Global video game investment to hit record high in 2022 | fDi Intelligence – Your source for foreign direct investment information

Greenfield foreign direct investment (FDI) in the video game industry accelerated to an all-time high in 2022, as companies looked for international talent and growth opportunities following increased spending on gaming during the pandemic.

According to the latest figures from the Foreign Investment Monitor, more than 140 global FDI projects worth an estimated $3.6 billion were announced between January and November 2022 in the video games, applications and digital content subsector fDi Markets. This is nearly double the 88 FDI projects announced across the industry throughout 2021.

Piers Harding-Rolls, research director for games at Ampere Analysis, said fDi that several factors, including higher spending on games and valuations of gaming companies, have paved the way for many companies to expand their global footprint.

“These circumstances have prompted companies to look beyond their local markets to access talent and gain a foothold in markets that will become increasingly important in the future,” he said, citing Southeast Asia as an example .

An example of this was Japan’s Sega which established a new subsidiary in Singapore in October 2022, which will “carry out local market research and marketing” in Southeast Asia. The global increase in video game foreign direct investment in 2022 was due to more (96) game companies announcing cross-border projects than ever before.

This one included League of Legends creator Riot Games, Swedish smartphone game developer G5 Entertainment and Cyprus-based game holding company Room 8 Group, all of whom have each announced at least 5 FDI ​​projects.

Silicon Valley-based game development tool maker Unity Technology was the most active investor, announcing last March that it planned to hire more than 1,000 new employees across its 47 global locations. In November 2022, Unity also formally completed its merger with advertising technology company IronSource, in a $4.4 billion all-stock deal.

While Unity’s expansion followed the company’s raising of $1.3 billion in an IPO in 2020 and a significant increase in revenue, it has had to reverse course on some of its expansion plans. In January 2023, Unity said it would cut more than 200 jobs — a further cut from the 225 layoffs announced last June.

Mr Harding-Rolls said he expects video game FDI to fall in 2023 compared to 2022 given the backdrop of job losses and risk reduction across the technology sector.

“Talent in local markets is likely to be more available as big companies cut jobs and companies will act more cautiously,” he added, noting that a more unpredictable macroeconomic environment will make companies make more defensive moves.

Growing video game FDI levels reflect the dynamics of a fast-growing market. According to data provider Newzoo, global spending on games increased 34% from 2019 to 2021 to $192.7 billion, before falling to $184.4 billion in 2022.

Guilherme Fernandes, Newzoo’s market advisor, explained fDi that most of the decline in gaming spending in 2022 was on mobile games, due in part to privacy regulatory changes in major markets such as the US and Europe, but that they expect a recovery in spending in the coming years. Newzoo forecasts that global spending will reach $211.2 billion in 2025, a 14.5% increase over 2022 estimates.

Major technology companies are increasingly betting on gaming as it has become an increasingly popular form of entertainment. Mr Fernandes notes that gaming has always been a goal for big tech as they see it as “a very engaging way to interact with their audience”. Facebook’s parent company, Meta, plans to open a new tech hub with 2,500 new jobs in Toronto, Canada that will focus on extended reality and metaverse technologies.

In January 2022, Microsoft said it would acquire Activision Blizzard, the studio behind such well-known titles as Duty and World of Warcraft. However, the $69 billion deal faces a US lawsuit claiming it will “create a monopoly in the video game industry”.

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