All Quiet On The Western Front: Gaming M&A May Be In A Lull As A New Generation Grows Up

When you step off the elevator into Kixeye’s new downtown San Francisco office, a guy in military fatigues has you sign an NDA. After you do (I didn’t), a receptionist with a lot of piercings takes your name, while The White Panda’s “Foolish Monsters” blares in the background. Kixeye has whale harpoons stapled to its office walls, bad oil paintings (see left), ceiling-to-floor drawings of fire-breathing dragons and jacked unicorns, a 3-D printer of questionable purpose and little desire to answer to anyone else. All while remaining profitable, the midcore social gaming company has quintupled its headcount over the last year to more than 450 employees. The company says it has “several” times the $19 million in capital they raised stowed away in the bank. Too expensive for acquirers and still too small and unproven for public markets, privately-held gaming companies like Kixeye are chugging along profitably and doing things their own way. “We don’t talk about exit scenarios here. The employees are not here for that,” said Brandon Barber, who is Kixeye’s chief marketing officer. “Most people are here because they love making games and that’s what they want to do. Focusing on that stuff at this point in our trajectory is super distracting.” (If you want to know what Kixeye really thinks of everyone else in the industry, watch this video.) Meanwhile, across the Atlantic, other privately-held gaming companies such as Finland’s Rovio and Supercell, the U.K.’s King and Germany’s Wooga are also growing profitable businesses. Buyers Beware That feeling is mutual on the buyers’ side too. Warner Bros said last week that it would be opening a gaming studio in San Francisco. In other words, it is choosing to build, not buy. “Every time we looked at a company that was really interesting, we found that the price tag was more money than we thought was reasonable to pay,” said Greg Ballard, who is Warner Bros. senior vice president of digital games. Similarly, EA is holding off after some big ticket deals in the last few years to buy Seattle’s PopCap for up to $1.3 billion. “With regards to a large acquisition, we’re probably OK for the time being,” said Nick Earl, who oversees most of EA’s free-to-play games as a senior vice president there. “If the right deal presents itself, we would make that deal. But we’re not actively seeking it.” He said his arm of

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