $1.25 billion to buy a minority stake in a new Ubisoft subsidiary with top brands like Rainbow Six and Assassin’s Creed in it.
If public markets stabilize, Coffee Stain is expected to go public soon as part of a spin-out from Embracer. Other gaming companies, including Discord, are also reportedly preparing for IPOs.
Some of the Japanese companies like DeNA and Konami had good upward stock movement in the quarter, and Tencent was up 70% over the past 15 months in Q1. At the bottom of the index in stock performance were companies like Unity, Ubisoft and WeMade. If the market rebalances, Metzger believes more deals will happen.
As for the tariffs hitting game companies, Metzger said, “The tariffs are top of mind for all hardware companies, whether that is the console makers or their suppliers. I hope it’s going to settle over the next few weeks.”
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