Games an ’08 Investor Favorite

Games an '08 Investor Favorite

Games an '08 Investor Favorite

Video and online games drew substantial investor interest in 2008, as the volume of equity raises in the sector outpaced that of social networking, web apps, mobile and blogging/user-gen sectors.

Peachtree Media Advisors said Monday that last year there were 59 equity raises in the games sector. That volume was followed by social networking (57), web apps/enabling/IT (47), mobile (35) and blogging/user-generated (27).

"Since there are capital raise transactions that do not report deal value throughout the year, capital raise volume is a good indicator of investor interest in certain sectors of online media," the report read.

Including equity raise and M&A deals, there were 88 videogame-related transactions in 2008. Only social networking topped that volume last year with 102 total transactions.

The total transaction value for videogames, including both equity raise and acquisitions, was $705 million.

Some notable M&A activity in gaming included the $70.1 million ($100K plus assumption of $70 in debt) acquisition of Midway Games by private investor Mark Thomas, Infogrames’ $27.6 million Cryptic Studios buy and Activision’s acquisition of Budcat Creations (no value reported).

There were also various capital raise transactions, including $11 million from Tencent Holdings to online game firm Outspark, Sequoia Capital’s $4.5 million injection into Challenge Online Games and Accel Partner’s $10 million investment in Mochi Media.

The overall consumer sector, which encompasses video and online games, social networking, blogging and consumer publishers captured $6.2 billion in mergers and acquisition transactions, or 37 percent of all reported transaction value in digital media, leading all other sectors.

More game-related investment

The consumer publishers and aggregator category captured the highest total reported transaction value in 2008 with $3.4 billion, topping the videogaming category. But the primary driver behind that category was the $1.8 billion CBS acquisition of GameSpot parent CNET.

Another notable consumer publisher transaction was Constellation Ventures’ $8.3 million investment in the gaming site Crispy Gamer.