Aristocrat Sells Fantasy Mobile Games Subsidiary to Modern Times
Australian gaming giant Aristocrat Leisure has announced a major shift in its business focus with the sale of its mobile game development subsidiary, Plarium, to Swedish media company Modern Times Group. The sale, valued at up to $820 million, aligns with Aristocrat's broader strategy of moving away from fantasy and mid-core mobile games to concentrate on the expanding real-money gaming market.
The cover of the RAID: Shadow Legends video game. (Source: Aristocrat Gaming)
LISTEN TO THIS ARTICLE:The financial structure of the deal includes a guaranteed $620 million. An additional contingent payment of up to $200 million may be awarded if Plarium meets certain financial performance goals from 2025 to 2028. This setup incentivizes Modern Times to guide Plarium to achieve these benchmarks, underscoring the acquisition's long-term potential.
Related: NeoGames Officially Acquired by Aristocrat in a Billion Dollar DealThis sale marks a notable transformation in Aristocrat's business portfolio, as the company repositions itself for growth in real-money gaming markets. For Modern Times, the acquisition represents a strategic investment, as it grants the company access to Plarium's popular titles and established player base. Known for its successful role-playing game, RAID: Shadow Legends, Plarium will add significant value to Modern Times' mid-core gaming portfolio and give the Swedish conglomerate greater traction in the mobile gaming sector.
The market responded promptly to the announcement, with Aristocrat's shares experiencing a 1.1% drop in early trading, while the overall market index saw a smaller decrease of 0.3%. Investors appear to be weighing the potential benefits and risks of Aristocrat's realignment toward real-money gaming, which operates in a highly regulated environment and presents different challenges and opportunities compared to the mobile gaming industry.
Modern Times sees Plarium's addition as a crucial step forward in strengthening its position in the mobile gaming arena. Plarium's flagship game, RAID: Shadow Legends, has become a prominent title in the mid-core genre, known for its strategic, squad-based gameplay. According to Modern Times, this acquisition will enable the creation of one of the most diverse and influential mid-core mobile gaming portfolios in the industry, adding a valuable asset to its gaming division.
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Projected Revenue Gains for Modern Times
Financial projections from Modern Times suggest that the merger with Plarium will have a significant positive impact on its revenue and earnings. Estimates indicate that the combined entity could generate over $1.11 billion in yearly revenue, with an annual adjusted EBITDA exceeding $275 million. This anticipated growth highlights Modern Times' effort to diversify and build a more sustainable revenue model within the competitive gaming sector.
The decision to sell Plarium follows Aristocrat's recent review of its mobile gaming assets under Pixel United, its digital gaming division. This strategic review, which was initiated in May, assessed the performance of Aristocrat's casual and mid-core gaming businesses.
Recent reports show that Pixel United experienced a drop in its role-playing, strategy, and action game bookings, which decreased to $186.5 million during the first half of the fiscal year. Similarly, bookings in the casual games category fell, prompting Aristocrat to focus on more lucrative opportunities in real-money gaming.
Aristocrat's strategic shift may not end with Plarium's sale, as the company has also signaled a reevaluation of its Big Fish Games unit, another part of Pixel United. Aristocrat recently acknowledged a goodwill impairment charge of $110 million for Big Fish Games, suggesting potential restructuring or even a possible sale. The company's full-year financial report for 2024, expected on November 13, could shed further light on these adjustments and provide investors with a clearer picture of Aristocrat's future direction.
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