Pune: Gaming firms have zeroed in on game studios as the next big opportunity as they look to build a more diversified portfolio of games.
Earlier this month, JetSynthesys announced a new venture Jetapult, which would invest up to $100 million in acquiring and operating game studios over the next nine months.
“We have acquired one studio and are in talks for one more acquisition. Based on our research, we have created a shortlist of 150 such potential targets,” said Rajan Navani, managing director, JetSynthesys.
The current slump in valuations, said Nitish Mittersain, joint MD at Nazara Technologies NSE 2.02 %, would also open up more acquisition opportunities, especially in areas around blockchain and augmented and virtual reality. “Acquisitions are part of the DNA of the company and Nazara will continue to look at opportunities across the spectrum of gaming firms, including game studios,” he said.
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The sweet spot, he said, would be firms generating a certain amount of revenue and that they would avoid companies that had still to prove their business model.
Over the past year, there has been a lot of activity in this space, with Microsoft’s acquisition of Activision Blizzard for over $68 billion being among the biggest deals in this industry. More recently, Pokemon Go developer Niantic acquired augmented reality gaming studio NZXR, and closer home, MoonFrog Labs and PlaySimple were acquired by Swedish gaming companies.
Tech companies are acquiring game studios to gain access to content, community, revenue, and skills, said Rupantar Guha, principal analyst for thematic intelligence at GlobalData. “One of the quickest ways to excel NSE 4.35 % in a theme is to acquire a company that is already excelling. Gaming is a hypercompetitive market, and tech companies don’t prefer to start from scratch. Therefore, acquisitions are a suitable route to own content, revenues, and skills,” he said.
The Indian video games industry will be valued at over $2 billion by 2023, according to GlobalData. Such a lucrative opportunity is the biggest motivation for tech companies to acquire or invest in gaming studios, said Guha.
Given the nature of the industry, it is hard to predict what the next big blockbuster game will be. Building a portfolio of diversified studios specialising in different types of games gives these companies a better chance of hitting the jackpot with one wildly successful game.
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Emerging technologies like Web3, augmented and virtual reality are expected to drive the next wave of growth and Mittersain said that Nazara would look at acquisitions or investments in these areas over starting from scratch.
Very often, indie studios have a good game, but struggle with scaling it up and marketing it. Navani said Jetapult would focus on acquiring and scaling revenue-generating Indie game development studios across emerging markets like India, South-East Asia, the Middle East, South America as well as Australia, and New Zealand to fill a dearth of long-term smart capital in the industry.
“This will also create and grow a roster of gaming companies commercially and help them scale from a local to international market,” he said. (Economic Times)
