Devolver Digital acquires System Era Softworks for up to $40M

Devolver Digital joined the consolidation craze with the acquisition of System Era Softworks for up to $40 million.

The initial part of the cash and stock deal is worth $22.0 million, while the rest will come through bonuses.

Established in 2014, System Era is an award-winning, multi-platform video game developer based in Seattle with a team of 50 people.

System Era is the developer behind Astroneer, a highly successful, space-exploration themed, multiplayer sandbox adventure game, of which it owns 100% of the intellectual property.

Astroneer is an expandable game title released in 2016, with a proven history of player retention and engagement through regular content releases and updates. To-date Astroneer has generated over $87 million of gross revenues and has been played by over 13 million people.

The acquisition represents a strategic opportunity for Devolver to expand outside of its core strength of premium indie titles, leveraging System Era’s knowledge of Expandable Game style development, as well as its live operations technology and existing IP, the companies said.

Devolver will capitalize on System Era’s development expertise in creating quality, community-centered, long-life titles, which it has proven through the success of its debut title Astroneer, a game that in 2022 achieved its highest annual unit sales figures

System Era’s founding team comes from triple-A backgrounds, having held senior positions at Ubisoft and Microsoft, working on franchises such as Halo, Assassin’s Creed and Watch Dogs, and have instilled a strong team culture that aligns with Devolver Digital.

Under Devolver’s accounting policies, based on an estimated restatement of System Era management’s unaudited numbers, System Era generated revenue of approximately $7 million, and adjusted earnings before interest tax depreciation and amortization (“EBITDA”) of approximately $3.8 million, in the preceding 12-months to 30 June 2023.

Douglas Morin, CEO of Devolver Digital, said in a statement, “The thing that excites me the most about System Era is the cultural and strategic fit with Devolver. This is a highly experienced, talented group of developers who come with a proven hit, Astroneer, in its eighth year. Their know-how in Expandable Games development opens up a new player-base and revenue stream for Devolver. We are looking forward to bringing the fun to new players in new, innovative ways – and above all welcoming the team to Devolver in coming days and months.”

Under Devolver’s accounting policies the Acquisition is expected to contribute positively to EBITDA in the year ending 31 December 2024, being the first full year of ownership.

Brendan Wilson, CEO of System Era, said in a statement, “Devolver and System Era have been mutual admirers for a long time. We’ve always seen Devolver’s banner as a mark of quality, but they also represent an approach to developing and publishing games that is unique in the industry. Their developer-first orientation lets bold and unorthodox ideas thrive. We’re thrilled to be joining into a confederation of like-minded people where System Era’s games will get the support needed to reach global audiences, and our developers will continue to work within the culture they love.”