Games Dealmaking Plummets In First Quarter Amid Soft Economy, Sliding Valuations

Games Dealmaking Plummets In First Quarter Amid Soft Economy, Sliding Valuations

Dealmaking of all kinds in the $180 billion videogame sector pulled back sharply in the first quarter of 2023 "amid cautious sentiment" by investors around drooping company valuations, rising interest rates, a chilly stock market, and economic instability, according to the latest quarterly Games Investment Review by Digital Development Management. "With reduced values across investments, M&As and IPOs, 2023 is off to a low start," says the report, which focuses on dealmaking in "Western" markets in North America and Europe. "The first quarter reflected the economic anxiety and cautious outlook that we noted previously." The totals for the value and number of investments and mergers & acquisitions were collectively among the lowest in years, or ever, in the 14 years DDM has been collecting data, said DDM, which provides clients with investment services, representation, consulting and research. Only the small sector of initial public offerings rose from the previous quarter, from $300 million to $500 million, each for four IPOs. Otherwise, it was an ugly quarter for dealmakers. M&A, for instance, dropped from 61 deals worth $5. 1 billion in Q4 of 2022, to just $400 million for 40 deals in Q1 of this year, a drop of nearly 92%.