Mobile game publisher Scopely – which has already acquired a string of studios in the past couple of years – said it has added another $340 million in a Series E round to finance further dealmaking in the fast-expanding industry.
“This was sort of a strategic move,” said Walter Driver, Scopely’s co-CEO and co-founder. “We’re on track for (more than) $900 million in (revenue) bookings this year, and the business is quite profitable. We do anticipate the gaming ecosystem will continue to evolve rapidly. We want to build one of the leading service companies in the world.”
To do that will require scale, Driver said, as the industry – estimated by various analysts at around $150 billion in global revenues – likely consolidates in coming years around fewer, bigger operators. The mobile space, where Scopely has focused development efforts, is estimated to be around $80 billion in revenues worldwide.
“Right now, it’s not a mature industry in the sense that a lot of the leading companies are all going to grow in parallel alongside each other withou a zero-sum kind of competition, because the overall market is growing,” Driver said. “But we do think that over time, more and more of the overall market will be in the hands of the largest companies. Access to lower cost of capital at scale and the ability to distribute products on a global basis, which requires significant investments in both technology as well as business capabilities, and the global scale, is going to be important.”
Investors in the round included Wellington Management, NewView Capital, TSG Consumer Partners, CPP Investments, funds managed by BlackRock BLK , D1, Battery Ventures, Eldridge, Declaration Partners, and Moore Strategic Ventures, as well as Greycroft, Baillie Gifford, Sands Capital, Revolution Growth, and Highland Capital Partners.
A source close to the matter said the latest round valued the company at $3.3 billion, nearly double its valuation a year ago. The company’s expected revenue bookings for the year are also nearly double last year’s totals.
Driver said “inbound interest” from investors “catalyzed this round and the opportunity to bring in some more shareholders that share a long-term vision and provide us with access to significant amounts of capital today, and potentially more in the future, so that we can grow our business as dynamically as possible,” Driver said.
Scopely’s portfolio of games includes some big Hollywood licenses – Marvel Strike Force, Star Trek Fleet Command, The Walking Dead: Road to Survival, WWE Champions – alongside titles such as Scrabble GO, Wheel of Fortune: Free Play, and Yahtzee with Buddies.
Driver emphasized the company’s focus on creating a variety of games that also have a significant social component that builds community and encourages “stickiness” and longevity for its titles. That approach, which he and others call Games-As-A-Service, requires robust back-end technology, strong social components, and experiences that continue to evolve long after an initial release.
“Investors are figuring out where is the greatest value going to accrue and (that’s) games as a service,” Driver said. “It’s a little bit different than the traditional gaming industry, where people used to buy a game and play it and consume it. It was more of a content business, and looked more like a media business, and now (the industry’s newer approach) looks more like software as a service,” valued for subscription and recurring revenue that makes it less dependent on a hit-driven model.
Investors have focused the past couple of years on Hollywood’s direct-to-consumer transition from traditional broadcast and pay-TV to over-the-top streaming video services, either subscription or ad-supported. But games are already a step ahead of that, Driver said.
“While everybody likes this direct-to-consumer evolution of traditional media, Scopely has really been focused on the next evolution that goes beyond direct-to-consumer, which is directed-by-consumer experiences,” Driver said. “It’s the idea that everybody really wants to craft their own journey and their own experience and make their own decisions about how they engage with that experience, and have an identity inside of a world and build meaningful relationships that are unique to them. And the more somebody can customize their own experience, the more they feel like it’s truly their own, the more valuable it is to them.”
The company has recently acquired a string of development studios, including FoxNext from Disney (which brought with it the Marvel Strike Force license) early this year, and studios in Spain and Ireland. The company now has nearly 1,000 employees, Driver said.
The company has remained focused on the mobile space, but is considering extending its reach into “adjacent” gaming sectors as boundaries blur in an era of cross-platform play, 5G-enabled cloud-gaming services, new console launches from Microsoft MSFT and Sony, and other shifts.
“We have evolved our studio ecosystem significantly,” Driver said. “And yeah, we are going to look at opportunities to move into adjacent categories as well, both organically and through through acquisitions. we are, you know, going to continue to be more focused on the player than the than the device. And to the extent that we can create deeper relationships with our players by providing cross-platform experiences that can be played on multiple devices, that’s something that’s certainly an interest to us.”