"No Time to Build Them, So Buy Them and Grow Them"—Is M&A Heating Up Again in the Gaming Industry?

[Financial News] The gaming industry's growth formula is changing. As developing new games and establishing them in the market requires massive investments of time and money, companies are aggressively pursuing mergers and acquisitions (M&A) to quickly strengthen proven capabilities in new genres, intellectual property (IP), and overseas business networks. Demand is also growing for artificial intelligence (AI) companies with technologies that can significantly reduce the various costs involved in game development.
According to industry sources on the 6th, Krafton is recruiting M&A specialists with at least seven years of experience to work in the CNTD Dept. organization within the Chairman's Office, which reports directly to Chairman Chang Byung-gyu. The organization identifies new cooperation opportunities, including investments and M&A, involving AI companies with high growth potential. After an investment, it also develops strategies to create synergies with Krafton's existing businesses and handles follow-on investments, collaboration, and business integration. The move is seen as an effort to strengthen the company's ability to identify, invest in, and acquire businesses across the organization—not only to enhance game development capabilities but also to make AI a mid- to long-term growth engine. An industry source said, "This shows that the scope of M&A in the gaming industry could begin to expand in earnest beyond game developers."
Instead of relying on the traditional M&A approach of acquiring game IP or developers with strong hit potential, companies are increasingly seeking to acquire entire business foundations that would take considerable time to build from scratch.
Last month, Kakao Games invested about 98 billion won to acquire a 39.56% stake in Me2on and secure management control. Me2on operates in overseas markets, including Asia, North America, and Europe, focusing on social casino games, casual games, and mind sports. The move was aimed at securing an entire package at once: a lineup of games in new genres, overseas operations and user bases, and local business capabilities. More than 80% of Me2on's revenue last year came from overseas markets.
Nexxus, a game development and blockchain company, acquired an 84.63% stake in ONE store from SK Square, NAVER, Steel Number One First, and Krafton in June for about 62.6 billion won. By securing its own app marketplace as well as payment and content distribution networks, Nexxus laid the foundation for creating a blockchain game ecosystem. It also began transforming ONE store into an AI- and blockchain-based gaming platform by launching the AI Games tab, dedicated to games created with AI.
In March, NCsoft acquired a 70% stake in JustPlay, a German mobile casual game platform company, for about $202 million (approximately 300 billion won). With 70% of its revenue generated in North America, the deal gave NCsoft a business base from which to enter the North American mobile casual game market.
The biggest factor behind the revitalization of M&A in the gaming industry is considered to be the uncertainty surrounding new game development. Although the personnel and costs required for development continue to rise, there is no guarantee that a new release will become a hit. Additional expenses are also unavoidable when securing global users and establishing services in overseas markets. By contrast, M&A enables companies to acquire the capabilities needed for game development at once and respond quickly to market changes. An industry source said, "Game companies will continue strengthening their M&A capabilities to find new technologies and business opportunities, including in AI."[email protected] Jang Min-kwon Reporter