Digi-Capital indicates that more mergers and acquisitions in the gaming space are coming, though high valuations for mobile and social companies may have peaked. Examples include EA’s $300 million purchase of Playfish and Disney’s acquisition of Playdom for roughly $700 million.
“The market is accelerating both in terms of investment and mergers and acquisitions,” said Digi-Capital managing director Tim Merel. “We don’t expect that trend to stop. In terms of valuations that’s a different question. Our broad view is that we think valuations will stay frothy for the next twelve months. Beyond that we’re not quite sure and that has nothing to do with the macro economic environment. It’s more to do with the headline-making deals that happened in the last few years. Some of those deals will pay off and some of them won’t.”
“Disney got completely beaten up the analysts and if you read between the lines of what they were saying it was ‘we don’t think you’re making enough profit from games, we think you over paid, why are you in games anyway ‘,” continued Merel. “We think a number of CEOs of public companies will get beaten up, it will hit the share price and they’ll stop being brave with deals and that will trickle down. So from a valuation perspective it’s probably not going to get stronger than it is right now.”
Source: GamesIndustry.biz
