Among all the technology, media and telecom (TMT) sectors, the gaming software saw the highest year-on-year growth of 130% in M&A activity, in terms of deal volume (deals with value greater than or equal to US$50m), reveals GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Mergers and Acquisitions in Tech, Media and Telecom (TMT), 2020 Update – Thematic Research’, shows that M&A activity had declined during the first half of 2020, especially in Q2 with just US$95bn worth deals taking place due to the COVID-19 pandemic. However, the activity recovered sharply in the second half to reach a total transaction value of US$903bn for the full year.

The growth was attributed to transactions in sectors such as gaming, electrical components, semiconductors, consumer electronics, application software and telecom services. There were 46 acquisitions in gaming and eight amongst these were billion-dollar deals. The top three among these include Microsoft’s acquisition of video game holding company ZeniMax Media, Flutter Entertainment’s acquisition of sports betting company FanDuel and the merger of Flying Eagle Acquisition Corp with e-sports company Skillz Inc.

Snigdha Parida, Thematic Research Analyst at GlobalData, comments: “With increasing mobile penetration and prolonged lockdowns, mobile gaming has boomed as a pass time. The immediate effect was a spurt in mobile game sales, benefiting both game developers and gaming device makers. As a result, investors rushed to participate in the rapidly growing gaming market.”

China-based tech giant Tencent-backed battle royale game PUBG Mobile generated nearly US$2.6bn revenues in 2020, becoming the highest grossing mobile game of the year. In fact, Tencent has been the most active acquirer with six gaming acquisitions (deals with value greater than or equal to US$50m) in 2020.

Ms Parida concludes: “In the short-term, COVID-19 will continue to positively impact the gaming sector, as people staying at home look for entertainment. In the medium-term, growth rates will start to decline towards the end of 2021 as lockdown restrictions ease around the world. GlobalData expects mobile gaming and online gaming to be the primary themes driving the gaming M&A activity along with e-sports and cloud gaming.

“Maintaining growth rates in the gaming sector will require improved 5G network coverage, attractive games libraries and reasonable pricing. Companies will also have to focus on new games, user experience and subscription-based pricing plans.”