Game industry concentration ahead
The $24 billion global videogame industry is concentrating rapidly, according to a Wall Street Journal article ("Videogame Makers Are Playing 'Takeover 2005'", 12/20/04). The article notes while many of the earlier acquisitions have been of small players, but now, like the characters in a shoot-'em-up game, medium and large game publishers "are being stalked themselves, as possible takeover targets."
Games are one of the growing parts of the media market, and they have a dedicated following in the much desired young male audience. Ina addition, keeping up the new releases of Sony's PlayStation and Microsoft X-Box hardware, and taking advantage of the constantly growing capacity, requires the kind of capital investment even mid-size players find it hard to keep up.
Electronic Arts, the biggest of them all, has fired a shot across the bow of France's Ubisoft (maker of Price of Persia and Tom Clancy games), by buying twenty percent of the stock of that game maker. Electronic Arts, the publisher of super hit Madden NFL and many other games, is estimated to have some $2.5 billion on hand and has declared its intention to be an acquirer rather than an acquiree.
Microsoft, maker of the X-Box and a game developer in its own right (Halo 2 through its Bungie Games subsidiary), is rumored to be interested in Take-Two Software, the maker of titles like Grand Theft Auto.
InterActive Corp., a cagey Internet conglomerate, has expressed interest in Buying the #2 game maker, Activision. Activision makes the Tony Hawk series of games among others.
Media giant Viacom has been looking to buy video game companies, and may target Midway Games, the maker of Mortal Kombat, controlling interest in which is currently owned by Viacom CEO Sumner Redstone.
Walt Disney has also been on the market for videogame companies.
Japanese game companies Namco (Dead to Rights) and Capcom (Street Fighter) are talking merger as well.
And British game publisher Eidos (Tomb Raider) has indicated its interest in "possible business combinations."
The game publishing industry is now bigger than the movie industry. It's potential flow of revenue is enormous, and it still hasn't reached anything like its zenith, as marketing strategies and tie-ins are just starting to take off. The global market is still growing rapidly. You may have noticed that the money put into advertising video games on TV is starting to approach that given to new movie releases. All of these factors both attract bigger and bigger players and require bigger players to keep up with competition. I agree that 2005 may see some major takeovers in the industry.
8:41:28 PM 
|
|
