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EpicRandy on 13 July 2023
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PotentHerbs said:

EpicRandy said:

You also saw a big ramp-up of studios being created since MS bought Bethesda. Those acquisitions are not what's cause consolidation, they happen because the time is propitious to investment in video game industries. The pandemic skyrocket the industry and now growth is through the roof and is expected to remain that way a least for a few years

There were also significant periods of consolidation in the video game market both in the 1970s and the 1990s. Can you say gaming in the 80s and 2000s was worse because of it?

I'd argue that its only propitious to invest in the gaming industry now because its the only industry left to be massively consolidated. That would mean Microsoft was the first to capitalize on this propitious time, and ultimately, the inception point of massive consolidation. Granted, you could argue that it was always going to happen regardless of what Microsoft did, but in reality they are the ones responsible for triggering the arms race. 

Comparing consolidation back then to the present is not an apt comparison. The fact that two major platform holders have made some of their biggest transactions ever, as well as the many billion dollar acquisitions on top of that, significantly separates the level of M&A activity now compared to the 1970's or 1990's, making any comparison or discussion about market impact null and void. 

" but in reality they are the ones responsible for triggering the arms race. "

But you have no proof of this effect, only a strong will that it is. Embracer and Tencent were gobbling up smaller players in large numbers prior to MS making their first new round of acquisition in 2018. There never was a point where no transactions were occurring either. 

The market has doubled in the last 5 years and MS output has very little to do whit this, it's not like the market is silly to the point where MS needs to be the one signaling to everyone else it is ready for acquisition. 

The ABK transaction is only the biggest to happen in a time where more of it happens, simple as that.

Also, there are much comparisons to be drawn from prior periods of mass consolidations, while no transactions were made on a scale of this one there were no actors with this kind of valuation either very far from it and there were also far fewer of them. Meaning individual transactions while not as impressive would have been much more impactful than their equivalent today.

The thing is even if we are in a mass consolidation, attaching the certainty of bad outcomes to this is still only based, like I said before, on just feelings and beliefs.