Video game

Are we entering a period of hyper-consolidation in the video game industry?

from bigger-and-bigger-and-bigger department

You’ll recall that we had several articles about Microsoft’s $7 billion acquisition of Zenimax Media, as well as some of the potential spinoffs from that acquisition. Much of the focus was on what the purchase of Zenimax and its child studios, such as Bethesda, would mean for those studios’ long-running PC and/or Xbox-exclusive game franchises. Microsoft made a bunch of vague and slightly contradictory statements on the subject before ripping the band-aid by making the next one. old scrolls game an Xbox/PC exclusive.

Most members of the gaming community are either agnostic about exclusives or downright hate them. In other words, there are very few cheerleaders for exclusives, which is why most news about large publishers acquiring small or midsize publishers is met with very narrow eyes.

That said, there are acquisitions, and then there are acquisitions.

You may have heard the news: Microsoft has announced plans to acquire gaming giant Activision Blizzard King (ABK) and its subsidiary development studios. The deal is valued at $68.7 billion – roughly 17 Star Wars franchise acquisitions – and that kind of money isn’t being spent without the expectation of major moves (and revenue) in the future.

From there, ArsTechnica’s post delves into some predictions of what those moves will be: more games coming into Xbox’s Game Pass, more mobile games coming out of Studio King, and of course the potential for franchises like World of Warcraft become exclusive. Much of the reaction to the announcement of this deal focuses on which titles will become exclusive.

But this agreement is much, much more important than that. This is Microsoft’s biggest acquisition in the gaming space and reading about it in the financial space is that it’s the real start of a much larger trend of consolidation in the industry.

“This is going to trigger a major ripple effect in terms of consolidation for other video game publishers,” said Dan Ives, analyst at Wedbush Securities.

Microsoft’s purchase of Activision will accelerate more industry deals, analysts say, as big tech companies seek to expand their consumer offerings by acquiring publishers and game developers that have attracted gamers during the pandemic. Microsoft’s purchase of Activision, which owns the Call of Duty, World of Warcraft and Candy Crush franchises, would also help the company break into the streaming and metaverse spaces, they added.

Notably, once news of this deal broke, shares of publishers like EA, Ubisoft, and Nintendo all rose significantly. It’s the market that buys this as a trend and tries to get ahead of the stock’s possible rise when future offers are announced.

So what does this mean for the industry? It’s not have be bad, as long as these large acquisitions are replaced by new entrants from smaller players. But there are many ways for this consolidation to go wrong. Kotaku’s writing is a bit over the top for my tastes, but there are a few valid points to consider in there.

It’s the future. There’s no way boardrooms everywhere from EA to Ubisoft to Sony won’t be full this week with panicked executives talking about their options for something similar, because their only instinct will be to match that. To keep up, make the stock price go up, until there are only 2 or 3 companies left at the top of the food chain, and things get a little worse for the rest of them. ‘between us. Because they don’t know anything else.

It is unlikely that we will reach a reality where there are 3 parent game companies. If we did, yes, it would be bad. Instead, I think the real danger in all of this could be the coordinated fragmentation of the gaming industry along platforms. If the same companies that manufacture the platforms (PC, Playstations, Xbox, etc.) also manufacture a plurality or a significant majority of games, this Absolutely will lead to more exclusivity, more walled gardens, more hoarding of the culture that is gambling.

And that would ultimately be bad for the industry, no matter how many billions of dollars are traded in these acquisitions.

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Filed Under: consolidation, video games, world of warcraft, xbox
Companies: activision blizzard, microsoft