Even more social game consolidation is coming this year.
And, here’s the reason why: There are hundreds of game companies competing on Facebook, and Zynga is single-handedly grabbing 15 percent of all the revenues.
A report published by Digi-Capital, an investment bank focused on video games, says this year will be a strong one for consolidation based on the number of discussions it is having with investors and management teams.
The bankers said the catalyst for the consolidation is either lack of revenues or profitability or both. The report said that Zynga, Wooga, King, Electronic Arts and Peak Games are all doing well, but as you get further down the list, many others are struggling to gain momentum.
Meanwhile, the leaders in the space, and particularly Zynga, are constantly having to come up with new games to keep their user base engaged, which is good news for companies that have strong games or teams and are looking for a buyer.
In the first quarter of 2012, Digi-Capital reports, 30 deals closed across all game sectors for a total value of $1.7 billion. In particular, casual, social, mobile and massively multiplayer online games were in demand.
In 2011, a total of 113 games transactions took place, for a total value of $3.4 billion.
Zynga, which recently spent $180 million to acquire OMGPOP, said it is looking to purchase more companies — and has deep pockets to do it. Besides the leading social games company, the report noted that other companies looking acquire or invest are from China and South Korea. They are specifically interested in social, mobile or other free-to-play games in domestic and international markets.