After Microsoft's acquisition of Activision, Sony also took the antitrust supervision and did not change the trend of industry integration

Last month, Microsoft unexpectedly launched an all-cash acquisition of Activision Blizzard, the producer of Call of Duty, for up to $68.7 billion. However, the acquisition is expected to face U.S. antitrust scrutiny.

The U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice jointly say the industry is becoming increasingly concentrated, and the surge in the number of merger applications over the past two years suggests that the monopoly situation will worsen further.

However, this statement has not stopped the pace of mergers and acquisitions in the industry. Less than two weeks after Microsoft announced its acquisition of Activision Blizzard, Sony also took the shot. Sony announced Monday that it will acquire Halo and Destiny game developer Bungie for $3.6 billion, becoming another "hipster" in the new wave of consolidation sweeping the game industry. Sony's stock price rose nearly 5% that day.

Microsoft's acquisition of Activision Blizzard became the largest all-cash acquisition ever, giving Microsoft, a tech giant with a market capitalization of more than $2 trillion, dominating the gaming industry and the third-largest gaming company after Tencent and Sony Group.

Although Sony is the "overlord" of the traditional game industry, its market value is far less than That of Microsoft. Sony's current market value is about $150 billion, and Activision Blizzard's acquisition price accounts for about half of Sony's market value, but only 3% of Microsoft's market value.

Pelham Smithers, a senior analyst in the gaming industry, said: "Its main impact is likely to be to restart the console wars, rather than moving from console wars to more comprehensive multi-platform wars. ”

In order to dispel market doubts, Microsoft has said from the time of announcing the acquisition of Activision Blizzard that at least for now, the Call of Duty series will remain on the Sony PS platform. Games like Activision Blizzard's Call of Duty and Overwatch give Microsoft's Xbox gaming platform an edge over Sony Playstation.

"Given the scrutiny by regulators, such assurances make sense. Microsoft also doesn't want to give regulators the idea of being a closed ecosystem. A senior investor in the game industry told the first financial reporter.

Microsoft's acquisition of Activision Blizzard comes against the backdrop of tighter global antitrust scrutiny, after both Google and Meta were subject to antitrust lawsuits by the U.S. government.

The acquisition not only exacerbated the console game war between Microsoft and Sony, but also caused panic about the entry of technology giants, and people feared that the pattern of the game market would change from then on, exacerbating the monopoly of the giants.

Damian Thong, a senior analyst at Macquarie in Tokyo, said in an investor note: "The blockbuster series Call of Duty has leapfrogged from consoles and PCs to the mobile market, where revenue growth is as large as the gaming console and PC business combined. In-game player purchases already account for a major portion of Sony's in-game transaction revenue. ”

It is reported that Microsoft's acquisition of Activision Blizzard will need to pay a $3 billion liquidated damages if it fails, which also shows that Microsoft is confident in winning antitrust approval. The transaction is expected to close by June 2023.

"Traditional monopoly law does not oppose natural monopoly, and regulatory concern is more about whether this transaction will unfairly disrupt the order of competition and cause damage to the rights and interests of consumers." You Yunting, a senior partner at Shanghai Dabang Law Firm, told first financial reporters, "From this point of view, Sony's acquisition of Bungie is also logical. ”

As people increasingly turn to digital entertainment during the pandemic, the gaming industry is reaping huge revenues, while the intensification of mergers and acquisitions will enrich the game libraries of giant companies.

Last month, Activision Blizzard's rival Take-Two said it would buy game development company Zynga for $11 billion in cash and stock deals.

According to data analytics firm Newzoo, the global gaming market has a total revenue of $180.3 billion in 2021 and is expected to generate $218.8 billion by 2024.

"Today's huge gaming audience dwarfs other forms of mass-market entertainment, and giant companies are taking advantage." Bing Gordon, a senior executive and venture capitalist in the video game industry, commented, "The landscape of the film and television entertainment industry and the streaming video industry is being reshaped, and the scale of gaming services can reach hundreds of millions of users. ”

Neil Campling, a technical analyst at brokerage Mirabaud Securities, wrote in an investor note: "15 years ago, there were about 200 million gamers worldwide, and today there are about 2.7 billion. Games have become the largest form of entertainment. ”