Extra Lives Cost Money

Lending against video game catalogs has become a more recurring component of our portfolio and pipeline and it's worth describing how we think about the two distinct parts of this market: mobile gaming and PC/console.

At the industry level, growth in both formats is far more muted than in years past. Global mobile game downloads grew just 0.8% in 2025 while user acquisition costs keep climbing. PC and console are faring better (e.g. console revenue rose 5.5% in 2025) though that growth has been driven almost entirely by a handful of blockbusters.

Mobile games depend heavily on new user acquisition and the marketing spend that comes with it. The portfolios we've evaluated recently derive revenue roughly two-thirds from in-app purchases and one-third from advertising, but the more telling metric is cohort analysis: e.g. how much of this year's revenue comes from players acquired years ago versus players bought last quarter. The age of the games themselves matters less here than in our usual catalog work. A nine-year-old mobile game can still be running a large paid acquisition campaign while a nine-year-old PC/console title is unlikely to.

For underwriting purposes in mobile, we evaluate revenue broken out by install cohort as well as the mix of organic versus paid user acquisition ("UA"). Our downside cases model what the portfolio earns with UA switched off entirely and as users start to churn. That zero-UA floor is the true comparable to a traditional catalog decay curve. Cash flow sweep and lower attachment points (at or below approximately 2x cash flow) become critical drivers of downside protection.

At the other end of the spectrum, PC and console catalogs sit closer to how we underwrite film and music IP. A premium title spikes at launch, drops 60%+ within months, then settles into a long and reasonably predictable decay. Titles released within the last three years typically decline 30-60% annually; past that three-year mark, decay moderates to 15-20%. Performance is driven by the durability of the gameplay and ongoing monetization of retained users rather than by ongoing marketing spend. Older PC titles are routinely ported to console and mobile years after release, which reinforces the point that the underlying IP can travel. Valuation and leverage expectations are commensurately higher, albeit still typically not exceeding ~3-3.5x cash flow from our perspective.

Across both formats, good operators can stabilize user churn and title decay curves and occasionally return older games to growth.