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A Merger In Gaming Services: Playhaven, Kontagent Combine In An All-Stock Deal Worth “Hundreds of Millions”

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Consolidation ahoy!

Playhaven and Kontagent, two of the bigger gaming services companies that help developers run analytics and retain their players, have decided to merge into a combined company worth “hundreds of millions” of dollars in an all-stock deal. Neither company could give more specifics on how the deal was structured.

“The valuation in the hundreds of millions, but I won’t tell you where,” said Andy Yang, who was Playhaven’s CEO and will lead the combined company. They have yet to choose a new name. Playtagent? Konplaygent, anyone?

Playhaven is a company that the biggest game developers use to retain their players with personalized promotions. They help studios segment out players, by whether they tend to play for free or are bigger spenders (known as “whales”). With the top gaming studios reaching tens of millions of players, retention has evolved into a big data problem.

Kontagent, on the other hand, is an analytics company that started off by catering to social game developers on the Facebook platform. They are used by everyone from EA to Zynga to China’s Tencent.

It’s a natural marriage of sorts. One company provides very deep analytics on game play, while the other offers a monetization solution.

“With this combination, we’ll be the 800 pound gorilla and the clear market leader,” Yang said. “Our clients were asking us about how they could take all the valuable data they’ve collected in Kontagent and act on it. We ended up having a shared vision.”

Yang said negotiations took somewhere between two and three months, and the boards of both companies were supportive. The two companies will end up reaching 22,000 apps and 400 million monthly active users together. The new company will employ 160 people and Yang and Kontagent’s CEO Josh Williams said there were no layoffs or redundancies with the deal. Williams will become the chief technology officer of the new company, while Yang will take the helm as CEO.

They expect to merge their two products by the end of 2014.

“At the moment, we’ll have to take one step at a time and have a simple integration at first,” Yang said. “It’s day one of our marriage, and we just moved in together.”

The merger comes at a time where we could be seeing more consolidation. As mobile and social gaming have matured, literally dozens of service providers offering competing analytics and monetization solutions have cropped up. Not all of them will survive.

“The market is very fragmented right now and you’ll see consolidation in the space,” Yang said.

As for why they decided to call it a merger and not an acquisition?

“This is a merger of equals. We are two leaders in our respective categories and there’s no money changing hands. This is not a traditional acquisition,” Yang said.

The two companies have raised at least $26 million from investors including ALTOS Ventures, Battery Ventures, e.ventures, GGV Capital, Maverick Capital, Morgan Creek and Tandem.