Gaming is a fast growing market and the growth is forecasted to continue, especially in the future metaverse. The US competition authority, Federal Trade Commission, has now taken the controversial decision to go to court to block Microsoft’s buying of video-game studio Activision Blizzard for USD 69 billion – the company’s biggest acquisition ever.
FTC thinks Microsoft could harm competition by making Activision games, like globally super popular “Call of Duty”, available only on Microsoft’s Xbox console. Microsoft’s answer is that the deal would expand competition.
Despite discussions focusing on controlling and regulating the power of big tech companies, the FTC decision to take Microsoft/Activision Blizzard deal to court has not only been met with applauds.
Commentators like influential Jessica E Lessin, editor-in-chief and founder of technology website The Information, writes that technology is upending the gaming world in so many ways and that she really don’t think this particular deal is going to hurt consumers. Others have said increasingly, the FTC’s position looks politically motivated.
FTC’ chair, Lina Khan, appointed in 2021 by president Joe Biden, in an interview with Vox earlier said that when companies don’t face robust competition, or when they’re allowed to just squash out competition, they can become too big to care.
They can impose all sorts of terms or contractual provisions that really just leave Americans in a position of take it or leave it. And in as much as these products and services, these digital tools, are becoming essential to navigating day-to-day life, we want to make sure that people have choices. They’re not just stuck in place with a company that can do whatever it wants, she told Vox.
Microsoft’s president, Brad Smith, tweeted that “we have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court.”
“We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers.”
Online measurement firm App Annie (now called data.ai) has in a forecast said “the gaming industry is evolving quickly and player empowerment is at the heart of the next wave of innovation. Play-to-earn models — games that allow players to monetize in an open economy — combined with metaverses which emphasize players’ self-expression will be the biggest drivers of mobile gaming innovation in 2022”.
Games analytics firm Newzoo reported that the cloud gaming market last year more than doubled its revenue compared to 2020. The company predicts that global games market will reach USD 218 billion in consumer spending by 2024 of which USD 116.4 billion is expected to be from mobile games. Cloud gaming will be USD 6.5 billion and esports USD 1.6 billion.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Satya Nadella, chairman and CEO of Microsoft, said when his company announced the deal to buy Activision Blizzard.
Globally today, 3 billion people play games, a market that is expected to grow to 4.5 billion by 2030, creating a USD200+ billion gaming industry, which is the largest and fastest-growing form of entertainment.
With this acquisition, Microsoft would become the world’s third biggest gaming company, in terms of revenue, behind Tencent and Sony. The acquisition would bring to Microsoft franchises like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming.
Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile and Activision Blizzard’s mobile business represents a significant presence and opportunity for Microsoft.
Last year, the European Commission approved a USD7.5 billion acquisition of ZeniMax Media Inc. by Microsoft Corporation, a deal that increased Microsoft’s list of first-party studios to 23.