Pay to Play
This article is published in collaboration with Statista
by Florian Zandt
After reviewing the details surrounding Microsoft's planned acquisition of Activision Blizzard King for $68.7 billion announced in January 2022, the Federal Trade Commission (FTC) has filed an official complaint to block the merger. In an official note, the FTC claims to "seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets." Microsoft vice chairman and president Brad Smith released a statement concerning the decision, saying the company had "believed in giving peace a chance" but will not back down from making its case in court. If the FTC's lawsuit is successful, it's unlikely the video gaming world will see a deal this big anytime soon.
Tencent, for example, held the record for most valuable acquisition for five years after buying an 81.4 percent share of developer Supercell, the firm behind mobile hit Clash of Clans, for $8.6 billion in 2016. But even if Activision Blizzard King might be Microsoft's most recent and most lucrative catch if they can clean up the act of the company, which has come under fire for alleged workplace harassment and toxic office culture, the tech giant has heavily invested in the games space for some time now. In 2020, it bought ZeniMax Media for $7.5 billion to bolster its roster of internal studios in the lead-up to the release of its current-gen consoles Xbox Series X and Series S. Its acquisition of Minecraft developer Mojang for $2.5 billion in 2014 pays dividends to this day as well, with total game copies sold doubling to 200 million between 2016 and 2020 according to company statements. Interestingly, Sony also heavily invested in other video game studies following the announcement of the deal in January 2022, buying Destiny 2 developer Bungie for $3.6 billion.
Except for deals struck by Tencent, Microsoft, Take-Two, and Activision Blizzard, acquisition prices are usually located in the low billions. According to media reports, only 17 video game company acquisitions or mergers in history had a price tag of more than $1 billion. That those billion-dollar deals often include mobile game developers like Zynga, Supercell, King, and Moonton, which ByteDance scooped up in 2021, is no coincidence. The revenue in the mobile game market was estimated at $94 billion or a market share of 70 percent in 2020 according to our Statista Digital Market Outlook. The market encompasses free-to-play games with in-app purchases and regular-priced games.
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