The video game industry has been abuzz thanks to high-profile acquisitions byMicrosoftand Sony. While Sony’s massive $3.6 billion payment to acquire Bungie, the developers ofDestiny 2, is noteworthy, a lot of people have expressed concern overMicrosoft’s most recent acquisition. At just under $70 billion, the acquisition of Activision Blizzard by Microsoft is huge, to say the least. Once finalized, it will give the company control over some of the largest video game franchises around as well as their mascots, many of whom have become iconic over the past several decades.
This has caused fans from all walks of life to express concern with formerAdam Ruins Everythinghost,Adam Conover,pointing out the potential downsides of the deal. While a lot of eyes have been trained on Microsoft and its acquisitions for a while, some of the most critical concerns don’t seem likely. Microsoft will indeed have access to a lot of different IPs and already owns some high-profile franchises such asHalo,Skyrim,Doom, andMinecraft, but the fear that the company will morph into the Amazon of video games doesn’t seem realistic. While there are a lot of ways it could turn into this type of corporate Goliath, and is well on the way in some respects, seeing Microsoft become the Amazon of video games would require it to jump over some major hurdles along the way.
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Microsoft vs. Amazon
The first thing worth pointing out is the market itself. Amazon’s growth partly comes from its ability to control so much of the process involved with purchasing products.The Xbox Game Pass subscription servicehas indeed provided Microsoft with a significant foothold despite its financial cost to the company, but it pales in comparison to Amazon’s approach. A major part of this stems from how video games are developed. Triple-A games in particular are known to be incredibly expensive to produce, making their financial success important.
While Microsoft can develop incredible AAA titles through its acquired studios and offer them asday-one releases on Xbox Game Pass, this course of action is unsustainable. Even though the company has an immense market cap and a lot of money at its disposal, continuously undercutting its competition through Xbox Game Pass via its AAA titles would result in an immense amount of money being lost. This would reflect the strategy that many people have observed with Amazon, but the difference in the companies’ competition and products is what sets them apart.
In many eyes, smaller businesses were the first to feel the effects of Amazon’s business model, and it shows as other companies like Walmart and Target continue to operate. While Microsoft has been buying up studios that are magnitudes smaller when compared to itself, in the gaming industry its main competitors are Nintendo and Sony. Both are titans of the industry in their own regards, making the use of Xbox Game Pass to eliminate them unrealistic. On top of this, both have options outside video games alongside the Nintendo andPlayStation first-party studios.
Nintendo
Nintendo has been producing products for consumers for well over 100 years, and its consoles have made it a mainstay in the video game community since the 1980s. A lot of video game history is associated with Nintendo, and while there have been projects that haven’t succeeded, Nintendo’s core consumer base is dedicated to it. Properties likeZelda,Pokemon,Kirby, andMariocontinue to be lucrative for the company. The exclusivity of these franchises’ main games on Nintendo consoles also means that the company maintains control of their distribution, and fans must own a Nintendo console to play a Nintendo game.
While Microsoft did once attempt to set up a deal where it could buy Nintendo, which likely would have changed all of this, it’s not an event that’s likely to happen. Similarly, given the control that Nintendo has over its franchises, Microsoft being able to undercut them enough to force Nintendo to leave the video game industry isn’t realistic. With games likeAnimal Crossing: New Horizonstied to the Nintendo Switch, it is unlikely that the company will be falling apart anytime soon.
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Sony
Sony is in a somewhat different position. While PlayStation exclusives are strong, they don’t necessarily draw in as many fans as Nintendo’s do, and third-party games are still important on PlayStation consoles. This might be where many people start to worry, as Bethesda’s newStarfieldgame has been confirmed to be an Xbox console exclusive andHellblade 2: Senua’s Saga, a sequel to a title previously on PlayStation 4, will also be Xbox exclusive. While this does raise some alarms, it’s important to look at PlayStation as an extension of Sony as a company rather than its bread and butter.
There are a lot of resources Sony puts into PlayStation and video games as a whole, as shown bySony’s recent acquisition of Bungie, but these are supported by the fact that Sony continues to make money elsewhere. While the company might not be quite as big as Microsoft, its ventures in other industries have given it the rights to beloved characters like Spider-Man, and it continues to be a mainstay in tech thanks to its audio devices and other electronics. With so much outside of video games making Sony the titan that it is, Microsoft being able to undercut it to such a degree that it’s put out of business seems unrealistic.
Microsoft’s Growth
Still, the reality is that there arepros and cons of Microsoft’s massive acquisition. While major companies like Sony and Nintendo might not have too much to worry about besides being able to match their competitor’s efforts, smaller studios and independent developers aren’t in the same boat. While AAA games are expensive to make, all games require a great amount of effort before they’re ready to be played by the public. For smaller teams, this means a lot of time and personal money invested into projects that people are passionate about.
Microsoft’s newest acquisition may threaten this thanks tothe Activision franchises Xbox will ownand how much money it has at its disposal, allowing it to undercut smaller games. While this would match the tactics many people have observed with Amazon, there’s still a bit of a difference. The technology at many developers' disposal allows teams to meet and work virtually. So, while smaller brick-and-mortar stores may have been hit hard by Amazon’s expansion, smaller video game developers should be able to avoid a similar fate. It doesn’t change the fact that life will likely become more difficult for these developers, but hopefully players will still be able to enjoy great games from studios both small and large.
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