As a result of the disruption of traditional sports in 2020, eSports has enjoyed increased attention as is evident from the investment activities it is receiving. According to the research data analyzed and published by Safe Betting Sites, Q3 2020 saw an increase of 714% quarter-over-quarter (QoQ) in eSports investment value, reaching a total of $1.33 billion.
There were 179 M&A and investment transactions, marking an increase of 32.59% compared to Q2 2020. In total, the M&A and investment transaction value recorded in the three-month duration topped $17.54 billion.
It was a 77.3% increase compared to the previous quarter which saw a total of $10.5 billion in transaction value. The total number of transactions recorded during Q2 2020 was 131.
Pre-IPO investment during Q3 2020 shot up by 247.19% to $3.645 billion. While confirmed Series C and D rounds were absent in Q2 2020, they made an appearance in Q3 2020.
Venture funding at an undisclosed stage rose by 942% QoQ to reach $2.107 billion. Similarly, corporate funding rounds increased by 941% to $374.5 million.
The highest investment (non-M&A) in a private company reported during the quarter was $1.78 billion into Epic Games at a $17.3 billion valuation.
Initial Public Offering (IPO) and post-IPO activity decreased by 55.55% QoQ to $2.556 billion. IPO activity declined by 11.4% QoQ, yielding a total of $2.471 billion.
Unity Software took the lead raising $1.3 billion in September at a valuation of $18 billion. The valuation was triple that of its previous investment in May 2019. At the time, it raised $525 million from sales of secondary shares and was valued at $6 billion. With the new valuation, it sits ahead of rival Epic Games.
Post-IPO activity dropped by a whopping 97.17%, with deal volume dropping from 11 in Q2 2020 to 5 in Q3 2020.
Microsoft Acquires Zenimax for $7.5B, Second Largest Gaming M&A Deal on Record
The total tracked funding value for September alone surpassed the Q2 2020 total. In that month, the overall transaction value totaled $11.77 billion. The value was largely boosted by a single transaction, Microsoft’s acquisition of ZeniMax at $7.5 billion.
The transaction went on record as the second largest M&A deal in the history of the gaming industry according to Bloomberg. Tencent’s $8.6 billion acquisition of Supercell in 2016 is the largest on record.
Rounding off the top five largest M&As in the space are Activision’s acquisition of King ($5.9B), Microsoft’s acquisition of Mojang at $2.5 billion and Facebook’s acquisition of Oculus VR at $2.0 billion.
Courtesy of the ZeniMax acquisition, Microsoft gained control of top gaming titles like Fallout, Doom, The Elder Scrolls and Wolfenstein. It also placed the tech giant ahead of rival Sony with 24 first-party game studios.
M&A transaction value during Q3 2020 totaled $11.65 billion, growing 262.0% QoQ. It translated to 63.3% of the total transaction value by investment stage. In terms of transaction volume, M&A accounted for 44 transactions.
However, 18 of these transactions were for an undisclosed amount and only 26 were disclosed. As such, the actual value of all M&A transactions for the period was likely significantly higher.
During the quarter, seven M&A’s in the industry surpassed $100 million in value. Four of the seven crossed the $500 million mark.
Besides Microsoft, Tencent had the most valuable of these deals thanks to its acquisition of Leyou Technologies at $1.498 billion.
North America Receives 80% of All Funding and Issues 57.2%
During Q3 2020, activity was particularly high in the US as 79.45% of all funding went to US-based companies. China received the second highest amount of funding, accounting for 10.2% of the global total.
North America received 80.6% of the global transaction value, compared to 12.9% in APAC and 5.8% in EMEA. As a result, North American companies enjoyed a 73.8% increase QoQ in terms of funding. Comparatively, transaction value fell by 57% in the APAC and 63% in EMEA.
During Q2 2020, the situation was vastly different as APAC received 50.0% of global transaction value. EMEA came in second with 27.0% while North America was third with 22.9%.
During Q3 2020, investors in North America led the pack in terms total funding value issued, with a 57.2% share. They made investments worth $10.04 billion, a 132.8% increase QoQ.
The APAC region also reported a significant growth in lead investment, with 10.7% of the global value. Worth $1.498 billion, the total investment value coming from APAC resulted in a 118.6% QoQ increase in the region.