I wrote for Naavik about Jam City’s acquisition of Ludia and its plans to go public via SPAC. Read the full article here.

Why I wrote about this

The Ludio deal would’ve been worth writing by itself, the SPAC thing just made it even more newsworthy. Plus, there’s an interesting valuation exercise there to unpack!

The gist of it

Jam City announced the $175M acquisition of Canadian developer Ludia, a studio best known for licensed titles such as Jurassic World and Dragons. Jam City itself has evolved from its early casual puzzle roots (Cookie Jam, Panda Pop) into a stronger player in licensed IP, most notably with Harry Potter: Hogwarts Mystery. The strategic logic is straightforward: accelerate top-line growth by layering Jam City’s marketing and live-ops capabilities onto Ludia’s portfolio.

The expected synergies center on two levers. First, scaling user acquisition through better and more numerous ad creatives, which is still the single most powerful tool in performance marketing. Second, improving monetization and retention through stronger live operations, including more content and events to lift IAP performance. At an estimated ~1.9x trailing bookings multiple (based on 2020 figures), the Ludia deal appears conservative relative to recent transactions, although Ludia’s reliance on licensed IP likely compresses margins.

In parallel, Jam City is going public in yet another SPAC arrangement via a merger with DPCM Capital (NYSE: XPOA), valuing the combined company at $1.2B. With $570M in 2020 bookings and $33M in adjusted EBITDA, the implied multiples land at roughly 2.1x bookings and 36.3x EBITDA. The EBITDA multiple may look steep at first glance, but profitability in free-to-play is heavily influenced by marketing spend, which can distort short-term earnings. The bigger question is execution: Jam City is targeting a doubling of bookings within three years, banking on both portfolio optimization and new releases. That’s definitely not easy.

Key takeaways

  • Jam City is pursuing growth through both acquisition (Ludia) and public market capital via SPAC.
  • The core synergy thesis is marketing scale plus stronger live-ops execution.
  • The Ludia deal multiple (estimated ~1.9x trailing bookings) appears reasonable.
  • Doubling bookings in three years will require new hits, not just better optimization of the back catalog.