With Carlyle Group in its corner, RuneScape maker Jagex says now is its time to shine

With Carlyle Group in its corner, RuneScape maker Jagex says now is its time to shine

Earlier this week, Jagex announced that it had been bought. Again.

Last year the RuneScape maker was acquired by Macarthur Fortune Holding for $530 million; this time the British games company has been snapped up by – at the time of writing – the world's second-largest private equity outfit, The Carlyle Group.

No figure has been publicly placed on the deal as of yet, but CEO Phil Mansell (pictured) tells it is "a fair assumption" that Jagex went for more than $530 million, especially given the company's growth during 2020. The exec also says that the deal isn't entirely about money; having Carlyle in its corner gives Jagex a huge amount of resources to further grow the company.

"There's a lot of support if you want to expand into new territories or do deals in different parts of the world," Mansell says. "Carlyle has a lot of expertise in growing companies and that's exactly what we want to do."

In the past, The Carlyle Group has dipped its toes into a variety of markets. Its previous investments have included oil and gas pipeline firm Kinder Morgan, US military contractor United Defense, media outlet Getty Images, food and drink giant Dunkin' Donuts, headphone monster Beats by Dre and fashion behemoth Supreme. But – as far as we can tell – this is the first time that the finance firm has bought a video games company.

This is likely driven by two things. For one, the finance community has started to grow more comfortable with the video games space, while the COVID-19 pandemic also showcased how both resilient and valuable the sector is. Jagex, meanwhile, has shown strong growth in both revenue and profits, as well as the number of people playing its games in recent years

"We have a strong tie with our community. That's part of the way that companies like ours are valued," Mansell explains.

"Both RuneScape and Old School bring in over £100m in revenue a year and we have some huge opportunities to grow both games, as well as do more with the RuneScape IP – both in games and beyond – and leverage our live games publishing expertise and tech to help other like-minded developers find and build their communities. All of that felt like a good track record."

Our ambition is to take RuneScape from being a cult hit to one of the top RPG brands in the world.

Part of acquisition sees a number of The Carlyle Group folks joining the Jagex board. These are largely people from the firm's tech funds, but two non-executive directors with games expertise have been appointed too; Niccolo De Masi and Mike Griffith, the former CEOs of Glu Mobile and Activision respectively.

"They aren't coming in to operate the company," Mansell insists. "But we'll be benefitting from the wisdom of people who know what it's like to be in your shoes. They have connections and resources. That's less specific to how we run our games, but we're interested in expanding Jagex's footprint around the world."

Private equity cash can be a good thing. These outfits generally have deep pockets and can help companies grow by pumping money into them, before – generally – selling them on or taking them public and scoring a huge payday in the process.

But private equity also has a reputation for operating in some slightly more nefarious ways, like buying undervalued companies, before stripping and selling their valuable assets for profit. While these financial firms outfits can make huge amounts of money this way, the process generally isn't so pleasant for the company in question, which normally has just been, um, annihilated.

Of course, there's nothing to say that this is Jagex's fate. Either way, Mansell isn't concerned about the kind of partner the RuneScape maker has jumped into bed with.

"Any deal has to work both for the company and for the investor," he says.

"We spent a lot of time making sure that the match with Carlyle was right and that we both had the correct expectations. What we want to do now is be unleashed. Between our current games, other titles we have in development and publishing partnerships with other studios, the level of opportunity we have is almost unique in the market. Now we can make a real run at that.

"That offers Carlyle a really robust revenue and profit base for Jagex, on top of which we can build out with these other opportunities. We only see this deal as a positive. We want to grow the company, to have the biggest possible community for our games and we want to flex our creative muscles and do much more with RuneScape. We're totally aligned on that front. You talk about IPOs and that sort of thing, but Jagex and Carlyle are really focused on the long-term value of the company. We are open to these other routes in the future – there's no reason for us to turn anything down – but I don't think that's a short-term thing."

RuneScape made its debut on Steam in October 2020. Old School is set to launch on Valve's platform later in February

All this being said, it's clear that Jagex likely isn't a fixer-upper investment for Carlyle. The firm has boasted strong growth in recent years and is obviously doing something right if millions of people are flocking to its games.

But Jagex has struggled to expand outside of the core MMO RuneScape titles. In the past, it has tried to do other kinds of games, including card title Chronicle: RuneScape Legends – which launched in 2016 and bit the dust just two years later – as well as sci-fi MMO Stellar Dawn/MechScape, which was in development for years before quietly disappearing. Similarly, while Jagex is looking to publish other people's games via its Partners label, the firm has tried third-party publishing before with little success.

The only real success that Jagex has had outside of RuneScape is, well, the retro-themed Old School RuneScape, which has brought a lot of jaded players back to the fold.

One might assume there's a lot of pressure on Jagex to deliver on its ambitions for expansion. But Mansell insists that things are different this time around.

"We really want to do more with the RuneScape universe," he says.

"We've done small experiments in the past, but now we have a really experienced senior team and are building a really strong bench of talent across our entire organisation. We can really do that ambition justice now. Over 288 million RuneScape accounts have been created so far. There are so many people who have fallen in love with the world, characters and stories that we've spent the last 20 years building and there's a wealth of lore and fiction in this giant fantasy world. We think it has a lot to give and our research shows that there's a demand for it.

"We have started developing more RuneScape games internally, which sit in the broader RPG space, though we're not at the point of announcing those yet. You can imagine that we are going to stay close to what we are good at; world-building, storytelling and multiplayer.

"In the longer term, as we know the RuneScape universe is so popular and has this enduring fondness from hundreds of millions of players, we are looking at partnering with other game studios to explore what they might do with the RuneScape IP. They might be able to answer the demands of players in ways that we cannot. We're looking at both angles. There isn't pressure being put on us; we absolutely love RuneScape. It's our baby that we've been nurturing for two decades and we think we can do much more with it."

Carlyle has a lot of expertise in growing companies. That's exactly what we want to do.

Even before this deal, Jagex was on the up. But with the Carlyle Group acquisition, Mansell says that now it's time for the company to really shine.

"Clearly we're good at what we're doing at the moment," he says. "We've been building up our publishing, new game development and partnerships capabilities and they are now ready for prime time. We're developing RuneScape and Old School for more platforms and parts of the world. There's some really exciting stuff, but you'd expect us to do that.

"Our ambition is to help other like-minded game devs successfully launch their products and do more with the RuneScape IP so we have a broader catalogue of games with some super exciting stories and characters and additional worlds in the RuneScape universe.

"It's about moving RuneScape from being a cult hit to something that's really well-recognised as one of the top RPG brands in the world. That's certainly an ambition we have."

Disclaimer: Alex Calvin is a freelance writer who works with a variety of clients and has in the past worked with Jagex on various projects.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.