Consolidation is happening across the video game industry, with massive publishers devouring smaller ones on an almost monthly basis, and it can often feel like we’re heading towards a future where every video game is published by Microsoft. , Sony, Nintendo or Embracer Group.
But a new forecast indicates that the consolidation could start to take a different shape. Bloomberg’s Lucas Shaw thinks the next big mergers will be between TV services/studios and game companies. Over time, they will start to buy each other to provide greater synergy.
Here’s what Shaw has to say about the potentially merged future of entertainment:
“A game company will buy a TV company or a TV company will buy a game company. All the big tech and media companies are trying to sell bundled services. Apple sells one. Amazon sells one. Disney is trying to sell one. Microsoft sells one. Music and video streaming are the main components of these bundles. But, apart from Microsoft, no one really cracked the game component.
Entertainment companies, meanwhile, are already experimenting with interactive storytelling and commissioning TV series and movies based on video games.
It seems inevitable that these two worlds will come together. If Netflix or Disney can offer popular games as part of their service bundle, they can raise prices and reduce churn. The same goes for Amazon and Apple, which have struggled in games so far. A game company could buy a television company to take advantage of its intellectual property and offer its programming in its game universe.
The problem with this is that he misunderstands the market and doesn’t seem to fully register the running status of certain market players.
One problem is that there is a limit to what a television or entertainment company could do if it bought a video game publisher. If the idea here is to sell ‘bundled services’ like in your Disney Plus subscription you get a bunch of EA games we’re missing the core component here that it’s not like you just throw away a bunch game tiles on Disney Plus. Something like this would have to be entirely cloud-based, a technology that exists, but is far from proven, and currently represents a tiny fraction of the industry. Only Microsoft has really invested so much in the cloud space, and it still relies heavily on directly downloading Game Pass titles to the PCs or Xboxes it manufactures. Google Stadia has just folded completely after years of trying to break into the market and make game streaming mainstream.
The alternative is that you should be talking about an entirely different kind of video game, like what Netflix is starting to do with its own original games that are primarily meant to be played on iPads or in-app phones. These may be “value added”, but they are by no means triple A titles.
We’ve also been down this road before. Disney, for example, used to publish a lot of video games until they mostly pulled out of that market and started licensing their IPs instead. That’s why we have Star Wars and Marvel games from a dozen different companies, where Disney ultimately gets paid, but doesn’t take responsibility for developing and publishing the games themselves. So you can’t just say, “Disney should buy a game publisher and put all the Star Wars and Marvel games on Disney Plus in a bundle.” It doesn’t work that way at all.
Conversely, a game company that buys a television company is neglecting one of the biggest players in the industry today, Sony, which is the market leader in video games with the PlayStation, and which is also a huge television and film studio. What’s on offer here is something Sony has done before, making movies like Uncharted that are box office hits, and licensing other titles like The Last of Us for what will undoubtedly be doubt an HBO megaseries. In this example, Sony doesn’t have its own “Sony Plus” streaming service, but they’re doing just fine with their current strategy.
Nintendo is starting to play more into multimedia, but again, there’s no reason for Nintendo to sell out to a media giant or try to merge with a giant. They licensed Mario to Universal and this animated feature is going to make everyone a ton of money. No merge required.
It might sound great in theory that you could bundle a bunch of TV shows and video games into one subscription, but in practice, there are too many caveats to count. The fundamental technology doesn’t really exist to make it work consistently given its reliance on the cloud, given that game streaming and video streaming aren’t the same thing. Conversely, I see no reason for video game giants to start buying up media brands when they can just continue to license their characters to be IPed. If you already exist in both worlds, like Sony is great, but they are the exception, not the rule here.
The most likely scenario is for the tech giants to buy both media companies and game companies. We’re already seeing this to some degree with Amazon, but I wouldn’t say Apple or Meta are making a mega-buy in either category. I believe it’s all consolidated to some degree, but not really in the way that’s proposed here.
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