The gaming 'acquisition' war is worrying me

It’s been one acquisition after another lately and I’m worried about what this means for the future of the gaming industry.

Source: Nikkei montage/Reuters

If you’ve got at least a finger on the pulse of the gaming industry you know that quite a few studios have been sold lately. Sony bought Bungie and, the biggest of them all, Microsoft bought Activision/Blizzard just to name two. It doesn’t show any signs of stopping either as Sony management recently stated they have more acquisitions planned. 

Acquisitions in the gaming industry are nothing new but I still find this recent wave worrisome. I’m worried about how the big three buying 3rd party studios and big multinational corporation buying their way into the industry. How that will turn the industry into a ‘big fish, small pond’ situation. To be fair though, there are some upsides as well and it would be unfair if I didn’t take those into account here. 

So, without further ado, let’s dive in. 

Opening salvo

I was going to start this with a brief piece on the history of gaming acquisitions, to paint a better picture and establish what has come before. When I started, however, I quickly found out that the task I gave myself was a lot bigger than I expected. So, new plan: I’ll keep myself to just the big acquisitions from the last 2 years or so and if you’re interested in the rest, you can check out this article. 

We good? We good. 

Well then. Acquisitions in the gaming industry are nothing new. Many of them happen every year which the general gamer won’t hear a word about. Recently though, we’ve seen deals of a magnitude that is beyond what we’ve seen before. Bigger and more well-known studios for getting bought for hundreds of millions. That article I linked to a paragraph ago mentions that top acquisition prices nearly doubled every year from 2013 to 2016, which just goes to show how much the videogame industry has grown. 

Microsoft seems to be the head runner in this. It bought Bethesda for $7.5 billion in 2020, Activision Blizzard for $68.7 billion (the biggest video-game acquisition to date) and bought a number of Indie studios as well. I can’t speak to Microsoft’s exact reasoning behind all these acquisitions, I don’t have an inside man or anything, but they’re doing it to build up their library of exclusives. 

The lack of choice

Where I see problems is in two ways. Buying such big studios has prompted Sony and other interested parties to up their game when it comes to acquisitions, starting a race of companies buying other studios in an attempt to keep up with Microsoft and snag up established IPs. That’s the second problem. 

With Bethesda and Activision Blizzard specifically, many big 3rd party multi-platform franchises are now under the Xbox umbrella. Fallout, the Elder Scrolls (Skyrim) and Diablo; all Xbox exclusives now. Microsoft will honour deals made before the acquisition in terms of games released multi-platform and has stated it will release Activision Blizzard Games On PlayStation And Switch "Beyond Existing Agreements" but you can bet your bottom dollar it won´t stay that way. 

Microsoft wants people to buy Xbox´s and buy into Game Pass and what better way to do that is to offer games you can’t play anywhere else? That´s what makes exclusives so valuable for the platform holders. If you want to, and this is just an example I grabbed out of thin air, if you’re a big Fallout fan and want to play Fallout 5 you have to buy into Xbox and/or Game Pass even if you’ve been a PlayStation fan your entire life. 

That’s why I don’t like these platformer holders buying such big studios with a large catalogue of popular 3rd party titles. It takes choice away from the consumer. 

Now, on to that first point. Microsoft has opened the floodgates for other companies to start buying gaming studios, big and small. Sony is open to more acquisitions and EA is reportedly pursuing a sale or merger and more. My problem with this behaviour is that the big studios are getting even bigger at the cost of the smaller studios. Big fish become bigger fish by eating the little fish leaving fewer fish in the pond.

I don’t look forward to such an industry. The power these companies would hold would be too much if you ask me. The potential for abuse of power alone is making my back shudder and it isn’t like the gaming industry is avoid of power abuse. I fear that controversial business practices like loot boxes and shipping a game unfinished ala Cyberpunk 2077 and even the incorporation of NFTs (looking at you Square Enix) would be more prominent. I fear that with most of these corporations needing to satisfy shareholders and such these types of businesses will see an increase. If done right, they can be highly profitable after all. The same goes for certain types of games, with more and more companies playing it safe and investing in multiplayer, free-to-start and life service games. Titles that don’t interest me at all. 

The positives

All right, let’s leave the negatives at that. If I go any further down this road this post will become overly long and not so pleasant to read anymore. So, let’s move on to the positives as yes, there are upsides. 

Lara’s new home is the Swedish Embracer Group.

Development costs for games are on the rise. IDG President and CEO Yoshio Osaki have stated that with every generational shift game production costs have increased by 200% to 300%. Depending on the IP, studio and genre publishing costs and development time increase as well. It’s the big reason why tie-in games have all but vanished but I digress. 

With this increase in costs having, a big company with some deep pockets behind you to get a project funded would be nice, now wouldn´t it? I mean, it’s easier for a big company to gain funds/attract investors for a project than a small studio. Plus: I imagine that it’ll give folks higher job stability. A better job culture in general for companies where there have been problems. With all the s***t that has gone down at Activision Blizzard (more on that in this article of mine), Microsoft intends to do some spring cleaning which is all the better for the employees. 

It can benefit certain series and studios as well. Using Activision Blizzard as an example once again, currently, the company has put all its studios to work on Call of Duty. Microsoft intends to, when the deal is closed, let these studios work on other projects. Square Enix selling multiple studios and IPs, including Tomb Raider, to Embracer group to invest in blockchain technology is quite laughable considering the NFT market is crashing but face it: Tomb Raider and such have never been a good fit for the company. 

Square Enix never seemed to know what to do with its western studios and IPs. No sales milestone was ever good enough for them. Hopefully, Embracer Group will be a better fit. So yeah, sometimes a sale can lead to dormant and/or mishandled series to finally get the time and attention they deserve.  

……….

There have been quite a few big profile acquisitions in the gaming industry in the last couple of years. From Microsoft’s massive deal to buy Activision Blizzard to smaller ones, like Embracery group-buying Tomb Raider and others off Square Enix’s hands. I’m concerned about what this, seemingly inevitable, acquisition war will have on the gaming landscape. That the big studios will become even bigger at the expense of the smaller studios, leading to a scenario where the big few can dictate nearly everything that goes on. There are upsides and everything is just my own speculation but I can’t help but fear the problems that could arise from a video game acquisition war.