Jam City Will Go Public Via a SPAC As the Mobile Gaming Universe Levels Up
Favot is an award-winning journalist and adjunct instructor at USC's Annenberg School for Communication and Journalism. She previously was an investigative and data reporter at national education news site The 74 and local news site LA School Report. She's also worked at the Los Angeles Daily News. She was a Livingston Award finalist in 2011 and holds a Master's degree in journalism from Boston University and BA from the University of Windsor in Ontario, Canada.
Mobile games featuring Harry Potter, Jurassic Park and the Teenage Mutant Ninja Turtles will soon be on the same roster when L.A.-based mobile game publisher Jam City goes public and acquires Montreal-based Ludia, creating a $1.2 billion gaming juggernaut.
Jam City announced Thursday it is going public through a merger with special purpose acquisition company (SPAC) DPCM Capital, which is led by former Uber senior VP of business Emil Michael. The merger will then allow Jam City to purchase Ludia for $175 million.
Jam City co-founder Josh Yguado said market consolidation in the mobile gaming space was the catalyst for the deal.
"If we're going to continue to be a leader and a consolidator in this space, it's going to require more dry powder," Yguado said in an interview. "Raising this money right now enables us to do this deal, and then also have additional, again, dry powder to continue to do more deals in the future," he said.
The combined company will have about $115 million in cash for other mergers and acquisitions and to develop more original games.
The deal comes during an explosive time for the gaming industry which saw a surge in users during the pandemic as people were forced to stay indoors. The value of the gaming industry topped $300 billion with 2.6 billion players globally, according to a report released in April by Accenture.
Investor interest has followed. Market analyst InvestGame reported that in the first quarter of 2021, $39 billion was invested in the gaming industry, compared to $33 billion in all of 2020. Game-maker Roblox also went public earlier this year.The gaming industry is expected to exceed $205 billion in revenue by 2023, according to Newzoo.
Related: What is a SPAC?
Since Yguado founded the company with My Space co-founder Chris DeWolfe in 2010, Jam City has based its growth strategy on acquiring games and producing original ones for a broad audience. Yguado said about half of the company's games are original. The other half are based on licensed Hollywood intellectual property, including Disney and Harry Potter.
Ludia's model is similar. The publisher will bring its Jurassic World and Teenage Mutant Ninja Turtles games, in addition to others, to Jam City platform.
Yguado said he's known Ludia President Alex Thabet for many years and they've discussed ways to work together.
"I think that the opportunity right now when their games are doing so well and they have such a great pipeline of new games and we're really at the same position, felt operationally and strategically the right thing to do at the right time," he said.
Jam City and Ludia games have been downloaded 1.3 billion times as of December 2020 and have 31 million monthly active users. The two companies also generated a combined 3 billion total hours played and 9 billion advertising impressions last year. An average of more than 1 million players spend about $45 each month playing Jam City games.
Yguado said while Jam City saw a boost in new player acquisition during the pandemic in the second and third quarters of last year, there has been "sustained performance" since then, creating a new baseline for continued growth.
More and more people are consuming entertainment on mobile devices and games are one of the most popular apps on those devices. Mobile gaming is set to grow faster than any other segment in entertainment, Yguado predicts.
"I think there will be a time when some of the words and universes and characters we're creating may live in other worlds, but that's not something that we're currently working on," he said. "There's so much opportunity in mobile games right now and in creating these mobile entertainment universes that we're really laser focused on at the moment."
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Favot is an award-winning journalist and adjunct instructor at USC's Annenberg School for Communication and Journalism. She previously was an investigative and data reporter at national education news site The 74 and local news site LA School Report. She's also worked at the Los Angeles Daily News. She was a Livingston Award finalist in 2011 and holds a Master's degree in journalism from Boston University and BA from the University of Windsor in Ontario, Canada.
