Digi-Capital, an investment institution on games, apps and digital services in general, estimates that Asia will dominate global mobile/online games revenue, with China contributing 32%, South Korea 12% and Japan 10% by 2016, according to the Q3 2013 Update of its Global Games Investment Review.
Games are expected to generate over 70% of global apps revenues in 2013.
8 of the 10 largest games M&As to Q3 2013 were made by Chinese, Japanese or South Korean buyers. Asian companies have been buying quality games businesses at home and abroad at valuation multiples higher than their Western counterparts. Deep Asian relationships are now critical for investors in games companies considering exits, Digi-Capital concludes.
Digi-Capital also finds that in the last 12 months there has been a trend for Asian tech companies to acquire mobile games and tech companies, as part of their defensive and growth strategies to deal with mobile. Many Asian companies are looking to invest in or acquire Western mobile games companies to leverage in domestic markets, or globalize themselves to publish Asian mobile games in Western markets. Digi-Capital sees relationships and market knowledge remain a challenge, particularly for those Asian companies looking for high quality Western deal flow.
As with other advanced trends from Asia, Digi-Capital anticipates similar moves by Western companies in the next 12-18 months.