This article was written by Norman De Bono and originally appears in the London Free Press on August 27, 2020.
The looming sale of a London gaming success story, is a “win” for the city’s technology sector that may draw more investment here, said one London tech entrepreneur.
Big Blue Bubble has come to an agreement to sell the business to a Swedish company in a deal that could total $76 million in value.
The maker of more than 100 free, app-based games including My Singing Monsters has been bought by EG7 in Stockholm for C$16 million in cash and up to C$60 million in cash and shares in EG7, stated an announcement on EG7’s website.
One of the challenges to growth in the tech sector is finding investors to fund initiatives, and this may help, said Brian Foster, co-founder of the RH Accelerator, which helps grow London businesses.
“London needs these wins. It sends a signal we can produce highly successful companies here and that attracts talent and money and that is what we need,” he said.
The transaction is the latest among a series of sales of London technology businesses. It joins Race Roster, bought by Asics in December, InnoSoft, purchased by Constellation Software in 2017 and Carproof, snapped up by IHS Inc. in 2015.
That’s a good sign London technology businesses are being noticed, and those businesses have grown here after being sold, said Foster, who founded and sold InnoSoft, a software firm.
“It’s a good story for London on the heels of Race Roster. This is a sizeable deal for the community. This is what the London community needs, more investment and I hope leadership and access and mentorship comes out of this.”
Damir Slogar, founder and chief executive of Big Blue Bubble, could not be reached for comment.
In its 16-year history, Big Blue Bubble has generated more than $100 million in sales and in the 12-month period ending in June, had net sales of $12 million.
“Big Blue Bubble is a gaming industry mainstay that has released more than 100 titles . . . . in partnership with world-class brands such as Disney, DreamWorks, Scholastic, and Nickelodeon,” stated the announcement by EG7.
As for the sale, while there is an up front payment of $16 million the additional $60 million will depend on Big Blue’s financial performance in 2020 and 2021, and up to 33 per cent of that could be paid in shares with the balance in cash, stated the announcement.
The sale is part of a larger, global trend of consolidation in the gaming sector where mid-sized businesses are being snapped up by larger ones, said Johanna Weststar, a professor in the department of management and organizational studies at Western University.
“If you look at the landscape now, there are a lot of big gaming businesses, and small, but not a lot of mids,” said Weststar.
“Good assets are being snapped up. There is consolidation.”
It is likely EG7 is looking for a presence and foothold in the North American market, she said.
“We have seen that pattern with other gaming studios, opening branches here that emerge globally and are successful,” she said.
“They may see a market here.”
EG7 stated it wants to buy Big Blue Bubble to better diversify its holdings, according to the announcement.
“The transaction is in line with EG7’s previously communicated strategy to perform complementary acquisitions to establish a stronger industry position,” it said.
“The transaction is expected to result in an increasingly diversified business model with recurring revenues.”
Big Blue Bubble was founded in 2004 and employs more than 70. Headquartered in the Bell building on Dundas Street downtown, it also has an office in San Francisco. It has been “a top grosser” in the free-to-play game genre sector for five years, stated EG7.
The deal is expected to close by the end of the year.
EG7’s full name is Enad Global 7 and it describes itself as a “family of companies” in the gaming industry that develops and sells PC, console and mobile games, according to its website. It also consults for other gaming businesses globally.
It is headquartered in Stockholm with 200 employees and has eight offices worldwide, with 1,500 gaming titles. Among the businesses it now owns, Big Blue Bubble will join Toadman Studios in Sweden, Antimatter Games in Britain and SoldOut in the U.K. It also owns an advertising marketing business, Petrol Advertising, working in the gaming sector.
