How to sell a game: ZiMAD’s M&A experience, step by step

According to data.ai, more than two million games and applications were released on mobile platforms in 2021 alone. Today the process of development and publishing is accompanied by fewer difficulties compared to previous years. However, facing a challenging global environment and problems with advertising platforms, small developers are increasingly inclined to think about selling games or cooperating with international corporations.

Developers are trying to invest in their products, but without detailed knowledge of the market and its intricacies, a decision to jump in and invest everything in a new game might seem unreasonably risky. In such cases, some people turn to investment funds, while others decide to join the M&A program of large companies. That’s where we’ll elaborate.

What is project acquisition?

M&A is a transaction for merging companies. The acronym itself stands for mergers & acquisitions. In the game industry, many studios appear to have a negative attitude towards M&A, focusing only on the word “merger” and imagining a big and powerful corporation that comes to an honest developer, taking away all the resources. 

In fact, with the right approach and careful attention to legal aspects, M&A is a transparent partnership that benefits both parties. For example, Domino Online, one of our acquired projects, shows a fivefold increase in revenue from the game and a threefold increase in the number of players after ZiMAD teamwork on it.

We will tell you what you should consider making the deal successful.

Step 1: Define your goals when selling the game

1. To diversify the portfolio: studios often sell projects to shift the focus to another area of business;
2. To increase profits – when a project seems to be doing well, but it is not performing as expected;
3. To gain expertise that your team doesn’t have;
4. To give the project a “second life,” making a redesign or even a remaster together with partners; to enter new markets.

In the case of ZiMAD, partnership also means that developers acquire the expertise and work with famous IPs who can expand the audience of both partners.

Step 2: Make sure your project is ready to sell

For us, M&A is the most honest and transparent scheme of cooperation because we invest a lot of attention and internal resources of our specialists in every project that comes to us. ZiMAD product marketers study every game that developers offer to us. Typically, we weigh more than twenty parameters and create a scoring sheet. 

The most important metric for us is how well the project fits our portfolio of puzzles and board games, and then we:

1. Look at overlap of possible audiences (geo, age, motivation to play, psychological profile);
2. Try to understand how often and for how long people play;
3. Evaluate the marketability: whether it is possible to buy the relevant traffic cheaply on social and gaming networks in different countries;
4. Pay attention to monetization: the potential for advertising revenue and in-game purchases. Given the increasing difficulty of working with games on advertising monetization, we expect a substantial share of in-game revenue in 2022;
5. The ASO department studies the landing page and estimates the possibility of increasing the number of organic installs through its expertise;
6. We study the technical features: the maintainability of the code, the architecture, and how quickly advertising and analytics modules can be implemented. Sometimes a product is created on an engine that is not widely used, and you have to hire a team of unique specialists to handle it. So the best option for us is when the project is developed on Unity.

Step 3: Choosing a buyer for your game

As a rule, every studio that buys games works with one particular genre or with several similar ones — that is, it will be a problem to sell a casual game to developers who specialize in shooters. Of course, the better a game fits the studio’s portfolio, the better their projects will be promoted there.

The second issue in choosing a studio is the performance and quality of its current games. Just look at the lineup of games of a particular developer and answer the question: are you satisfied with everything in the existing projects? Please pay attention to ASO, download a few games, check how clear they are, whether you are happy with the gameplay, whether you encounter bugs. Constant bugs in the game or weak design in the storerooms — this is a significant disadvantage in sales.

Finally, the third indicator essential to consider is the degree of personal communication with studio representatives, and what impression it makes on you. Your ultimate goal is to make money on the deal. If the developers are very responsive, talk about the metrics of their projects, and respond to any of your questions, especially legal ones, calmly and confidently – that’s a good sign.

Step 4: Look at the game through the eyes of the buyer

Remember that studios consider not only potential benefits but also hidden risks. For example, if a project with an advertising monetization strategy uses mechanics from a completely different genre – this is a wake-up call. There is a risk that ordinary creatives with unchanged mechanics do not perform. You get a “pyramid,” where users come attracted by the ads and drop out after the first ad they’re shown because the game doesn’t match their expectations – this business model is very unreliable. 

Or another example: gorgeous metrics of the first days and beautiful graphics, but few levels. It turns out that a team of highly skilled artists spend about a month on drawing each location, and enthusiastic players complete it in a couple of days. And yet the game is monetized through advertising. The business model does not add up:

• The cost of content is prohibitive.
• The speed of passing levels is high.
• The income from a user does not cover the cost of development and operation.

Also, there are traps like the “golden cohort” (also called “honeymoon”), where the Facebook platform gives a few tens of thousands of quality users at a low cost and with a good return on investment. There might be a feeling that this is a potential gold mine. But after a month, the algorithms can no longer pick up such good players in the right volumes, the purchase price rises, and the metrics fall. The result is a project for 10-20 thousand installations per month, which cannot scale up.

This might lead to an impression that developing a game that will spark the interest of publishers ready to spend a few hundred thousand dollars (not to mention millions) is just an impossible task. But there is always a place for quality projects in our field. As we’ve seen so many times before, a puzzle game created by a mini-team or even one person, with the most uncomplicated mechanics and 2D graphics, can stay in the top ad impressions for years, ahead of renowned market leaders like Angry Birds in terms of revenue. And that means every enthusiast has a chance to succeed.

Step 5: Choose a collaboration option

Working toward M&A doesn’t always equal just buying a game. So what are the options?

1. Partial purchase: sell a share of the project and stay in touch with the game developer;
2. Total purchase: give the project and get the money;
3. Team growth: after a detailed analysis of your game, our specialists from different departments work with it.

Each option has its advantages – it depends on your goals in terms of earnings and your desire to be deeply involved in the project’s life after the deal.

What’s the bottom line?

Building a business together is more profitable, and with the right partner, any deal is built on a win-win system. In our opinion, project acquisition is more honest and beneficial than publishing, not least because you spend much effort on a comprehensive study when you buy a project. Remember that publishing does not equal royalties, and M&A is a more detailed approach to working together on a product.

About the author:

10 years experience in Marketing Communications and PR, 5 years experience in the game industry (consoles and mobile). Currently I’m working as a Business Development Manager. I have worked previously with a lot of brands and companies for different audiences – games, consumer electronics, eSports projects and FMCG. Gaming has become my favorite industry, because working process is really exiting.