Home >Tech-news >News >Gaming sizzles as big guys go on acquisition spree

Software giant Microsoft Corp, is believed to be in talks to buy popular game Minecraft’s developers Mojang AB for $2 billion according to the Wall Street Journal. The acquisition, if it does happen, would make sense for Microsoft by ensuring the availability of the game on some of the popular devices at a time when the company is having a tough time competing with Sony’s Playstion range of consoles. Currently, Minecraft is not available on Windows Phones.

Playing Minecraft is like playing Lego games in a virtual world. But despite the crude look of the 3D-blocks (as compared to the current standards of graphics), since its 2011 debut, Minecraft has sold more than 55 million copies of the game for PCs, mobiles and consoles. The USP of Minecraft is its availability on multiple platforms incluiding iOS and Android devices. Now it is available on Playstation Vita in addition to Xbox 360 and Xbox One.

What makes Mojang a worthwhile target is the fact that it is already a profitable business. The company was co-founded by 35-year-old game designer Markus Presson, famous in the gaming world as Notch, along with his friend and co-founder Jakob Porsér. Mojang has a simple business model for Minecraft: the company earns its revenues by selling a copy of the game for a onetime fee ranging from $7 on mobile phones to $20 for PCs. Minecraft is also the top selling game on Xbox for Microsoft at $20.

Microsoft isn’t the only company chasing game developers to add meat to their product portfolio. Market research firm Newzoo pegs global gaming revenues across all platforms at $86.1 billion by 2016. The deal space in the gaming business is dominated by Asian companies. According to research firm Digi-Capital, 9 of the 10 gaming-related M&As in 2013 involved Asian buyers. In its report Global Games Investment Review 2014 Q2, it also says that 13 out of 15 games initial public offers (IPOs) between 2011-2013 were by Chinese, Japanese or South Korean companies. Although, major non-Asian companies like Amazon, Facebook and Zynga still made the biggest deals in this space.

Here are some of the biggest M&A deals in gaming for 2014 till now:

1.Buyer: Tencent Holdings Ltd

Target: South Korea’s CJ Games

Price: $500 million for 28% stake

Owners of WeChat messaging app, Tencent Holdings, also Asia’s biggest internet company, paid $500 million for a 28% stake in South Korea-based CJ Games. The deal included purchase of existing shares of CJ Games and the Netmarble portal with titles like ‘Taming Monsters’ and ‘Everybody Cha Cha Cha’. In 2011, Tencent acquired a majority stake in the creator of ‘League of Legends’, Riot Games for about $230 million. In 2012, it also spent $330 million to acquire a minority stake in Epic Games, owner of franchises like Unreal, Gears of Wars and Infinity Blade.

2.Buyer: Facebook Inc

Target: Oculus VR

Price: $2 billion for acquisition

The social networking site Facebook Inc, acquired virtual reality technology company Oculus VR. Oculus Rift, the gaming product from the company is a highly anticipated device among gamers. “Immersive gaming will be the first, and Oculus already has big plans here that won’t be changing and we hope to accelerate. The Rift is highly anticipated by the gaming community, and there’s a lot of interest from developers in building for this platform," Mark Zuckerberg, founder and CEO of Facebook wrote in a note to announce the acquisition. The deal comprised 400 million in cash and 23.1 million shares of Facebook stock.

3.Buyer: Zynga Inc

Target: NaturalMotion

Price: $527 million for full acquisition

In January Zynga Inc bought U.K. based gaming company NaturalMotion for $527 million. NaturalMotion was the owner of franchises like CSR Racing and Clumsy Ninja. The deal involved $391 million in cash and about 39.8 million shares of Zynga. This buy was a new chapter in Zynga’s gaming story as the company looked to move in the direction of owning profitable franchises. Zynga makes popular social media games like FarmVille, ChefVille, CastleVille and CityVille.

4.Buyer: Amazon Inc

Target: Twitch

Price: $970 million for full acquisition

The world’s largest online retailer Amazon Inc bought a video gaming streaming site called Twitch for $970 million. Twitch is famous for allowing gamers to broadcast their game-playing feats. In fact, its stream is embedded in consoles like Sony’s PlayStation 4 and Microsoft’s Xbox One. As of July, Twitch has 55 million unique users who showcase their video game playing talents on Twitch.

5.Buyer: Google Inc

Target: Green Throttle Games

Price: Undisclosed amount

Search engine giant Google Inc acquired Santa Clara-based console company Green Throttle Games for an undisclosed amount. Green Throttle Games builds Android based game systems and controllers. The acquisition fired up speculation of Google launching a set-top box or its own gaming console. Pando Daily, which broke the story, said that Green Throttle Games would help Google in developing a replacement for its Google TV devices, possibly under the Nexus brand name.

6.Buyer: Amaya Gaming Group, Inc

Target: Oldford Group Limited

Price: $4.9 billion for full acquisition

Toronto-based Amaya Gaming Group acquired Oldford Group Limited (the parent company for Rational Group) in an all-cash deal worth $4.9 billion. Rational Group owns franchises like PokerStars and Full Tilt Poker. The transaction made Amaya, an online gaming and gambling company, the world’s largest publicly traded gaming company.

7.Buyer: SoftBank Ventures

Target: Turbo Studios

Price: Undisclosed amount

Some of the other notable deals done by Asian companies include Japanese telecom and internet giant Softbank’s investment arm SoftBank Ventures making an investment in a New York-based game designing studio Turbo Studios, whose strength lies in developing cross-screen games, basically playing games across multiple screens at any given time. In 2013, SoftBank also acquired a 51% stake in Helsinki-based hotshot gaming company Supercell. The company is famous for its Clash of Clans game. SoftBank acquired the controlling stake through its subsidiary Gungho Online Entertainment for $1.5 billion. In fact, Gungho Online Entertainment was also acquired by SoftBank in March 2013 for $265 million. Gungho developed the hit mobile game Puzzles and Dragons

Some of the other notable deals which involved Asian companies include Korea based Nexon Co Ltd which makes video games and has acquired many gaming companies including distribution platforms and developers like Gloop of Warriors of Odin fame and NCsoft of Guild Wars. Other Asian gaming firms like Alpha,, Ourpalm Co Ltd, Gamevil Inc, Shanda Games Ltd, Susino have also made notable acquisitions in gaming companies across the globe.

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