Gaming sector proves profitable for investors

Multi-million-pound acquisitions have a long-term history in the world of video games. For example, Electronic Arts’ acquisition of Bullfrog Productions in 1995 was arguably a driving force in the Guildford area becoming the hub it is today.

Accountancy and business advisory firm BDO found that merger and acquisition deals for UK video game-makers hit £1.9 billion in 2021, an increase of 63 per cent on 2020.

This was generated by 14 takeovers across the year, compared to nine in 2020 and six in 2019, indicating an expansion in the market.

According to BDO’s research, the bulk of the merger and acquisition value in 2021 was generated by Electronic Arts’ acquisition of Playdemic, which made Golf Clash, for £1 billion and the acquisition of the Sumo Group, designer of the Sonic Racing, LittleBigPlanet and Crackdown franchises, by Chinese entertainment conglomerate Tencent for £850 million.

The true number may in fact be a little higher than this, however, as BDO make no mention of Electronic Arts’ £1.2 billion takeover of Leamington Spa-based Codemasters, creators of the DIRT, GRID and Project CARS franchises, at the start of the year.

Four of the acquisitions were made by private equity funds, with BDO stating that these organisations started to look at video game producers due to their lower valuations compared to other areas of the tech sector.