- MTG adds further dimension to digital gaming vertical with acquisition of San Francisco based Kongregate
- Kongregate attracts up to 14 million monthly active users across all platforms, with more than 100,000 games on own browser platform and more than 100 million downloads of 45 games from app stores
- Kongregate also expanding into first party game development
- Kongregate expected to generate net sales of at least USD 50 million in 2017 with an EBITDA margin of approximately 10%
San Francisco based Kongregate was founded in 2006 and has 80 employees. Kongregate started as a browser based web gaming platform and has since expanded into publishing for both mobile and Steam games, and now into first party game development following the acquisition of San Diego based games studio Ultrabit.
The company grew its net sales (net of revenue share with developers) by 38% in 2016 to USD 35 million, with mobile revenue generated from in game purchasing and advertising growing by 74%. The company is expected to grow its revenues to at least USD 50 million in 2017, with an EBITDA margin of approximately 10%.
As a publisher, Kongregate has revenue sharing agreements with games developers. MTG and Kongregate intend to acquire further first party games developers, which will benefit from Kongregate’s global audience network, traffic generation capabilities, and publisher / platform relationships. This further expansion is expected to drive both continued growth and higher profitability levels.
The investment follows MTG’s recent acquisition of 51% of Hamburg based online games developer InnoGames in 2016 and 2017, and gives MTG a clear foothold in both the European and US markets.
Kongregate works closely with independent game developers all over the world, publishing games across multiple platforms and attracting up to 14 million monthly active users. Its web gaming portal features over 100,000 free-to-play games that are played by millions of gamers each month, while it has also published 45 mobile games that have been downloaded over 100 million times. Kongregate’s publishing services include consulting, analytics, marketing/user acquisition, launch support and ad management.
Kongregate has published award winning mobile games including:
- ‘Animation Throwdown: The Quest for Cards’ (8.6 million installs) was a Google Play Editors’ Choice; and was also honoured as one of Google Play’s Best Games of 2016
- ‘AdVenture Capitalist’ (20.8 million installs) was a Google Play Editors’ Choice game and was a pioneering title in the idle games genre
- Peter Molyneux’s ‘The Trail’ (9.25 million installs) selected as an App Store Editors’ Choice game; included in Apple’s Best of 2016 awards; and honoured as one of Google Play’s Best Games of 2016
- ‘BattleHand’ (4 million installs) selected as an App Store Editors’ Choice game; and included in Apple’s Best of 2016 awards
Kongregate has also recently expanded into Steam publishing with ‘Animation Throwdown: The Quest for Cards’, ‘Spellstone’ and Steam-first title, ‘GRIDD: Retroenhanced’.
Kongregate also started its first party publishing programme with the recent acquisition of San Diego based Ultrabit. Ultrabit has developed the hit titles ‘Raid Brigade’, ‘Pocket Politics’ and, most recently, ‘Office Space: Idle Profits’ based on the cult-classic movie IP.
Jørgen Madsen Lindemann, MTG President and CEO: “This investment is in line with our strategy to invest in relevant, complementary and scalable digital content and communities. Online gaming is one of our three digital entertainment verticals, and we are establishing a presence in a gaming industry expected to be worth some USD 130 billion in 2020, of which mobile gaming is the fastest growing segment. Almost a third of the time people spend on mobile devices each day is spent gaming. We look forward to welcoming the high quality, hugely talented and well proven Kongregate team to MTG.”
Emily Greer, co-Founder and CEO of Kongregate: “Our vision has always been to nurture the development of indie game developers and the consumer gaming community. Our values are all about integrity, collaboration, and most of all, fun. MTG is not only a great partner as we continue to step up our expansion into new gaming platforms and channels, but the right partner because they share our values and commitment to empowering indie development teams to create unique and innovative gaming experiences for consumers across any and all game platforms.”
Arnd Benninghoff, MTG EVP and MTGx CEO: “MTG’s ambition is to create a next-generation publisher hub and acquiring Kongregate is the next step in this journey. They have a multi-platform business and a global audience network, and are now developing and acquiring their own high value game studio IP. This will enable us to screen a wide range of gaming companies at an early stage, in order to find additional investment opportunities.”
MTG’s Q2 financial results to be published on 18 July will include approximately SEK 10 million of transaction related costs within the MTGx business segment.
MTG’s financial advisor on this transaction is EY Corporate Finance.
NOTES TO EDITORS
MTG (Modern Times Group MTG AB (publ.)) is a leading international digital entertainment group and we are shaping the future of entertainment by connecting consumers with the content that they love in as many ways as possible. Our brands span TV, radio and next generation entertainment experiences in esports, digital video networks and online gaming. Born in Sweden, our shares are listed on Nasdaq Stockholm (‘MTGA’ and ‘MTGB’).
Download high-resolution photos: Flickr