Gaming is one of the few sectors of the digital economy continuing to thrive throughout the recession, but the UK’s share of the global market now looks slim indeed. Shareholders in Tomb Raider creator Eidos, the country’s last home-grown developer with genuine worldwide clout, have backed the proposed £84.3 million takeover from
Korean Japanese developer Square Enix, maker of the Final Fantasy franchise. The deal, which will give investors 32 pence per share, was passed at an EGM on Friday where just one private investor turned up to oppose it. From April, Manchester-based Eidos will become part SQEX, Square Enix’s UK-incorporated arm. Release.
The deal is part of Square Enix’s long-held ambition to “accelerate our aggressive expansion into western markets” and in Tomb Raider, which sold 2.6 million copies of its last installment, it now has its hands on a significant global brand. And from Eidos’ perspective, the takeover couldn’t have come any sooner — lower-than-expected Christmas sales forced Eidos to shave £20 million from its 2009 sales forecast which is now between £160 million and £180 million.
In January the company shut its mobile games studio due to a downturn in that market, making 14 staff redundant. The company had warned it may have had to renegotiate banking covenants, though H208 trading picked up markedly.
Where does this leave the UK games sector? as FT.com points out, the Eidos takeover leaves Codemasters — the veteran developer of games like Colin McRae Rally — as the country’s largest independent games group. The company is privately held with Balderton Capital its majority shareholder — and VCs are willing to bet their cash on British games companies, especially online, casual developers: Accel Ventures and Index Ventures funded Playfish to the tune of $17 million (£11.9 million) in November and Accel also backs German online games developer Gameforge.