This blog has written a couple times about YouTube‘s dominance in the video sector. Spotify may well create a similar leading position for itself in music streaming, while a mega-merger underway would shrink publishing‘s Big Five into the Big Four. A recent article in The Hollywood Reporter shows that a similar concentration of power is taking place in video gaming:
two gaming megadeals have put Wall Street focus squarely on what increasingly feels like an M&A free-for-all. Microsoft unveiled a $68.7 billion takeover of gaming publisher Activision Blizzard on Jan. 18, eight days after Take-Two Interactive’s $12.7 billion deal to acquire mobile game powerhouse Zynga (Words With Friends).
The article explains that Microsoft’s acquisition – its biggest ever – will help it in its aspiration to become the “Netflix of gaming”. Other players in this rapidly growing sector include the Chinese tech giant Tencent, Sony (which is buying Bungie, for $3.5 billion) , and Netflix itself. The synergies between streamed games and cinema may also spur companies like Disney to join the fray.
The Hollywood Reporter points out that the Activision acquisition will make Microsoft the third-largest videogame company in the world, with a revenue of $24 billion. That’s just behind Sony ($24.4 billion), and Tencent ($29 billion). To put those figures in context, the highly-successful Universal Music Group, discussed on Walled Culture a few months back, had revenues of 7.43 billion euros in 2020 – around $8 billion. Overall, the gaming sector is huge: $200 billion and growing, according to the article.
It’s significant that it is Microsoft, a software company, that is buying Activision, something it can do without much difficulty, given Microsoft’s $2 trillion capitalisation. The same applies to its chief rivals – Amazon, Apple, Facebook, and Google (although Meta/Facebook is “only” worth $800 billion currently). If there weren’t antitrust issues, any of them could buy up the entire music, film or publishing industries with their spare change. That shows how vulnerable copyright companies are to being absorbed by one of the digital giants that increasingly dominate not just their own industry, but adjacent ones too.
Featured image by Alexey Komarov.