It is easy to forget, but the video game industry isn’t just fun and games. It is business, and a big business at that. The large publishers, including Activision and Electronic Arts, are publicly traded companies and while there are plenty of creative types within these companies to create the products, at the end of the day the bottom line is what matters most. The video game industry is also engaging in the most American of business trends, namely big-time mergers.
While mergers of major corporations take place across the globe today, several American industries practically pioneered the merger mania — and many of these eras of big business have made for decent games too! Anyone whoever played Sid Meier’s Railroad Tycoon (recently remade as Sid Meier’s Railroads) knows about the robber barons of the 19th century. In the 20th century the American automotive industry saw the rise of the big four, and if Detroit is to remain competitive it shouldn’t be long until we see the big two! And of course just 15 years ago there were six major music labels; today there are four.
All of these industries saw fascinating mergers. No one would have expected the New York Central Railroad to merge with the Pennsylvania Railroad (and in fairness this was in 1968, way past the era of the barons), or Sony to merge with BMG to form Sony BMG Music Entertainment. These mergers, much like the consolidation in the automotive industry, were good for business. But will the various mergers in the video game industry be as good for gamers, let alone investors?
Last week it was announced that Activision was being sued by some its shareholders, who didn’t believe the merger with Vivendi was the best possible deal for the big A. The merger, which would give Vivendi a 52 percent stake in the new Activision Blizzard, put the shareholders in an "unfavorable minority position" (ironic of course if you remember that Activision published the lackluster video game version of Minority Report). EA acquisition of Take-Two Interactive (publishers of the Grand Theft Auto series) could be all but a done deal. EA’s management still needs to convince Take-Two investors that the deal is a fair one. Otherwise, unlike the Activision merger with Vivendi, which isn’t quite the fun stuff, the EA deal could turn ugly and hostile — something worthy of a future game no doubt. Newsweek’s N’Gai Croal, said that he is optimistic about working with Electronic Arts. The game publishing giant has scooped up some major brands, and developers over the years, notably the Command & Conquer franchise as well as SimCity creator Will Wright — who is hard at work on the possible groundbreaking Spore.
Meanwhile analysts were predicting that an
So again, the question needs to be asked: are these mergers good for gamers? Aforementioned über game designer Sid Meier, in speaking to
The question is whether EA will return to the early 1980 roots of promoting the developers as "artists." The "album cover" boxes were popular packaging back in the early to mid-1980s, and allowed EA to attract some of the best developers of the era. The other question is: Where does this leave the little guy?
EA has done a good job of managing multiple similarly themed franchises — notably Need for Speed and Burnout. But with two successful driving games, would the publisher even consider another one? Likewise, when EA obtained the movie license to "The Lord of the Rings," the company still produced a few non-LoTR fantasy games, but it was apparent these didn’t get quite the level of support.
Additionally, if EA does acquire Take-Two, what does that mean for the 2K sports franchises? EA had already gobbled up a number of official licenses, and apart from the 2K games there hasn’t been a lot of competition to the likes of Madden across several platforms.
While sports games have been seen as the most direct competitors, how would a fewer larger publishers perhaps handle some of the bigger franchises? On the one hand fewer publishers could mean that some properties are merged or even canceled. Even if EA, or Activision Blizzard did go forward with multiple shooters, strategy games, etc., these could now face competition from within as much from a rival publisher. This could be the worst-case scenario. Would Publisher A move Shooter 2 back six months to avoid it competing with the more anticipated Shooter 1? Instead of choice, gamers are left with what is best for the publisher’s release calendar.
But most ominous of all is how the mergers affected the other industries. Today the various railroads that crossed the country are gone, the American auto industry has fallen on hard times, and the state of music leaves much to be desired. The game industry is already lacking for innovation, but that’s nothing that a couple of larger publishers watching the bottom line can’t fix!
