While the Activision Blizzard acquisition is Microsoft’s largest deal ever, it only costs $2.6 billion more than Disney. But that deal came before Microsoft’s $26.2 billion Linkedin deal in 2016. Compared to that deal, Bethesda and Zenimax could be worth nearly $10 billion by 2020. The lesson here? Beware of big acquisitions. Instead of getting greedy and over-investing in video game companies, look for a smaller but still significant company that will be able to outspend other gaming giants.
Star Wars strategy
The recent $69 billion acquisition of Activision Blizzard Inc. by Microsoft shows how a content giant can use a similar strategy. The risk is high, because a new game can cripple an entire industry. But Disney can also learn from the mistakes of its gaming rivals. The company recently stumbled into a costly trap with its upcoming release of Cyberpunk 2077.
Japanese gaming can be restored to its former luster
Is there a way to bring back the glory days of Japanese gaming? Yes, but it won’t be by simply copying Western games. This will require a new breed of Japanese game developers who can understand both Western and Japanese gaming cultures and draw inspiration from both. In the past, Japanese game studios have been eager to imitate Western, European, and American games, not understanding the fundamentals of what makes them successful.
To make matters worse, the game industry in Japan is facing a cultural shift that may prevent it from re-establishing itself as a global leader. While Sony and Sanyo continue to lead the world in consumer electronics, Akihabara began to see more consumer-oriented retail stores. These stores specialized in finished electronics, parts, and games, which allowed consumers to trade in their old Famicom systems for new ones. As consumer electronics became more affordable, retailers became more valuable, and gamers were drawn to these locations.
Sony’s acquisition of Activision Blizzard
Despite the recent announcement that Sony will no longer own Activision Blizzard, there is no immediate reason to believe this deal will not have ramifications for Sony’s future. Call of Duty is one of the most popular games on PlayStation, but it will likely only be a PC or Xbox exclusive in the near future. Microsoft’s purchase of Activision Blizzard comes amid reports that Microsoft plans to make some of its games exclusively for the Xbox. The acquisition of Activision Blizzard by Microsoft could have long-term effects for Sony, which may not necessarily be a bad thing.
As the video gaming industry becomes more consolidated, the FTC is considering investigating Microsoft and Activision Blizzard. The law envisioned an FTC’s role in acquisitions when it was passed in 1976. It was assumed that the commission would investigate around 150 large mergers a year, but today, the agency receives roughly 150 merger filings every two weeks.
Tencent’s acquisition of Tencent Holdings Ltd.
As one of the world’s largest video game companies, Tencent has been making bold moves in recent years. In 2019, its gaming business was its top money-maker, generating 18 billion in revenue, 40 percent of its total revenues. The acquisition of a majority stake in the gaming company positioned the company to enter this lucrative market. But what did this deal mean? The company didn’t stop there. The acquisition was just the beginning.
The Chinese internet company has made a move to grab a larger piece of the digital-music market. It has already secured deals with Warner Music and Sony Music Entertainment to distribute their music online exclusively in China. This acquisition will boost Tencent’s market share, as it will control 60% of all music rights available in China. The deal will help it expand its QQ Music service and add to its music library.