It’s the big one. Mobile technology company AppLovin has offered to purchase video game makers Unity Software in a $17.54 billion all-stock deal.
In a report by Reuters, AppLovin is offering $58.85 for each Unity share.
“We believe that together, AppLovin and Unity create a market-leading business that has tremendous growth potential,” said Adam Foroughi, AppLovin CEO, in a press release.
AppLovin estimates that together, the companies could reach an estimated run-rate adjusted EBITDA of over $3 billion by the end of 2024.
In AppLovin’s proposal, Unity would own 55% of the merged company’s shares, representing 49% of voting rights, however, the Israel-based company would become a wholly owned subsidiary of Unity.
Foroughi added, “Unity is one of the world’s leading platforms for helping creators turn their inspirations into real-time 3D content.”
It’s estimated that Unity is the development platform behind 70% of the world’s most popular mobile titles such as Call of Duty: Mobile, Pokémon Go and Animal Crossing: Pocket Camp.
A wild ride
It’s been an interesting ride for Unity recently following their acquisition of graphics tech giants Weta Digital and their deal with app business provider ironSource. The deal meant that the popular app development platform had a simple to use, built-in monetisation partner right there within Unity. It’s not clear at present what Applovin’s move means for Unity’s work with ironSource.
If the Applovin/Unity goes ahead (and IF developers like the tools they produce together) the combination has the power to deliver them 70% of all the money being made in mobile…
Too much, too soon, too big?
Needless to say there’s lots of talk about ‘monopoly’ right now with the deal – potentially – being too powerful.
Evangelos Pappas, CTO of Web3 economy-building platform Metanomic says, “Traditional ad networks have fewer and fewer ways to monetise their channels. Tracking based on user IDs and cookies is failing, and ad networks need to find new ways of serving the demand from brands that seek new, innovative ways of reaching out to new user segments, and the next generation of consumers. So, these types of mergers and partnerships, like Microsoft’s with Netflix, are something we’ll see plenty more of in the near future.”
Şekip Can Gökalp, Core Contributor, Strategy at games tools co. Infinite Arcade comments, “Ad networks seem to be playing an unwanted game of musical chairs in response to Apple’s privacy measures. This level of consolidation in the market won’t particularly help game makers who are already suffering from the first ever year-on-year decline in its history. To set gaming on a more open, competitive path once again, we need the step up the tide of anti-competition regulation and the exploration of new technologies such as Web3.”
James Draper, Founder & CEO at in-game advertising company Bidstack commented, “This is a fascinating move, creating an immensely powerful combined company that will be appealing to shareholders. With AppLovin, Unity becomes an even more attractive engine to build out on for game developers large and small, with such easy access to monetisation and revenues. We’re interested to see how this all plays out.”
While Arkadiy Kuznetsov, CMO at games, music and wellness app developer Gismart comments, “It appears as if AppLovin is attempting to build an “all-in-one” ecosystem, having recently acquired Adjust and now looking to acquire Unity. In my opinion, it all leads to establishing some kind of monopoly within the market, which might potentially negatively affect traffic acquisition and monetization in the long run. The monopolised market will also obviously have its pros, yet it’s always best to have a healthy competition, driving the industry forward”.