Analyst: purchase data.ai Sensor Tower could have cost $300 million, the mobile analytics market needs competition
In March, Sensor Tower, an analytical company, announced the purchase of a rival company data.ai . Joost van Dreunen, founder and head of the now-closed SuperData, shared his opinion on the deal in his newsletter. He is pessimistic.
Joost van Dreunen at South by Southwest 2023. Photographer: Travis P Ball
- Sensor Tower and data.ai they called the deal historic. According to Oliver Yeh, head of Sensor Tower, the purchase marks "the beginning of a new and exciting chapter not only for Sensor Tower, but also for the digital marketing and mobile app analytics industry as a whole." Drunen does not share this delight.
- Dreunen believes that the mobile analytics market needs competition. Gaming companies use data to justify new game ideas, develop business strategies, etc. The lack of competition among analytical firms and, as a result, the reduction in data transparency will hurt mobile games.
- Developers and publishers need independent sources of information, the analyst is sure. For example, in politics, journalism is such, in games — data trackers and analytical platforms.
- Dreunen pointed out that we already see the same faces in the mobile analytics market: "At least in the United States, the analysis of the entire industry is carried out by only two dozen permanent accountants and forecasters. Despite their honesty, they depend on healthy relationships with the companies they serve," said Dreunen.
- The deal with Sensor Tower has already affected data.ai . After the announcement of the purchase from data.ai half of the employees were fired — about 200 people.
- Reducing competition in the mobile analytics market will also lead to the fact that game data will become more expensive, says Drunen. This will raise the entry threshold for small and medium-sized developers, and it will become even more difficult for them to compete with giants.
- Already, companies are spending a lot of money on marketing mobile games. One of the latest examples is MONOPOLY GO! and the Royal Match. Their marketing budget ranges from 500 million to 1 billion dollars.
- "UA in mobile has never been so expensive. Monopolization of the data channel that informs game developers gives monopolists the opportunity to claim even more of the marketing budgets. Until recently, competition between the two largest companies in the field of mobile analytics kept tariffs low, but soon everything will change," says Dreunen.
- Also, Dreunen drew attention to the fact that the purchase data.ai drove Sensor Tower into debt. The company had to turn to Bain Capital, Riverwood Capital and Paramark Ventures for a loan to buy the platform. In addition, Riverwood Capital became the majority shareholder of Sensor Tower.
- According to Dreunen, Sensor Tower may become a public company in the near future.
- "Now the largest verified source of data on mobile games has investors who will strive for rapid growth and access to the stock exchange," said Drunen.
- In conclusion, Dreunen tried to calculate how much Sensor Tower paid for data.ai . According to him, the cost of analytical companies is usually calculated based on the multiplier x2-5 of annual revenue. According to TechCrunch, before the purchase, the revenue data.ai It amounted to $100 million. Given the stagnation in the mobile gaming market and the current financial situation of Sensor Tower, the multiplier for the deal was at the lower limit. Thus, data.ai It could have cost about $300 million. This is not a large, but also not a small amount for data.ai , the specialist believes.
- Dreunen recalled that for the entire time of its existence data.ai It attracted $157 million from investors. Also, according to him, a few years ago the company's annual revenue was $ 66 million.
