Game Face: Funding, Online Deals Surge 36%

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Driven by advancements in online and social gaming, funding and acquisition deals for the worldwide gaming market surged 36% in 2010, according to new IHS Screen Digest research. 

In 2010, 123 funding rounds and 87 acquisitions equaled 2010 events -- up from 154 events in 2009. Acquisitions alone doubled year-over-year, with 20 to 24 events occurring every quarter, compared to 49 acquisitions for all of 2009. Total declared funding for 2010 reached $1.89 billion -- up a robust 130% from $819 million in 2009.

"Two key trends fueled the robust pace of funding and acquisitions in gaming during 2010," said Steve Bailey, games analyst at IHS. "First, it was driven by burgeoning activity in the fast-evolving sphere of online gaming, with particular emphasis on social-network gaming.

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"Second, movement in funding and acquisitions also has ramped up between Western markets and entities in Asia, centered on the growth to be found in various aspects of online gaming," added Bailey. "In particular, the global opportunity presented by versatile browser-based content, on both PC and mobile platforms, drove companies in Asia and the United States alike to embrace opportunities presented by each region."

The total declared value of funding deals in the social network gaming segment increased by nearly 300% in 2010.

The biggest funding event in 2010 belonged to Digital Sky Technologies, which closed $300 million from Chinese online gaming giant Tencent. DST -- which has since been renamed as the Mail.Ru.Group -- has investments in both Facebook and Zynga, so its input into social network gaming in the West is tangible.

For its part, Zynga -- the largest game operator on Facebook -- received $147 million from Japanese investor Softbank. The funding is indicative of Zynga's wish to penetrate deeper into the Asian market as a gaming operator, targeting the rapidly growing mobile-based aspect of social network gaming.

Other notable funding events included Zenimax Media's receipt of $150 million from Providence Equity Partners, which led to its game publishing arm Bethesda Software acquiring two new studios, Arkane and Tango Gameworks. The latter is a Japanese developer, headed by "Resident Evil" creator Shinji Mikami, and furthers Zenimax's aggressive campaign to establish itself as a key publisher in the core gaming space.

Also last year, U.S.-based Flash-gaming aggregator and monetization specialist Mochi Media was acquired by Chinese online gaming presence Shanda for $80 million, underscoring 2010 as a key year for global interplay between major operators in the online gaming ecosystem.

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