Partner Stuart Smith comments on the news that RuneScape developer Jagex has been acquired by the private equity backer of Six Nations Rugby, CVC, in VentureBeat.
"The Jagex acquisition is a positive sign for the UK gaming industry - a sector that has had a turbulent time attracting investors after a surge in growth during the Covid years.
"Private equity generally only invests in businesses that it is confident it will be able to meaningfully grow within a 5 year horizon, so this is a reassuring indication of CVC's outlook on at least certain parts of the industry.
"Crucially, this demonstrates the power of nostalgic and well-loved IP. Jagex is one of the stalwarts of the UK industry, and whilst RuneScape 3 - the current version of the game - is enjoyed by many, the valuation for Jagex is certainly bolstered hugely by the very successful release of Old School RuneScape (OSRS) in 2013. This version of the game was snapshotted from the 2007 client and has since seen a variety of updates, including release on Steam and Mobile, attracting larger concurrent playership than RuneScape 3.
"Jagex, which has been owned by the Carlyle Group since 2021, also has a track record in the development of OSRS of listening to community feedback, famously championing a polling system for major in-game updates to OSRS.
"This news is hopefully a sign of the gaming industry in the UK settling back into a more sustainable growth model after the plateau in 2022 and 2023, and embracing development studios that have a reputation for fostering long-term community over short-term monetisation. However, it remains to be seen how the monetisation of Jagex’s two flagship games will evolve following the acquisition."
Stuart's comments were published in VentureBeat, 9 February 2024.