Gaming Acquisition |OT|

Started by the-pi-guy, Oct 01, 2022, 06:54 PM

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the-pi-guy

My motivation here is two fold:

1.) For people sick of hearing about acquisition news, they just have to stay out of this thread.

2.) There's a lot of acquisition "news" that are more rumory. Even when they're credible and definitely have plans in the works, it doesn't guarantee that anything will come out of it. Plenty of real acquisition discussions don't end up going anywhere. Or sometimes they take years to go anywhere.


Stuff that people would care about or be interested in will probably still get its own thread, but I figured for stuff that most people don't really care about, having it all hidden away in this thread will probably be better.



List of major video game publishers per wikipedia organized by biggest revenue in 2021

1Sony Interactive EntertainmentJapan, United States18.190
2Tencent GamesChina16.224
3NintendoJapan12.010
4MicrosoftUnited States10.260
5NetEaseChina6.668
6Activision BlizzardUnited States6.388
7Electronic ArtsUnited States5.537
8Take-Two InteractiveUnited States3.089
9Bandai Namco EntertainmentJapan3.018
10Square EnixJapan2.386
11NexonSouth Korea, Japan2.286
12NetmarbleSouth Korea1.883
13UbisoftFrance1.446
14KonamiJapan1.303
15SegaJapan1.153
16CapcomJapan0.7673
17Embracer GroupSweden0.3225




Notable deals we have seen this year:

Take Two acquires Zynga
Tencent acquisition of Sumo closes
Sony acquires Bungie
Microsoft acquires Activision
Sony acquires Haven
Embracer Group acquires Crystal Dynamics, Eidos.
NetEase acquires Quantic Dream


the-pi-guy

Quote from: Idas, post: 94167888, member: 111169
OK, that's very nice, you'll say. But why the hell acquiring a videogame publisher could have major anti-competitive effects in cloud services?


I guess that the line of thinking that they are following is similar to the one from the CMA:

- Videogames generate more money than other form of entertainment.

- But there are only 3 major competitors (MS, Nintendo and Sony) and no one has entered the (video game console) industry in the last 20 years. Not a good sign...


- In addition to that, the barriers of entry (level of investment) and the network effects (more users usually attract better content) are very strong.

- So, there is the minimum amount of competition in that market and it's very hard to get new entrants. That's not good!


- Luckily, PC and mobile are alternatives to play games beyond consoles. Well, that helps the market to be more competitive

- In any case, as other industries, the videogame sector is in a transitional phase from the classic "buy to play" to alternatives like subscriptions, cloud, etc.

- This transition is finally allowing more competition and new entrants (Apple, Amazon, Netflix, Google, Nvidia, Meta, etc). Finally, that's good news!

- But to be able to compite these new entrants also need good content and access to the cloud infrastructure that's going to be the basis of future developments.

- One of the 3 originals competitors in the industry (MS) has a good position in the market, a very popular subscription service, a strong first party offering, it's number 2 in cloud services in the world and number 1 with the operating systems used by PC (Windows). Not bad! That's already a lot of very good synergies.

- Suddenly, that competitor (MS) buys the biggest third party publisher in the world (ABK) with some of the biggest and most popular IPs in the industry (COD, Candy Crush, WoW, etc).

- What happens with the other two competitors (Nintendo and Sony)? Well, they have a better position in the industry (by number of sales, users and quality content). But if the industry is really transitioning to the cloud and subscriptions, although they offer some popular subscription services (PS Plus, for example), they don't have cloud infrastructure or an OS. Well then, to get access to them they'll have to pay for it.

- What happens with the new entrants? Well, some of them have cloud infrastructure an even an OS (Amazon or Google), but the gaming catalogue is very small and they don't have a lot of users. So, to attract new users they'll have to pay for popular content (Google) and probably cloud infrastructure or OS licenses as well.

Well, well, well... If the industry is already transitioning to subscription + cloud and one of the 3 main competitors (MS) already has: 1) a popular subscription service (Gamepass), 2) a good amount of users and sales (Xbox) 3) a strong first party offering (24 studios) 4) one of the biggest cloud infrastructure with Azure (so they don't have to pay for it) 5) the most important OS (Windows) in an alternative gaming market, PC (so they don't have to pay for it) and now 6) they are acquiring the biggest publisher in the sector with some of the biggest IPs on all the gaming markets (COD and consoles; WoW and PC; Candy Crush and mobile) they could really hurt competition, including new entrants and the ones already established (no access to the content acquired, worse and more expensive access to cloud infrastructure and OS licenses or very strong network effects).


Therefore, although MS is acquiring a videogame publisher the real question of the transaction is not if there will be more publishers, enough developers or alternative IPs post merger, it's about the transition of the industry to a new model and if this operation could seriously harm the most lucrative industry right now for present and future competitors.

That would be my theory of why there is so much focus on cloud services although ABK is the one being acquired. Of course, now MS has to prove with facts that the reality of the market is different and even with all of that to its favor, there will be enough competition in the short and long term.


the-pi-guy


BananaKing

When will the acquisitions end!

kitler53

I thought we had am acquisitions thread for this sort of stuff..
          

the-pi-guy

I thought we had am acquisitions thread for this sort of stuff..
Whatever do you mean?  :-X

the-pi-guy

Microsoft has a website dedicated to the acquisition


Quote
Greater competition in traditional gaming, where Sony and Nintendo will remain the biggest
Nintendo? I can see an argument for Sony, but I'm not sure how they are smaller than Nintendo.

BananaKing

Man I never seen a company with such audacity. A web page about how they want to make a monopoly of the market and saying its best for consumers.

Legend

Man I never seen a company with such audacity. A web page about how they want to make a monopoly of the market and saying its best for consumers.
So many points are just straight up lies. Their benefits for game devs have nothing to do with the acquisition. Just shut the fudge up Microsoft.


I think I've heard of Fandom here and there, but it's crazy to me that they're large enough to buy all this.

BananaKing

They arent big enough to buy vizioneck though

Legend

They arent big enough to buy vizioneck though
Not even Microsoft is.

VizionEck is secretly a 10 trillion dollar company like this.

the-pi-guy


Legend


What would happen if they didn't approve it? Brazil is important but not the largest market.

the-pi-guy

What would happen if they didn't approve it? Brazil is important but not the largest market.
Not exactly sure.

Quote
Or maybe the majority of regulators approve the deal but some minors ones don't. In that case, MS/ABK would probably go to court to appeal the decision and would probably win because courts are usually more favorable to parties than regulators. Although that could take some years, if the market is not too big/important, maybe it could work for MS/ABK.

It could also happen that an important regulator approves the deal (the FTC in US) but another big one rejects it (the EC in Europe). In that case MS/ABK could go to go court to appeal the decision but that's going to be a long and tough battle. When that happens the parties usually abandon and cancel the deal.
Era has a pretty good thread on all of the Microsoft-Activision stuff

kitler53

one step closer to that MS gaming monopoly.  it's going to be great!
          

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