As Finland plans to join NATO following Russia’s unprovoked invasion of Ukraine, another wave of mergers and acquisitions is underway in the country. Today, Netflix announced that it will acquire Next Games, a mobile games developer in the country for a total value of 65 million euros ($72 million). Next Games is listed on the Helsinki Public Markets and the transaction is in the form of an all-cash share purchase at €2.10 per share. The gaming company’s board has already approved the deal and is recommending it to shareholders, although it is not yet finalized but is expected to close in the second quarter of 2022.
The deal is part of Netflix’s broader strategy to grow its gaming content to complement its video catalog and Next Games is a perfect fit. The free-to-play mobile games publisher has previously developed titles tied to some of Netflix’s biggest draws, such as Stranger Things and The Walking Dead, meaning the two companies already had a strong relationship. This deal will cement that and improve Netflix’s margins beyond just licensing brands, bringing Next Games’ existing intellectual property, talent, and in-app purchases sales business in-house.
“Next Games has a seasoned management team, a strong track record with mobile games based on entertainment franchises, and strong operational capabilities,” Michael Verdu, vice president of games at Netflix, said in a statement. “We are thrilled to have Next Games join Netflix as a lead studio in a strategic region and key talent market, expanding our in-house game studio capabilities. While we’re just getting started in games, I’m confident that with Next Games, we’ll be able to build a world-class game portfolio that will delight our members around the world.
Next Games had 120 employees at the end of 2021 and its latest annual results showed 27.2 million euros in 2020 revenue. Some 95% of its sales came from in-game (in-app) purchases that year. Now it will have more investment to double existing titles and further expand Netflix’s catalog.
Teemu Huuhtanen, who founded Next Games in 2013 and serves as its CEO, is an alumnus of Finland’s vast gaming ecosystem, which has played an important role in gaming innovation over the years. Just before Next Games, he was an executive at Rovio, the publisher of Angry Birds (this was at a time when it was still a formidable app store presence). Before that, he was in Sulake for about a decade. spent nearly a decade at Sulake, a pioneer in the online virtual worlds category with the creation of Habbo Hotel (now called Habbo, having weathered much controversy over the ensuing years).
“We had an unwavering goal to execute on our vision: to become the partner of choice for global entertainment companies and create authentic and enduring interactive entertainment based on the world’s most beloved franchises,” Huuhtanen said in a statement. “Joining forces with the world’s largest streaming service, Netflix, provides an opportunity for a logical and exciting continuation of our strategy to create interactive experiences for the world to enjoy. Our close collaboration with Netflix on Stranger Things: Puzzle Tales has already proven that together we create a strong partnership. This is a unique opportunity to upgrade the studio on all fronts and continue our mission together.
For all its size, Netflix has only made a handful of acquisitions over the years — five in all according to CrunchBase data. Next Games is its first specifically in gaming, though the others include a visual effects studio, two interactive content creators for younger audiences, an animated comics publisher, and the Roald Dahl estate, so arguably it There has been a play angle to its M&A strategy throughout.
And at a time when companies like Disney may continue to pull the rug out from under Netflix by removing key video content to improve selection on their own streaming video platforms, it’s also a way for Netflix to fertilize its own walled garden. . Buying something like Next Games underscores a strategy to produce or buy its own exclusive work, and now build bigger franchises based on it across multiple screens and experiences.