Sega Sammy Holdings has recently announced its plans to acquire Rovio Entertainment. Rovio Entertainment is the Finnish game developer behind the popular mobile game “Angry Birds“. In particular, Sega Sammy is acquiring Rovio Entertainment for nearly $800 million. What’s more, the acquisition is the latest in a series of consolidation moves in the gaming industry. So, game development companies seek to leverage their combined fan bases and bolster their market positions.
Sailing in Stormy Waters
The gaming industry has witnessed a flurry of M&A activity in recent years. Those activities are driven by the need for companies to stay competitive and maintain their market share. Another driver is the enormous competition within the gaming industry. In fact, globally, growth is slowing down as people spend less money on mobile games compared to previous years. Therefore, the deal-making environment in the industry has become even more active. As a result, companies seek to expand their offerings and explore new growth opportunities.
Sega’s Opportunity
Over the recent years, Rovio had a difficult time recreating games that had the same success as “Angry Birds.” Therefore, making it vulnerable to a takeover by a larger rival. The company’s fortunes have been tied to the success of its flagship franchise. However, the franchise has experienced a decline in popularity in recent years. With the acquisition by Sega Sammy, Rovio will be able to tap into Sega Sammy’s expertise and resources. Thus, the expertise and resources could help Rovio to develop new games and revive its fortunes.
Absorbed by Giants
Consolidation has also been driven by the increasing complexity and cost of game development. The increased complexity and costs have made it harder for smaller companies to compete. What’s more, larger companies with deep pockets and strong brand recognition have been able to weather these challenges. As a result, they emerge as dominant players in the industry.
Strategic Move
The acquisition of Rovio by Sega Sammy is a strategic move that will give Sega Sammy access to Rovio‘s extensive library of mobile games. One of those games is the hugely successful “Angry Birds” franchise. Apart from that, the acquisition will also enable Sega to tap into Rovio‘s strong user base and expand its reach into new markets.
The acquisition of Rovio is just the latest example of the consolidation trend in the gaming industry. In fact, the industry has seen a number of high-profile mergers and acquisitions in recent years. A few examples of that are Blizzard & Microsoft, Zynga & Take-Two, and Bungie & Sony.
In A Nutshell
The acquisition of Rovio by Sega Sammy is a strategic move that will enable the TJapanese company to expand its reach. Apart from that, it will tap into new growth opportunities in the mobile gaming market. In addition, the consolidation trend in the gaming industry is likely to continue as companies seek to stay competitive. This way, they will maintain their market share in an increasingly crowded and complex marketplace.