Digital Bros Moves to Acquire Starbreeze; US Game Content Generates USD$35.4bn in 2019

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TheGamingEconomy’s Daily Digest brings you the trending stories in gaming. In today’s news: Digital Bros moves to acquire Starbreeze; US game content generates USD$35.4bn (£27.0bn) in 2019; and Media and Games Invest acquires Verve assets.

Digital Bros moves to acquire Starbreeze

Milan-based entertainment firm Digital Bros has made a potential move to acquire Swedish developer Starbreeze, with the board authorising chairman Abramo Galante to purchase the assets in the Swedish publisher currently held by Korean developer publisher Smilegate Holdings, in a deal priced at €19.2m (£16.2m). Digital Bros currently owns 7% of Starbreeze capital, should the deal prove successful it would subsequently hold 30.18% of total shares along with 40.83% of voting rights, and would therefore be obliged under Swedish law to submit a bid for a full takeover of Starbreeze, as the threshold for submission of a mandatory acquisition bid is 30% of voting rights.

The value of Smilegate's current holdings in Starbreeze are valued at an estimated €36m (£30m), which consist of a €20.4m (£17.2m) convertible bond, credit of €13.8m (£11.6m) to be paid within five years as part of a court-stipulated reconstruction plan, and Class A and Class B shares worth approximately €1.8m (£1.5m).

As previously covered by TheGamingEconomy, Starbreeze has been undergoing considerable financial distress in the past year, accumulating debts amounting to SEK395.7m (£31.76m) (which the firm has agreed to pay off in full by 2024), and being split into two subsidiaries in reconstruction efforts. Much of Starbreeze's future relies on finalising a publishing agreement for its upcoming PAYDAY 3 by mid-2020, which will likely now be made with 505 Games, the video game publishing unit of Digital Bros.

US game content generates USD$35.4bn (£27.0bn) in 2019

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US video game content generated USD$35.4bn (£27.0bn) in 2019, which represents a 2% year-on-year increase, according to data released by the Entertainment Software Association (ESA) and The NPD Group. The rise in consumer spending was largely driven by digital sales and subscriptions across console and mobile platforms, while both physical and digital sales on PC declined. Analysts are bullish on seeing further increases in 2020, with the launch of the next-generation consoles from Sony and Microsoft, along with the proliferation of subscription and cloud gaming platforms.

The fall in revenue generated by PC content has been attributed by NPD Group industry analyst Mat Piscatella to warring between PC distribution platforms, chiefly Steam and the Epic Game Store. Writing on Twitter, Piscatella stated, "Priorities of enhancing consumer experience & choice and minimising confusion were all deemphasised in 2019, contributing to lower overall consumer spend on PC content."

Media and Games Invest acquires Verve assets

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Media and Games Invest (MGI) has announced that its publishing and platform service subsidiary gamigo is set to acquire the total assets of Verve Wireless Inc, a provider of location-based programmatic video and display marketing technology. While the exact terms of the deal have not been disclosed, the price is expected to be between USD$10m-USD$15m (£7.6m-£11.4m). The acquisition continues MGI's prolific M&A drive in both the gaming and media sectors in the last six years, having acquired 30 firms in this time including app performance agency Applift and advertising supply side platform Pubnative.

In a statement announcing the acquisition, Remco Westermann, CEO of MGI, said, "With the acquisition of Verve, we are further expanding the position of the MGI Group in the media and advertising sector. Together, the group has a strong global offering with over 600 million monthly active direct users, strong proprietary technology, over 17 registered patents and a global sales team with offices and employees in well over 20 countries worldwide as well as a strong customer base, including many blue-chip companies. This powerhouse in the media sector will also further strengthen the gaming sector, particularly in the area of user acquisition for our portfolio games as well as for our new game launches."