Since the early days of the pandemic, acquisitions in the video game industry have been happening at a breakneck pace. In an effort to grow market share by acquiring the competition, almost every major company involved in video games has been scooping up smaller players left and right.

There has been a flurry of large-cap gaming companies being acquired by mega-caps (like Microsoft’s pending $69 billion buyout of Activision-Blizzard and Sony’s now completed $3.6 billion acquisition of Bungie), but much of the recent M&A activity has shifted towards the smaller end of the market.

This trend, however, may soon come to an end. It’s rumored that Sony is looking to acquire Square Enix, which trades in Tokyo at a $5.4 billion market cap.

Earlier this year, Square Enix, best known for titles like Final Fantasy, Dragon Quest, and Kingdom Hearts, sold some of its assets to Embracer Group for $300 million. A price many in the industry saw as a coup for Embracer.

But, the assets that Square Enix still controls may be exactly what Sony is looking for. Additionally, an acquisition would allow Sony to better compete with Microsoft’s growth by acquisition model, helping to keep Sony atop the video game revenue mountain.

Gaming revenue, as of late June:

  • SONY: $24.9 billion.
  • MICROSOFT: $16.3 billion.
  • NINTENDO: $15.3 billion.
  • TENCENT: $13.9 billion.
  • ACTIVISION BLIZZARD: $8.8 billion.

Should the MSFT/ATVI deal close. the estimated combined gaming revenue would surpass that of Sony. However, should the Square Enix acquisition rumors come to fruition, and it’s just a rumor, Sony could regain its title as king of gaming revenue, albeit by a slim margin.

Even in this bear market, there seems to be no slowing down of M&A activity in the video game industry. 2022 is already the biggest year ever (dollar wise) for deals in the space. But even with this record already in the books, many experts believe tens of billions of dollars’ worth of deals may still close before the year is out.

Read more about the Sony/Square Enix rumors, HERE

Or discover other potential buyout targets, HERE