Big cash for Bigpoint

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The FT reported yesterday that Bigpoint has been acquired in a transaction valued at €70 million.

(As an aside, that’s $110 million, which shows how weak the dollar is against the euro at the moment – not all that long ago, my mental conversion rate was $1=€1)

Bigpoint launched in Germany and has become one of the leading providers of high-quality browser-based entertainment. The site offers 20 persistent multiplayer games as well as a range of casual games, all for free. Revenue comes from micro-transactions, optional subscriptions and supplying services to portals.

The numbers they are achieving are impressive: 24 million registered users with 100,000 signing up every day, over 500,000,000 page impressions (I guess per month, but it doesn’t say), over €20 million ($30 million) in revenues, growing at 100% a year.

So back-of-the envelope valuation metrics for online games for online games portals give:

• Value per registered user: €2.90 or $4.49

And Bigpoint is achieving some extremely impressive operational figures:

• Effective CPM of €3.33 ($5.17) – (only a very rough guide: the majaority of Bigpoint revenues appear to come from micro-transactions and subscriptions, not advertising.)
• Revenue per registered user of €0.83 ($1.28)

Bigpoint was acquired by Peacock Equity, the venture arm of NBC Universal, and GMT Equity Partners, a later-stage financial investor. The original venture capital investors (Aurelia Private Equity, European Founders Fund and United Internet) all sold out in this transaction. The primary purpose of the capital raising (and the choice of investors) is to help Bigpoint break into the US market where it has made little impact to date.

This deal is incredibly important for several reasons:

• It validates the model of offering free high-quality content in the browser
• It demonstrates that the financial community has fully accepted this as a future, meaningful business model for games
• It publicises the success of browser-based games and will, I expect, make the major games companies sit up and take even more notice

Games are changing. Browser-based games are the future. And Bigpoint is spearheading the charge.

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