The first 9 months of the year were brutal for games deal makers, with total deal value (i.e. dollars) across investments, mergers and acquisitions (M&As), and IPOs down 82% on last year. Of that decline, games investments fell the least at 35% below last year, games M&As deals dropped 74% and the games IPO market evaporated.
It’s been party time for mobile, with massive growth and disruption helping VCs to raise huge funds, entrepreneurs to raise massive rounds, and valuations to skyrocket. With 89 mobile internet unicorns now worth almost $1 trillion, it’s no surprise that folks from Silicon Valley to Shanghai are asking what’s going on with return on investment (“ROI”). While there are many ways to measure ROI, let’s look at the ratio of exits to investments, the total amount invested, and ROI across all 27 mobile sectors for the last 5 years. The analysis is extracted from Silicon Valley based tech advisor Digi-Capital’s quarterly Mobile Internet Report.
Extract from CNBC interview of Silicon Valley based tech advisor Digi-Capital’s Tim Merel about rising mobile unicorn valuations.
Full detail of 89 mobile internet unicorns adding $44 billion to hit $831 billion shareholder value by sector, country, value added (or lost) and ranking in Digi-Capital’s quarterly Mobile Internet Report.
It’s not surprising that mobile unicorns are multiplying, with mobile internet revenue forecast to hit $850 billion by 2018. What is staggering is that the 89 mobile unicorns across 18 sectors and 15 countries in Silicon Valley based tech advisor Digi-Capital’s new Mobile Internet Report Q2 2015 are now worth an average $9.3 billion, after adding $44 billion in Q2 to hit $831 billion total shareholder value. Even mid-range (i.e. median) mobile unicorns are worth almost $3 billion, so “only” $1 billion valuations might be losing their mythical status.
The games industry’s structure now looks a lot like it did 10 years ago, with a handful of companies dominating the top grossing charts (although different sectors and companies to back then). While Digi-Capital’s new Games Report Q2 2015 forecasts games software revenue growing from $88 billion in 2015 to $110 billion by 2018, that is just 8% growth per year – low by tech standards (although AR/VR could break out next year). This dynamic has had a dramatic impact on games deals so far this year.