February 17th, 2020 | 10:09 CET
Media and Games Invest plc - successful on schedule
Media and Games Invest plc is a profitable investment company focusing on the game publishing and media sectors. Since May 2018, the Group has changed its business purpose by spinning off the real estate business from the scope of consolidation and acquiring a majority stake in the game publishing platform gamigo AG. The strategy is currently based on four pillars: "Buy, Integrate, Expand and Improve" and is being implemented with organic and inorganic growth.
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Author:
Mario Hose
ISIN:
MT0000580101
Table of contents:
Author
Mario Hose
Born and raised in Hannover, Lower Saxony follows social and economic developments around the globe. As a passionate entrepreneur and columnist he explains and compares the most diverse business models as well as markets for interested stock traders.
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Loyal customers as revenue generators
Media and Games Invest's business is divided into two segments: 1) Game Publishing, which includes a broad portfolio of online, mobile and console games; and 2) Digital Media, which includes online advertising and social marketing services for the Group's and third-party games. The majority of consolidated revenues are attributable to gamigo's free-to-play games, which allow users to purchase goods, i.e. virtual items, for a more intense or successful gaming experience.
The group registers daily activities of more than 600,000 users. More than 50% of revenues in Core Games are generated by users who have been on the platform for more than five years. As a result, gamigo video games generally have a long lifespan and customer loyalty is high.
Takeovers with synergies
Since the first half of 2019, the Digital Media division has been further expanded through the acquisition of the online advertisers ReachHero, Applift and PubNative. On January 23, 2020, the Media and Games subsidiary gamigo AG completed the acquisition of the main assets of the US company Verve Wireless Inc. (Verve), thus continuing the high level of M&A activities of recent years.
Verve is a provider of location-based and programmatic video and display marketing and has a well-known customer base (including: BMW, MC Donalds, Pepsico, Unilever. etc.). On the other hand, the company, which is active in New York and San Diego, works with a broad network of equally well-known publishers, thus ensuring the dissemination of its marketing activities.
Potential in the large advertising market
With the integration of Verve, the gamigo and Media and Games groups will benefit on the one hand from the customer contacts they have built up, both at the supplier and the publisher level. There is high synergy potential in particular with the two B2B subsidiaries PubNative and Applift, which are active in mobile marketing. Neither company is currently active in the USA, so Verve should enable the expansion of the existing activities into this largest advertising market.
On the other hand, Verve could benefit from the global orientation of the two companies. In addition, the B2C segment could also benefit from the Verve acquisition. This should provide the gaming subsidiaries with additional expertise in customer acquisition and increase their know-how in mobile applications.
GBC confirms assessment
According to analysts at GBC Research, the Verve acquisition is to be seen as a continuation of the high level of M&A activity to date, which they have partly assumed to be the basis for the sales and earnings growth they expect in the coming financial years. The experts leave the price target at EUR 1.90 per share and continue to assign the BUY rating.
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