MTG has entered into an agreement with Eight Roads Ventures and the company’s founders to acquire 35% of the global online games developer and publisher InnoGames. The investment is in line with MTG’s digital strategy to invest in relevant, complementary and scalable digital content and communities. It creates a third digital entertainment vertical for MTGx alongside its esports and MPN businesses. The transaction is based on the company’s value that is estimated to €260 million. MTG now also has an option to acquire a further 16% of InnoGames at the same valuation.
Esports/gaming is one of the largest and fastest growing online content categories. A recent industry report in Sweden found that more people watched esports/gaming online than traditional sports during Q2 2016. Innogames predicts that gaming industry’s revenues are expected to grow at a compound rate of 7 % from 2015 to 2018 to a total of €102 billion worldwide. Nearly half of it or €46 billion is expected to come from browser and mobile based gaming. Innogames claims that mobile based games is the fastest growing segment with an anticipated compound growth rate of 12 % over the same period driven by larger audiences and more paying players. Also the amount of money spent will increase average per player.
MTG’s ESL and DreamHack are the leading players in esports, which is the fast growing professional sport and will engage over 250 million worldwide fans in 2016. Content from MTG’s MPNs Zoomin.TV and Splay generate approximately 2.5 billion online views every month. 25% of them are related to gaming content.
InnoGames was founded in Hamburg in 2007. It is a large scale global online games developer and publisher with a proven track record in creating popular strategy and role-playing games. It operates a 100% free-to-play model with revenues coming from in-game purchasing. The company runs four studios (three in Hamburg and one in Dusseldorf) and employs 400 people. The US is InnoGames’ largest market in terms of revenue (>25%), followed by Germany (>15%) and France (~10%). InnoGames has generated compound annual revenue growth of more than 20% over the last three years, with expected revenues of approximately € 125 million in 2016. The company has 150 million registered users and a portfolio of popular cross-platform titles that keep gamers engaged through constant and innovative live game operations. InnoGames has already successfully introduced mobile versions of its games, and more than half of all new user registrations are on mobile platforms.
Jørgen Madsen Lindemann, MTG President and CEO stated: “We have been involved in the gaming space for a while now, and look for companies with clear track records in IP development that have translated into high revenue growth and a healthy profitability profile over time. This we have found with InnoGames. We are focused on digital verticals with global potential, and gaming is a truly global industry. InnoGames is the right partner due to its established position in the industry, fast growing mobile user base, and exciting pipeline of new releases. We are now present in three complementary digital video storytelling verticals, and we will invest to expand this presence further.”
