Why a declining economy could spur increased M&A activity in the mobile gaming industry

With a recession in the offing, the coming year is shaping up to be a difficult one for business across the gaming industry, including the mobile gaming sector. But while the recession brings challenges for mobile game developers, that doesn’t mean M&A activity in the space is going to slow down in 2023.

M&A has been a consistent source of growth for mobile gaming companies in recent years. Much of Zynga’s growth between 2016 and 2020 was a result of its ample acquisitions of other mobile game studios during the period, according to Chris Petrovic, who led M&A at the company at the time. In 2023, the M&A action has continued: Just last week, Playtika announced a nearly $738 million deal to acquire Rovio, the developer of popular mobile games such as “Angry Birds.”

“In 2023, I don’t think the appetite for acquisition will change much,” said Zynga Chief Product Officer Scott Koenigsberg. “I think the targets will probably be younger companies in their evolution, and so we’re going to have to do more analysis to try to figure out what their long-term forecasts would be.”

The aforementioned smaller mobile gaming companies are likely to feel the squeeze of a recession earlier than the Zyngas of the world. Many rely on brands’ advertising dollars to stay afloat, and as those dry up, they are likely to turn toward acquisitions as a potential emergency exit.