Hiro Capital advisory division targets UK/EU studio spin-outs as fragmentation cycle accelerates
Summary
Hiro Advisory launched 18 months ago, led by Spike Laurie (Hiro partner) and Mike McGarvey (ex-Eidos president/CEO/COO)
The division executed two spin-outs: The Chinese Room from Sumo Group and Bulkhead Interactive from Tencent
Both studios returned to independent British ownership, preserving UK-originated IP
"We're starting to see a bunch of great talent starting to leave these larger corporations and form new studios. It's an opportune time for us as advisors."
01
Two spin-outs reveal distinct divestiture triggers
The Chinese Room was mid-sale to an unnamed buyer when Laurie was flagged by an industry contact
Hiro redirected the outcome toward independence, restructuring the exit with studio director Ed Daly
Bulkhead's deal stemmed from Tencent's post-COVID portfolio reprioritization
The studio was too small relative to Tencent's other assets, including parent company Splash Damage
"That shifting strategy with Tencent particularly provided some opportunities for us to come in and ask how we can help both them and Bulkhead create a new structure that works."
02
Regulatory barriers are funneling Asian capital into European M&A
Chinese investors face growing restrictions on US transactions, making Europe their primary Western target
European studios offer lower costs than North American equivalents alongside world-class talent
Hiro's concern: US or Chinese acquirers historically publish the game and retain IP rights
That pattern prevents European-originated franchises from scaling under European ownership
"Europe is the only market they have to access for M&A and investment now in the games space, outside of Asia."
03
PE-backed acquirers are assembling mid-market publishing vehicles
McGarvey identifies a new buyer class: PE-backed vehicles led by industry veterans, formed in the last 12 months
Their mandate is to aggregate IP and studios into mid-market publishing businesses
COVID-era investors have largely retreated, shifting leverage decisively to buyers
"We will see a new wave of companies that haven't been in the market enter with a plan to aggregate IP and studios, and leverage the management expertise that private equity firms partner with to create a mid-market publishing business."
04
Funding bar now demands unique IP, genre expertise, or proprietary tech
Generic execution capability is no longer sufficient to attract investment
Hiro Advisory may reposition studios with deliberate pivots before going to market for capital
Large upfront commitments are giving way to milestone-gated, prototype-first deal structures
Studios must now demonstrate audience demand before funding, not after
"The days of securing $25 million and then hoping to hit the milestones are something in the past."
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