When we broke the news that AppLovin is selling off its studios for $900m last week, it got plenty of folks speculating: who’s the buyer?
Remember: AppLovin said it has already signed a term sheet for the sale, so it’s effectively a done deal. But who exactly is the new owner of Machine Zone, PeopleFun, Magic Tavern, Lion Studios, Belka, Athena, Clipwire, Leyi, Zenlife and Zero Gravity?
[Update, 05/03/25: Our sources and a report from Business Insider suggest it’s Tripledot. But nothing’s been confirmed yet.]
First, some context: AppLovin has been looking to divest its games business for a long time. It has been talking about ‘optimising’ its games portfolio since 2022, and a source told us in October 2024 that AppLovin cut 120 staff at Game of War maker Machine Zone after – allegedly – failing to sell off its games arm.
A separate source told us last week that the studios were effectively sold at cost, and for good reason. AppLovin’s just-about-profitable game studios were dragging down the company’s overall EBITDA given the explosive growth in AppLovin’s advertising business. So whoever snapped these studios up got themselves a bargain.
Indeed, on the latest Deconstructor of Fun podcast, founder Mishka Katkoff alleges that AppLovin was touting its studios around at Gamescom 2023 for $2.4bn. So the deal announced last week, worth $500m cash and the rest in equity, is a big drop from what AppLovin wanted back in 2023 – if that speculation is true.
Let’s also take into consideration what AppLovin boss Foroughi said about the buyer. It is a “company that specializes in and champions game development” – which seems to discount some random private equity group, and instead implies it’s an established player in the games business.
And finally there’s the portfolio itself. As Jakub Remiar noted on LinkedIn, based on Sensor Tower data, match 3 game-maker Magic Tavern and social casino studio Zero Gravity make up over half the revenue made by the group when taken as a whole. So they’d find a suitable home at a company with experience in those genres.
So with all that considered, let’s look at the potential options.
Scopely/Savvy Games Group
Most folks seem to think it’s Scopely. That’s mostly because it is now owned by Savvy Games Group, and has been given the keys to its vast M&A warchest.
Savvy has said publicly that it has $38bn to spend as it establishes itself as a major player in games – so $500m in cash and the rest in equity feels like spare change.
There’s further intrigue here. In October 2024, Scopely’s Tim O’Brien said Scopely was lining up a “megadeal” for 2025, specifically for “a scaled global franchise doing hopefully at least a billion dollars in revenue.”
AppLovin’s games portfolio doesn’t quite fit that description, but O’Brien also said Scopely had already privately made some “smaller investments” – he said that the market would hear about those deals “pretty soon”, too.
Was he referring to a deal for AppLovin’s games portfolio? We’ll see for sure within the next quarter.
Take-Two
Yes, as we’ve noted several times now, though most people think of Take-Two as primarily a PC and console publisher, it actually makes over half its revenue from mobile. And having splashed a then-record $12.7bn on Zynga in 2022, $500m cash (with the rest in equity) feels like a bargain for 10 studios.
Take-Two generally prefers buying mobile studios over building them, too. Alongside Zynga it has also snapped up Socialpoint, Nordeus, Playdots and a couple more in the last decade. Zynga’s leadership also has plenty of experience integrating studios into its business as well, after successfully adding Small Giant, Rollic, Gram and Peak before that big sale to Take-Two.
But outside of Match Factory, there isn’t really a big growth story happening in its mobile division that would impress investors. A good value deal with AppLovin would keep the graphs pointing upwards, and investors happy, right?
All that said, adding a load more legacy titles to its books would inevitably mean layoffs and messiness in a year when investors would rather hear about GTA 6. Does Take-Two want that kind of distraction right now?
Playtika
The Israeli publisher’s whole strategy is buying up studios and optimising them, so a bargain deal for 10 studios with a bunch of established games feels like a very neat fit.
Playtika just spent $700m upfront on SuperPlay, and is on the hook for a total of $1.25bn if SuperPlay’s targets are met over the course of the next three years. So does it have the cash on hand for more big deals?
Yes it does, said Playtika president and CFO Craig Abrahams in its last earnings call. “M&A continues to be a key driver of growth for us – nine out of our top 11 titles came through M&A,” he said.
Any further acquisitions would likely be “more of the ‘bolt on’ variety”, he added. Buying up 10 AppLovin studios would be bold, but not super surprising – not long ago Playtika swooped for Wooga, Seriously, Redecor and even tried to buy Rovio.
Wildcard: MTG
This Swedish roll-up group has just completed a deal that might sound familiar.
Australian casino and gaming firm Aristocrat announced it was offloading its gaming businesses in mid-2024, including Plarium and Big Fish. And MTG bought the former.
Its $620m deal for Raid: Shadow Legends maker Plarium was completed just last week – so could it be snapping up AppLovin’s unwanted assets too? It’s a long shot, but don’t count it out. These Swedish roll-up firms seem to be able to magic up cash for acquisitions out of thin air, don’t they?
Wildcard: Nazara
Indian technology group Nazara bought UK-based Love Island: The Game maker Fusebox for $27.2m in September 2024 – a pretty small deal, relatively speaking.
But it also put out a press release in March last year stating it had $100m to spend buying up gaming assets, with a particular interest in gaming and adtech properties. And it’s that interest in gaming and adtech that could have led to Nazara knocking at AppLovin’s door.
Have you got intel on who’s buying AppLovin’s studios? Email me in confidence here.
