In the previous post, we explored the recent news around Take-Two’s acquisition of Zynga to bolster its mobile gaming division. While a lot of acquisitions in recent memory are driven by mobile M&A (especially in terms of absolute deal size), we can’t forget that console/PC acquisitions still drive a big part of the Consolidation of Gaming story.
This is particularly true with Microsoft and Sony, developers of Xbox and PlayStation, respectively. Between these two, there is a constant search for new content that will help bring new players into the ecosystem, while simultaneously retaining existing ones. These two giants aren’t just gaming companies, but their gaming divisions keep busy with their own M&A activity, consistently trying to one up the other.
In recent memory, a transaction that sticks out above others in the console/PC space is Microsoft’s acquisition of ZeniMax for $7.5bn — all in cash (Microsoft really wanted this one!). ZeniMax is the owner of Bethesda Software, the AAA publisher behind massive franchises like The Elder Scrolls and Fallout. The Elder Scrolls V: Skyrim is a title with extreme longevity, still being played 10 years after its original release. It even surpasses Take-Two’s Grand Theft Auto: V in the longevity category.
Through this acquisition, it has been assured that the next installment, TES 6, will be a Microsoft exclusive — surely swaying some customers away from PlayStation. As big as the franchise is, it’s still a massive bet on the company’s ability to deliver and it remains to be seen how long it will take for Microsoft to recoup its $7.5bn cash investment through Bethesda’s future content releases.
It’s not just about console exclusives, but rather a long-term plan to keep players retained through Xbox’s Game Pass subscription service. Through this acquisition, they are filling a content pipeline that can hopefully drive thousands of dollars more in customer LTV than the traditional boxed product model.
Expect to see both Sony and Microsoft continuing their gaming M&A spree, but I think it will be a while before we see a transaction of this size and type in the console/PC space.
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