How Microsoft and Sony Might Transform The $200 Billion Video Game Industry

by Apkyolo, Monday, 7 March 2022 (4 months ago)

Introduction

How Microsoft and Sony Might Transform The $200 Billion Video Game Industry.

Sony’s response to this was to say, hey, you know we can get a big name property to we’re going to go after Bungie.

And not only is it a nice studio that makes destiny in a game people love. It’s also kind of poking Microsoft a little bit. What do these multi billion dollar deals mean for the future of gaming? There’s been a consolidation wave going on in the game space for the last several years. And, look, you’ve had a lot of private equity money flow into the industry and it’s highly fragmented, so it’s just natural to see consolidation. Microsoft being a trillion dollar company, obviously, they can do bigger deals and others.

Read More Our Articles

Surfshark vs PrivateVPN | The only VPN comparison

NEW SURVIVAL GAME Released Today! 5 

How Microsoft and Sony Might Transform The $200 Billion Video Game Industry

In September of 2020, Microsoft announced its intention to acquire ZeniMax Media the deal closed in March 2021. It brought games like the Fallout series, The Elder Scrolls and Wolfenstein, among others under the Microsoft umbrella, this was a $7.5 billion all cash deal, which now pales in comparison to the $68.7 billion bid for Activision Blizzard.

How Microsoft and Sony Might Transform
How Microsoft and Sony Might Transform

Microsoft has the Xbox platform and Sony has the PlayStation platform. Those are both incredibly large players, and they’re the devices that people have at home to play these games on. developers tend to release games on those platforms as either first party which means that they are part of those platforms are third party which means that they are independent developers choosing which platform to develop on the evolution of streaming services.

How Microsoft and Sony Might Transform

The proliferation of consoles, and other connected devices like smartphones has made the video game space more lucrative than ever. In 2021. Consumers spent $60.4 billion on video games according to NPD Group. Sony’s gaming sector made 813.3 billion yen in sales during the last three months of 2021, which is just above $7 billion. And Microsoft made $5.44 billion off gaming in the last three months of 2021.

Read More Our Articles

20 INSANE Little Details in Rockstar Games

Alibaba Overview: How to Sell on Alibaba

Microsoft woke up to the fact that half the world’s population, nearly 4 billion people play video games and this is a huge market for them that they only have barely begun to scratch the surface Historically there haven’t been huge plays of big companies buying other studios in the game space.

Well, we see Microsoft now consolidating through the acquisition of Activision Blizzard and of course Sony looking to buy Bungie we had a Microsoft Zenimax transaction earlier on. So they’re starting to be more plays in this space. And it’s showing that Microsoft really realizes the value longer term, both the video game sector, the metaverse and other plays like that.

When it comes to console choice, exclusive titles are a key driver of consumer sentiment. The original Xbox had Halo, an acclaimed first person shooter with an immersive story. This became the killer app that drove sales of the original Microsoft console.

According to VGchartz, more than 24 million Xboxes were sold over the life of the console and Halo and Halo 2 combined for 12 million units and sales which is three times higher than the next best selling title. Nintendo has Mario, Sony has games like The Last of Us and Uncharted. Now with the makers of Call of Duty and destiny potentially becoming first party games, which is to say games created and owned by the console producer, there could be a new push for exclusives to fuel console sales and game subscriptions in years to come.

I think subscriptions are great, too, a great way to monetize your catalog. It allows people to try a number of different games. And that way when a new iteration of these games come to market, you know they’re more likely to buy a new version of that game. One potential downside to consolidation is decreased competition, especially among developers that make AAA titles basically the equivalent of blockbuster movies.

But for video games, from an industry point of view, as a game developer, it’s it’s quite scary. Obviously, it’s a tremendous financial opportunity for a lot of these studios that are getting bought.

But it’s also limiting the amount of competition in the space. And that that always makes for a bit of a worrisome precedent, other gamers have had to buy a PlayStation if you want to play Uncharted, it’s not on other consoles. So maybe Is that really so different than what we’ve always historically had, Microsoft has stated that they do not have plans to make Call of Duty exclusive after the current contract ends.

Shortly after Microsoft announced the deal on January 18, Sony stock began to drop from about $124 a share by February 23, the stock had reached a year to date low of about $101 per share.

But in the long term, the acquisition of Bungie a successful developer could help Sony in cultivating a larger consumer base, Destiny is you know, become a very good live services game. And that’s has not been one of Sony strengths, you know, over the last cycle.

So this improves them, they’re in that area. So they’re all looking to get more IP and strengthen themselves in key areas of the industry. I think it’s easier transaction pass review, it’s much smaller, much smaller company being acquired.

So I think if there’s any review there, that one’s going to be pretty easy to get across the line. I think it actually whether it’s intentional or not, throws quite a thorn into Microsoft side over there try their transaction of activism,

Activision Blizzard, because now that transaction showing that there is consolidation occurring in the video game space, and that there could be anti competitive issues raised by that one of the past maybe people weren’t looking at the video game sector to say that there’s there’s an issue of competition here. It’s the Microsoft deal that is really going to catch the eye of regulators. In fact, the day Microsoft announcer is gonna buy Activision, the FTC and the DOJ antitrust divisions came out and said, Hey, we’re gonna put out stricter guidelines going after deals just like the one Microsoft announced. And in fact, it’s since come out that the FTC is going to be the agency for reviewing this. And Lena Khan, the new chair of the FCC, she’s really out there to make an example. And this could be the kind of deal she wants to blow up to say, hey, we’re not going to let these multi trillion dollar companies get bigger and bigger and bigger.

 

It looks from the outside like Microsoft and Sony are positioning themselves to stay relevant and expand their consumer base in the years ahead. The economical model of the games industry has been incredibly risky for for as long as I can remember, even when I joined the games industry, the reality is that when you make a video game, you spend two to three years based on a prediction of what people might like in the future.

And you spent sometimes millions of dollars making these games, some of the larger games are hundreds of millions of dollars, and then hope that you sell enough units enough copies that people will like it enough in the end to actually offset those costs. And for every big game that gets made, and that is a super hit. A lot of studios have one or two failed projects. So they’re always dealing with a lot of risk, subscription services and streaming continue to make inroads there may soon come a point where consumers can smoothly play triple A games over the cloud without the need for consoles or gaming computers.

So instead of running out and you go buy a $500, Xbox or whatever it costs, you can just buy a laptop, or your Smart TV and run these games streaming over the internet and that they see as a huge opportunity to expand the Xbox and their gaming footprint beyond just those pricey consoles and PCs that they already exist on

Rate this news

Comments

Your email address will not be published.