We have generally avoided investing in game developers because of the difficulty in predicting successful games.  Small publishers will often attempt to raise capital on the back of a successful game but repeatability in gaming is a challenge.  We’ve found that the old adage, “past performance is not indicative of future results”, is particularly apt in gaming.  Or maybe we just lack the creativity gene to be able to pick what successful content will look like.  We definitely would have invested in Barry Jenkins’ If Beale Street Could Talk over Todd Phillips’ Joker last year…and that would have been a big mistake.  But, back to gaming.

‍

We uncovered a game publisher that has a different approach, which we found quite compelling.  PopReach is a company that purchases legacy mobile games and franchises, which have a proven track record of generating income (long tail games).  These games tend to be older and declining in popularity, which presents an opportunity to acquire at attractive multiples.  The game plan for PopReach is to spend prudently to rejuvenate the games, both in terms of technology and marketing, in order to justify a healthy ROI on the acquisitions.

‍

‍

One of the key attributes we like about mobile gaming is the plethora of data available to publishers to help guide their decisions.  How to optimize gameplay, how to cross-promote, how to price virtual goods, etc.  Of course, the data is only valuable if you have the right people to interpret it and make the right decisions.  Here, we feel quite good about the executive team, lead by Jon Walsh and Chris Locke; these are experienced guys who have an analytical and practical style, which suits us just fine.

We expect mobile gaming popularity to continue to grow, particularly with the recent pandemic.  We expect big developers to spend lots of money on new content, which might mean that old content gets neglected.  These are the tailwinds that should drive PopReach’s M&A pipeline going forward.  PopReach is already cash flow positive and has assembled a game portfolio of over 20 titles and franchises.

“We are excited to have Antera as investors”, said PopReach COO, Chris Locke.  “This group has a different thought process on investing and due diligence.  We look forward to working constructively together to ensure PopReach’s long term success”.

‍