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Gaming has always been an exciting and dynamic industry, with new technologies, titles and innovations being introduced every year. This constant change keeps investors, developers and gamers alert. The past year was a particularly eventful one for gaming studios. We can safely say that the consolidation wave has been unlike anything else in history.
In January 2022, the two biggest gaming deals ever announced were revealed. Microsoft announced its intention to acquire Activision Blizzard at a staggering $68.7 Billion. Take-Two Interactive announced its intention to purchase Zynga at a price of $12.7 billion. These acquisitions have unquestionably changed the game in the gambling industry.
Microsoft’s acquisition of Activision Blizzard is a major move that will create a gaming giant. Activision Blizzard is responsible for some of the most popular games in the industry, including Candy Crush Saga, World of Warcraft and Call of Duty. Microsoft, on the other hand, is the owner of Xbox. The two companies can work together to create a gaming ecosystem that is unparalleled.
Microsoft’s subscription service Game Pass will be bolstered by the vast selection of games offered by Activision Blizzard.
Mergers and Acquisition Activities
Here’s a list of merger and acquisition activity that is truly staggering.
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Embracer Group has acquired Gearbox Entertainment (the developer of Borderlands) for an astounding $1.37 billion. It also acquired Aspyr, an expert in porting, for $450 millions, and Easybrain a mobile developer for $765,000,000.
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Microsoft’s acquisition by ZeniMax Media – the parent company to well-known studios like Doom, Bethesda Softworks and Fallout – has been approved by the European Commission. Microsoft now has 23 1st-party game studios, cementing its industry position.
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EA shareholders have approved the $1.2 billion acquisition offer for Codemasters, signaling that the deal is now finalized.
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EA also acquired Glu Mobile, a developer of mobile games, for a significant enterprise value $2.1 billion. This acquisition expands its mobile gaming portfolio.
The primary factors driving the European gaming studio consolidation
Game development is still a risky undertaking, despite the boom that has swept the gaming industry. The user’s preferences are unpredictable, the costs of development have risen, the competition is fierce, and the creative ideas that seemed promising may turn out to be commonplace once the game has been completed.
Even the most successful online casinos or independent game developers can encounter challenges when navigating this difficult industry terrain. Gearbox Entertainment Co., and Insomniac Games are two examples of companies that were stable in the past but have been sold over the last two years. These developments highlight the importance of strategic adaptability to a market that is constantly changing.
Let’s look at the reasons for this trend.
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Investment Companies and Banks Investing Money
The current investment landscape is marked by an influx of money from banks and firms that invest, creating a hot investment climate. Looking ahead to 2023 there is no sign that this trend will change anytime soon.
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Bigger gaming companies making bigger impacts
Microsoft’s Q2 2021 earnings reported revealed a 51% increase in gaming revenue YoY. This pandemic caused an increase in video game spending, which resulted in increased revenues for major gaming companies like Tencent, Sony and Nintendo EA. The trend is expected to continue as people spend more time at their homes and discover new entertainment options.
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Studio Acquires Secure Content
Acquiring studios can be a good way to obtain content for subscription-based services. Microsoft and EA both believe that owning original content is a smart and lasting business strategy. They can ensure long-term success by acquiring studios and ensuring a constant flow of exclusive content.
Mergers and Acquisitions : Effects
As with everything else, the effects are complex and multiple. Take a look.
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Bigger gaming studios have the resources and money to accelerate growth
It is common for a smaller company to be acquired by a bigger one. This leads to more frequent and rapid game updates. The acquiring company provides greater resources and support, such as access to a bigger team of developers, improved technology and substantial funding. The acquired studio is able to focus on producing high-quality content, while also benefiting from infrastructure and expertise provided by its parent company.
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Corporate Life Can Limit Your Creative Freedom
Consolidation is mutually beneficial. The consolidation process is mutually beneficial. Acquired companies are able to ensure their sustainability while larger studios can acquire additional content in order to satisfy a growing fan base. This approach has its downsides. The market being controlled by only a few dominant companies can lead to fewer options, creative stagnation and higher subscription fees. To maintain a thriving and healthy gaming industry, it is important to find the right balance between consolidation and competitiveness.
When smaller studios are acquired by larger conglomerates, their uniqueness can quickly be wiped out. This originality is often the main selling point of their loyal fan base. Assimilation of smaller studios into larger corporate structures can dilute their creative identity and cause them to lose the qualities which made them so special in the first instance. Companies must therefore strike a balance in order to preserve the unique qualities that made an acquired studio successful.
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Independent Gaming Organizations Struggle to Stay Afloat
In the past, there were many independent studios in the gaming industry that produced successful titles using fewer resources. They also had more creative freedom. When these studios faced financial difficulties and budgetary restrictions, large corporations began to acquire them. It has become increasingly difficult for smaller studios, due to the industry’s increased emphasis on blockbuster games and high-budget productions, to compete. The gaming industry is now dominated by a small number of powerful players.
Author
Bart is the content manager at Online Casino Groups. His background as a journalist within the iGaming sector means he is always the first to report on online casinos. Bart has been working in the iGaming sector for over 10 years, so you can trust his honest casino reviews!
