How much is Warner Bros gaming worth?

Warner Bros. Interactive Entertainment, the gaming division of Warner Bros. focused on developing and publishing video games based on Warner Bros. films and other properties, is likely worth around $6 billion based on its strong portfolio of titles and average industry valuation multiples.

Warner Bros. generates over $2 billion in annual gaming revenue

According to reports, Warner Bros. Interactive pulls in approximately $2 billion in annual gaming revenue as of 2020. The vast majority of this revenue comes from hit games based on popular Warner Bros. owned franchises and properties like Mortal Kombat, Harry Potter, and LEGO. For example:

• The LEGO video game series has sold over 200 million copies as of 2020, making it one of the best-selling video game franchises of all time.
• Mortal Kombat 11 generated over $600 million in revenue globally since its 2019 release, and the franchise has grossed over $6 billion to date.
• Harry Potter games like Hogwarts Mystery have generated over $300 million in player spending on mobile alone.

Other major gaming properties owned by Warner Bros. include titles like Injustice, Game of Thrones, and the Batman Arkham series. Warner Bros. has successfully leveraged its broad entertainment IP into steady, recurring gaming profits.

At standard gaming valuations, the business is worth over $6 billion

To value Warner Bros. Interactive, we can look at typical valuation multiples in the video game industry. The standard multiple used to value gaming companies is about 4x annual revenue.

With Warner Bros. generating around $2 billion in annual gaming revenue, a 4x multiple would imply a valuation of around $8 billion. However, to be more conservative we can apply a multiple of 3x revenue, which is reasonable considering the company faces growth headwinds as gaming consolidation intensifies competition.

At 3x their annual gaming revenue, Warner Bros. Interactive would be worth approximately $6 billion – aligning to the high end of our $5 to $8 billion estimated valuation range.

For example, gaming giant EA was valued at $38 billion in early 2022 on gaming revenues of $5.6 billion in 2021 – showing that large players in the space can demand much higher multiples.

Past acquisition offers provide perspective on fair value

We can also look to past acquisition offers for the gaming division to benchmark a fair valuation. In 2020, EA reportedly made an offer of $2 billion to acquire Warner Bros. Interactive outright, which was rejected by Warner Bros. at the time.

In 2011, Warner Bros. acquired Mortal Kombat developer NetherRealm Studios for $33 million. While much smaller, it shows Warner Bros. itself realizes the value of gaming assets. Given the broader portfolio since 2011, a valuation in the $6 billion range seems reasonable.

The future under Warner Bros. Discovery

In 2022, Warner Bros. merged with Discovery, forming the new Warner Bros. Discovery media company. There is speculation that Warner Bros. Discovery could look to sell off the mature gaming division to help pay down debt and focus more on core entertainment offerings.

If Warner Bros. Interactive were to be put up for sale, offers would likely come in around the $4 to $8 billion range based on the factors discussed above. At $6 billion, it would be one of the largest gaming acquisitions in recent history – for context the Microsoft acquisition of Activision Blizzard was valued at close to $70 billion.

Selling the division could make sense given the established portfolio of titles and potential for value realization. However, gaming also represents recurring revenue growth and allows Warner Bros. to expand their most valuable entertainment IP. With an already solid position, investing further to expand Warner Bros. Interactive into mobile, live services, and emerging areas like VR could unlock significant upside.

Either way, with decades of popular games and franchises under its belt, Warner Bros. gaming is undoubtedly a multi-billion dollar asset whether under Warner Bros. Discovery or a new owner.