Mergers and acquisitions are normal in business. Over the course of my career, I’ve seen several large industry publishers merge or acquire other publishers, and dozens of independent studios get purchased by publishers.
- Sega merged with Sammy Corp. in 2004 to form Sega-Sammy. Later they bought Atlus.
- EA merged with Pandemic Studios + Bioware in 2007
- Bandai and Namco merged in 2007
- Activision merged with Vivendi Universal’s games division in 2008 to form Activision-Blizzard
- Bungie was purchased by Microsoft in 2000, bought itself out to go independent again in 2007, and was recently acquired by Sony in 2022.
- Activision-Blizzard merged with King in 2015
- Microsoft acquired ZeniMax in 2020
- EA acquired Glu Mobile in 2021
- Embracer Group bought Gearbox in 2021
- Take Two bought Zynga in 2022
These kinds of behaviors are fairly normal in any major industry. Smaller companies fall on hard times and a larger company offers a rescue. Old leadership grows weary of running the company and someone offers them a big payday. Two like-minded sets of leadership decide that they would work better together.
In my opinion, the danger comes when too much consolidation happens and, instead of a market with plenty of competition, you end up with a cartel. It’s not quite a monopoly with a single controlling company, but it’s pretty close - a cartel is a handful of enormous organizations/companies that control the vast majority of the market and collude with each other in order to keep competition down and enrich themselves. In such a situation, they don’t have to compete as hard anymore because they can take turns and help each other out. Any rising competition either gets bought or sabotaged by the combined might of the cartel.
Usually this happens because the cost for entering the market is really high - it’s really risky to take that chance to compete with the cartel, which makes the newcomers much more vulnerable to cartel countermeasures. You can see this kind of corporate nonsense at work in many fields here in the US - there are only a handful of telecom companies, internet service providers, meat packing companies, train companies, cloud computing services, and so on. A big sign you’re dealing with a cartel is when there aren’t many options and none of them are particularly appealing.
I don’t think that’s happened in video games yet - we still have large independent publishers like Take Two, Steam, and EA, and we have medium-sized independent publishers like Capcom, Sega-Sammy, Bandai-Namco, Epic, and so on. But if the mega-corps keep buying up the bigger publishers, we’ll probably end up in cartel territory and everything will suck.
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