Social game valuations are "crazy," says Bigpoint CEO

Online publisher targets "struggling" console developers for acquisition while social market is overpriced

While social game companies are over-valued, online publisher Bigpoint is eyeing traditional console makers for acquisition as they represent better value and are struggling in their own market.

Speaking to today, CEO Heiko Hubertz said that deals like Disney's $763 million buyout of Playdom are "crazy" and he doesn't expect valuations to drop to realistic levels for at least another year.

"There are many companies that have paid crazy valuations, just look at the Disney and Playdom acquisition, that was a crazy valuation from my point of view," said Hubertz.

"We're also in the same segment and if you want to grow at the same speed as your competitors you cannot only grow organically, you have to buy other companies.

"In 12 months, maybe 18 months the prices will be more realistic and then we can look at buying more companies. But that doesn't mean we don't want to acquire now. We're also acquiring companies with a realistic valuation, and there are still companies out there, we're talking to many of them."

The company publishes browser games such as Dark Orbit, Poisonville and War of Titans, and has recently snapped up Drakensang developer Radon Labs. It is also tying up significant deals with Universal and Playboy as it expands with brands and franchises.

Instead of looking at social, online and mobile studios, Hubertz said that Bigpoint hopes to cherry-pick console developers grateful of the lifeline, and put them to work in the new sector.

"In the traditional games industry, in the boxed industry, there are developers who are really struggling and they are not asking for high valuation, they are just asking for survival.

"We're looking exactly for these kind of developers because when it comes to high quality 3D games they have the experience. We can just give them another engine, they don't need to use the Xbox or PlayStation technology, they can use our web technology. They can still develop the same quality of game it's just for a browser."

However, Bigpoint has no desire to enter the console space, said Hubertz, as it's too enclosed and the company wants to work across multiple platforms.

The full interview with Heiko Hubertz, can be read here.

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Latest comments (5)

Tomas Lidström Lighting Artist, Rebellion6 years ago
Good for the over valued companies. Im sure they can find the extra pocket room for whoever is the highest bidder. :)

Hate to see too much money being spent tho, so i guess its good for the entire market once it seattles down.

Edited 1 times. Last edit by Tomas Lidström on 1st September 2010 11:42am

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Terence Gage Freelance writer 6 years ago
I don't know a lot about social games - I never play them and am not on Facebook - but some of these prices do seem crazy considering how these applications seem to have a short lifespan and how fickle the market can be.
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its simple.

The casual games market isnt saturated yet. The console games are crowded by established IPS and set yearly cycles. Publishers are out of new IPs to buy or license. There is only so many sequelitis to procure and develop.

Casual looks cool for the moment (but I doubt it has any true lasting potential)
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Victor Perez CEO, Games GI6 years ago
Again and again coming to the same discussion about product vs company value in entertainment. In entertainment there are only products, if you have been successfully once it does not mean you will be again… tell it to APB investors… The key question here is how to collect the online pay users, that 10% of conversion rate. The Bigpoint model is not a growing model as it is, because of their business basement, limited.

Now they are now trying to create add value for sure for selling the company and collect their bonus… but it will be hard… really hard.
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Eric Preisz CEO, GarageGames6 years ago
Everyone talks about social games as being bad games and they are right. Heck, I'm sure the social game companies would even suggest they are bad games. The thing is, these social games are really awesome exercises in social engineering with a game attached to it as opposed to the other way around like we have in our traditional business. The difference is that while games are appealing to many, social is appealing to a much larger number and different demographic.

Valuation that aren't based on a multiplier of existing revenue and reasonable discount rates for the future are just a gamble and worth what a buyer is willing to pay. For some, double and tipple digit million eyeballs producing decent revenue are very valuable.
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