Video gaming: Deals aplenty in mobile games

The video game industry has been a big winner in the COVID-19 era—and rising revenue is driving an M&A boom.

Alex Paik

Alex Paik

Partner, Advisory, Financial Due Diligence, KPMG US

+1 408-367-7658

Roderick Moon

Roderick Moon

Managing Director, KPMG Corporate Finance LLC, KPMG US

+1 212-954-5834

The video gaming industry got a big boost when people hunkered down to shelter from the COVID-19 storm in 2020. But mobile gaming did even better. U.S. revenue jumped 35.5 percent in Q2’20 from the previous quarter. The momentum continued in 2021, when an estimated 2.7 billion people played mobile games, driving $96 billion in global revenue. In 2022, mobile games are expected to generate $107 billion.1 Powering the market is the continued growth of smartphone use and the rise of Generation Z consumers, for whom gaming is a big part of their identity.2

In 2021, there were 122 mobile gaming deals globally worth $13.6 billion, compared with 82 deals worth $14.3 billion in 2020.3 Many deals were by established players snapping up more titles and talent. Notable mobile gaming deals included Electronic Arts’ takeover of Glu Mobile for $2.1 billion. For EA, the maker of Apex Legends and Madden NFL, Glu adds popular games targeted at new demographics, as well as additional live-service games. Meanwhile, Chinabased ByteDance, the creator of TikTok, acquired Moonton Technology for $4 billion, reportedly outbidding Tencent, the country’s biggest video-gaming company.4

Global Mobile Gaming, consumer spending, in US$ bn

Source: Sensor Tower

Not surprisingly, money is pouring into mobile gaming. This year started with a bang: on January 10, 2022, Take-Two Interactive, the maker of Grand Theft Auto, announced that it intends to acquire Zynga for $12.7 billion to expand further into mobile gaming. On January 18, Microsoft topped that with a massive $68.7 billion bid to take over Activision Blizzard, the maker of Call of Duty and Candy Crush.

Momentum in the mobile gaming market is expected to continue, driven by new technologies such as high-bandwidth 5G networks and more powerful handsets, that will significantly enhance the quality of mobile gaming. Meanwhile, emerging gaming technologies such as augmented reality (AR), virtual reality (VR), and blockchain-enabled in-game non-fungible tokens (NFTs) will offer even more immersive playing experiences in metaverse platforms, attracting more players.

This should provide lots of opportunity for deal making. Big tech players such as Microsoft, Google, Netflix, Meta/ Facebook, and Apple are all eager to expand their footprint in mobile gaming. These companies have launched new games, game-streaming services, and subscription-based platforms. To increase market share, they and other major incumbent players, including Tencent, Take-Two, and Epic Games, will likely continue to search for gaming studios to acquire.

Additionally, disruptions caused by privacy changes within the industry (namely Apple’s App Tracking Transparency allowing iPhone users to opt out of third-party tracking) should lead to more consolidation. Publishers are likely to invest in internal ad networks—see, for example, Zynga’s acquisition of Chartboost in August 2021—even as smaller ones struggle to adapt.

We expect competition to remain elevated for high-quality gaming companies. This, coupled with continued proliferation of options to absorb consumers’ time and money, means dealmakers will need to evolve their diligence approach for speed and depth, while developing post-deal value-creation plans to optimize returns.


  1. Source: Statista, “Number of mobile gaming users worldwide in 2021, by region,” September 7, 2021; Sensor Tower, “2021-2025 Mobile Market Forecast”
  2. Source: BNN Bloomberg, “Big tech companies flock to the gaming industry: Enthusiast Gaming CEO,” April 14, 2021
  3. Source: Capital IQ, PitchBook, KPMG analysis
  4. Source: Reuters, “ByteDance acquires gaming studio Moonton at around $4 billion valuation: sources,” March 21, 2021