"Gambling Activities Compared and Contrasted"

In the first half of this year, the global gaming industry has witnessed a flurry of significant deals and investments, as mobile gaming continues to gain prominence and drive growth.

One of the most notable transactions was the acquisition of Niantic's gaming division by US mobile game developer Scopely for $3.5 billion in the first quarter. Niantic, known for the popular mobile game Pokémon Go, is now set to join forces with Scopely to create engaging and immersive gaming experiences.

However, it's important to note that mobile gaming is not necessarily more profitable than the traditional gaming business. Investments in developer studios remain risky from an investor's perspective, given the uncertainty surrounding the success of games developed over many years.

Despite the risks, the gaming industry has shown resilience and growth. Last year, it generated a revenue of $219 billion, marking a 5% increase. This growth is particularly evident in the mobile gaming sector, as reflected in the M&A market.

One of the standout examples is Infinite, which closed a $3 billion funding round in the second quarter, valuing the augmented reality company at $12.25 billion. This funding round was crucial, as without it, the cumulative private placement volume would not have reached $6.5 billion, but only around $1 billion.

Another significant investment was made by the private equity firm CVC, who secured a significant minority stake in Dream Games for around $2.5 billion, valuing the Turkish mobile game developer at $5 billion.

In Europe, Germany has emerged as a major player in the gaming industry. It is now the largest gaming market in Europe and the fifth-largest worldwide. Last year, the German gaming industry generated around €9.4 billion in revenue, although this represents a 6% decrease from the previous year, it still represents a 50% increase compared to 2019.

Interestingly, follow-up business revenues in Germany were almost five times higher than the sales of the games themselves, totalling €4.6 billion.

Looking ahead, Saudi Arabia plans to invest around $38 billion in the next few years to turn the country into a global gaming hub.

As the gaming industry continues to evolve, it's clear that investors are increasingly focusing on tool, tech, and AI solutions rather than studios that develop new games. Historically, strategists have played a crucial role in M&A, but they have significantly reduced their early-stage investments in the past two years.

Lastly, the Drake Star Gaming Index, which tracks the performance of the 30 largest listed gaming companies, was up 28% in the first half. This suggests that despite the challenges, the gaming industry remains a lucrative and exciting space for investment and growth.

Game companies primarily generate revenue less and less with the initial sale of games or consoles, but with subsequent in-game and in-app purchases, driven by the trend towards mobile gaming. As such, the rapidly growing mobile gaming market is set to continue shaping the landscape of the gaming industry.