In this segment, we discuss how 2021 so far has yielded $60B in gaming deals.
The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!
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Paul Dawalibi 1:32:21
But it was about Drake Star Partners, which is an investment bank, run by a guy named Michael Metzger is a well known analysts in the space. And they did sort of a report on game deals in the first half of 2021. And I was I mean, there’s nothing there’s not a huge amount of discussion here. I just thought some of the data was was really incredible. So the headline here was game deals surpassed $60 billion in the first half, just the first half of 2021, just six months. And if you look at m&a transactions in the first half, you have Microsoft Zenimax. You have you have ByteDance and Jesus, I can’t I’m going blind.
Jeff Cohen 1:33:17
Where’s Gen.G Analytics are missing? They’re missing a big acquisition here.
Paul Dawalibi 1:33:23
Yeah, EA in Glu. You have Embracer Gearbox, right? Like you have all these massive, massive acquisitions, HP and HyperX. I was surprised at the I hadn’t thought sort of stopped to think 169 mergers and acquisitions just in the first half of 2021 $23 billion in deal value. Okay? If you look at private investments, there were 364 minority financings from VCs and strategic investors, to the tune of 4.8 billion. And if you look at public markets 37 announced and closed IPOs with 11 point 2 billion in proceeds. Again, this is all just in the first six months of 2021. I don’t know if you guys have thoughts on this on the size on the number of like, I’m just blown away by both the sheer volume of deals and the size of the deals and the size of the dollars involved. Anyone, anyone? Like think this is going to slow down second half 2021 or, you know, first half of next year? I’ll go Well, number one, and Ramsey two Ramsey’s question, link this one right now. I’m sorry, Ramsey, I should make a better habit of linking every article that we cover. Going forward. I think what I’ll do is Ramsey asked, Have you linked all these articles anywhere, Paul? I think going forward, what we’ll do is we’ll link will include links to all the articles in the description of the YouTube. VOD after the facts, so we’ll add the links to the YouTube VOD description after the fact, Ramsey if that’s helpful. Sorry, Jeff, go ahead.
Jeff Cohen 1:35:08
I was just going to sort of answer your question. I mean, clearly, number one, it’s been a great time to be a gaming company. The pandemic, obviously, we’ve, everyone sort of that listens to this knows this, you know, brought out a lot of new demand. We obviously just literally talked about it with the last story. Having said that, I do think you probably will see a slowdown. With the pandemic, igniting so much interest in gaming, all the public gaming companies, stocks did really well, which tends to lead to acquisitions, more m&a, more IPOs, because valuations are really hot, we are likely to see that abate a little bit in terms of there probably will be. And you’re already starting to see it a little bit, the last couple months, like the stocks of all the video game companies have taken a little bit of a cooling off period. So I do think you’re likely to see this really hot activity slow down to some extent. But long term, medium term, obviously, it’s a great time to be investing in gaming.
William Collis 1:36:13
I’d also just point out, there’s like, a limited number of big acquisition targets left, like there’s only so many Bethesda’s out there, right. And I think we’re gonna see, a lot of these guys snapped up because it makes sense, partly for why Jeff outlined and partly just because I think they’d stayed independent for too long. There were other business reasons. But there’s a finite number of those good deals to do. And I think a lot of the good ones already got done, to be honest.
Paul Dawalibi 1:36:36
So what’s the total size you guys think of activity, we’re gonna see second half of the year, if you’re including m&a, private transactions, and public, like IPOs.
William Collis 1:36:47
I’ll say 40 billion to bring us to 100 billion for the year,
Paul Dawalibi 1:36:50
you think it’s like $100 billion year in terms of total activity
William Collis 1:36:53
huge year, but the bigger stuff got done earlier in the gate would be my gut, it’s still gonna be a big second half, but it’s gonna slow down a tiny bit.
Paul Dawalibi 1:37:01
Interesting. Jeff, I’m curious to get your thoughts. Where do you think this plays out?
Jeff Cohen 1:37:07
I liked Williams answer. I think that was a, you know, we’re obviously kind of guessing here. But there were some chunky deals in the beginning of the year. So I think I would agree with that. It will slow unless you get a beat, you know, caveat would be, you know, like Amazon, or sorry, Netflix to bring in a story just hired a new gaming executive, and we’ve been talking about Netflix getting deeper into games. Do they go out and buy Activision? Or EA or something like that? Obviously, that that makes the number significantly higher. So
William Collis 1:37:40
I’m handing you the juice. Why aren’t you drinking it? Like that was?
Jeff Cohen 1:37:44
You just got juiced?
William Collis 1:37:46
Great, great point.
Paul Dawalibi 1:37:47
We’re gonna need we’re gonna need a graphic. especial effect. Don’t worry, Jeff. We’re gonna we’re gonna hook you up here. All right, guys.
Jimmy Mondal 1:37:56
I did want i sorry, I do want to say, I’m excited that Cherry was doing so well as a huge hardware fan. I’m excited mechanical keyboards, bass is doing well. I’m excited. They’re doing well, especially in light of all this new Switch competitors that have come out like Razer ever Logitech. They’re all making their own Switches, but Cherry prevails, because quality is overall the quality and consistency and they’ve delivered that product. So I think it’s huge space, they get caught. I don’t think they got bought, but I saw it on the publicly traded one all the way that they were doing pretty well, from looks at that graph.
Paul Dawalibi 1:38:29
Oh, yeah, you’re right. They did. They did go public. Yeah, I actually didn’t even know that.
Cherry went public, and they raised $430 million. And their IPO valuation was 828 million. This makes Switches.
Jimmy Mondal 1:38:43
Exactly. That’s what I’m saying. That’s exciting for me. Like, that’s exciting.
Paul Dawalibi 1:38:47
That’s a cool, that’s a cool pickup. Interesting. Yeah. That one is, this one’s an interesting one. But what’s interesting is their enterprise value, the multiple of their trading at six times revenue, which is not insane. Right. In the gaming conversation, which is in VR, Paul was assuming quite a bit of growth, right, like in Switches.
Jeff Cohen 1:39:17
Jimmy Mondal 1:39:19
Yeah. Like they they partner, the manufacturer, like the Switch of the keyboard, like the actual actuating point of the keyboard, and then partner not like
Jeff Cohen 1:39:29
Nintendo not need Switches.
Paul Dawalibi 1:39:32
Right, right. Just like Switch this red thing here.
Jeff Cohen 1:39:36
Yep, they thought you meant they literally make Nintendo Switch like they manufacture the Switch. And I was like that No, interesting. Yeah, like they were like an external manufacturer for for Nintendo.
Paul Dawalibi 1:39:48
Keyboard switches. That means they’re planning on selling the markets believe we’re gonna sell a lot of gaming keyboards.