Gaming spotlight
What the recent run of big-name acquisitions means for the games industry
Stewart Stanbury - Director of Business Development at Jagex explores how the
recent spate of big name acquisitions in the games industry have been driven by the evolution of technology.
W
hile big studio mergers and acquisitions are a staple of the games industry, the recent spate of big
spending from the dominant industry players has raised a few eyebrows. Microsoſt kicked off 2022 with the news that it was buying Activision Blizzard for a cool $68.7 billion. Combined with the purchase of Zenimax Media in 2021 (for the smaller but still impressive $7.5 billion) Microsoſt has brought the powerhouses of Bethesda Game Studios, Arkane Studios, id Soſtware and more under the Xbox umbrella, placing itself in a now dominant position in the video game space. Microsoſt’s biggest rival Sony Interactive
Entertainment responded by showing it hadn’t been sitting on its hands when it revealed its plan to purchase Bungie for $3.6 billion - a move that many see as a poke in the eye for Microsoſt given that Bungie were once a Microsoſt studio, becoming independent in 2007 before signing a ten year publishing deal with Activision in 2010. Interestingly the deal with Sony allows Bungie to remain more or less independent and self-publish games if they wish. Outside the big console makers, Take-Two Interactive (owners of 2K Games and Rockstar Games), announced it was acquiring mobile gaming giant Zynga for a heſty $12.7 billion. But why now? As fun as it may be to imagine Sony buying Bungie
34 | June 2022
in response to Microsoſt and Activision, these deals can take months if not years to iron out - so both companies must have been planning similar moves for a while. Te rationale for these high level consolidations are hotly debated, but many agree it is about securing valuable IP, talent, making good on the tech investment of the last console generation, and securing content for the future of an increasingly competitive market. For context it’s important to acknowledge that
physical consoles are loss leaders for Microsoſt and Sony; they cost considerably more to produce than they recoup through their sales alone. Most of the revenue comes from the
sales of games and services provided through the consoles’ ecosystem - which is arguably one of the reasons we’re seeing a splurge at this point in their life cycles. IPs with proven track records of big sales figures make ideal acquisition targets. Tis has been the case for a while, but the recent shiſt in the games space towards “Live Service” games (games that receive substantial/revenue generating updates for years beyond their initial release) means that these popular IPs can offer a steady stream of revenue from over-and-done releases they may have provided in the past. Tis games-as-a-service model (GaaS) sounds good on paper from a revenue perspective, but this model requires significantly more
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