XBOX owns Activision Blizzard - is this the beginning or the end?
Let’s talk business. Or, more accurately, businesses owning too much business.
In February of 2021, Embracer Group launched an aggressive acquisition of Gearbox Software as a 1.3 billion dollar deal. Gearbox Software is known for the wildly successful Borderlands franchise. Embracer Group, a Swedish media holding company, is known for acquiring rights to the Lord of the Rings series. It was stated to have as many as five Middle Earth games in development. That plan may be on pause now.
As of September 11, Embracer might be selling Gearbox Software due to consolidation efforts after a 2 billion investment fell through abruptly. With Embracer Group reporting lots of third party interest, it’s clear to the gaming community Gearbox Software will be moving house once again.
The point is not that Gearbox is being sold, but rather is the trend in how studios are being pushed around by the larger companies. It’s becoming increasingly hard to identify a game that doesn’t have a larger company (Like Nintendo, Sony or Microsoft) behind it. These acquisitions that are increasingly commonplace solidify the foothold major companies have over smaller indie-level games.
XBOX MAKES A PLAY
Take for example Microsoft’s official move to acquire Activision Blizzard, which is now a years-long business transaction. This multi-billion dollar deal has given Microsoft full access to household titles like Overwatch, Call of Duty and World of Warcraft, even Candy Crush. There’s a very valid concern from both the UK Competitions and Market Authority (CMA) and the US Federal Trade Commision (FTC) that this acquisition has resulted in Microsoft owning too much of the gaming market (Chee & Mehta 2023).
“The FTC says the deal could let Microsoft degrade Activision's game quality or player experience on rival consoles like Nintendo consoles and Sony Group Corp's PlayStation, manipulate pricing or change terms or timing of access to Activision content.
Britain's CMA stopped the deal over anti-competitive concerns around cloud gaming, which it called an "an emerging and exciting market", as it allows users to play on any device.”
Eventually, both the FTC’s and CMA’s concerns were addressed through the deal being restructured, and gave the thumbs up. It is still unclear how and when the acquisition will settle.
As these deals progress, it is time to address the issues of having the same company produce the majority of video games. If the gaming industry does not have a diverse competitive market, then the emerging conglomerate can set higher prices and treat employees poorly without consequence. More so, the quality of games could spiral.
If there are only a few companies controlling all the games, you get what is one of my least favorite games: Monopoly.
DO NOT PASS GO
These potential consequences are not just conspiracy, we are already seeing them take hold. A leaked email from CEO of Microsoft Phil Spencer reveals just how cornered they have the market (Yin-Poole 2023). When someone this big is writing about acquiring Nintendo and labeling it a “prime asset”, those who do not feel comfortable in a late-stage capitalist economy should be sweating right now (Yin-Poole 2023). As of now, it’s considered strange if a studio isn’t owned by a larger corporation like Embracer Group or Microsoft. Recently, Larian Studios has rejected Microsoft’s offer for acquisition after its success with Baldur’s Gate 3.
When starting my research for this article, I didn’t quite understand the scope of this. Why can’t I play the new Starfield and relax without worrying who’s controlling those beautiful, programmed stars? The short answer is it’s owned by Zeni-max media, which was acquired in 2021 by, you guessed it, Microsoft Gaming. Microsoft now owns rights to the Elder Scrolls, Fallout, and Doom series, which some would already consider too much control on the market.
THE ROBBER BARONS OF GAMING
The industry is being consolidated. To effectively describe the kind of companies that have its hands in nearly all current video game production, the adjective bloated comes to mind. As Microsoft closes in on a deal with Activision Blizzard and waits to pounce on Nintendo, the market will ensure indie games have the worse hand.
Microsoft currently owns the Xbox and a huge chunk of PC gaming through Activision Blizzard, so their only large competitors are Sony and Nintendo. If those are the only three controlling the Triple-A games being produced, then that is an effective monopoly. And if Nintendo does get acquired by Microsoft–, why pay its workers a reasonable amount if the conglomerate is controlling the entire industry? I’ll be the first to call Phil Spencer, the robber baron of gaming, if it comes to that.
A word to the wise as we hear more acquisitions from our pals Sony, Nintendo, and Microsoft: think about what they’re selling us, and the voices that are being squashed.
References
Chee, F. Y., & Mehta, C. (2023, July 14). Explainer: What challenges does Microsoft's $69 billion Activision deal face? Reuters. Retrieved October 10, 2023, from https://www.reuters.com/technology/how-microsoft-is-addressing-antitrust-concerns-over-activision-deal-2023-02-22/
Yin-Poole, W. (2023, September 19). Leaked Microsoft Email Reveals Xbox Boss Phil Spencer Really Wants to Buy Nintendo. IGN. Retrieved October 10, 2023, from https://www.ign.com/articles/leaked-microsoft-email-reveals-xbox-boss-phil-spencer-really-wants-to-buy-nintendo
