Even though Microsoft is in the midst of closing the largest gaming acquisition deal of all time, it’s $69 billion all cash buyout of Activision-Blizzard, the company’s CEO of Gaming, Phil Spencer says Microsoft may not be done with acquisitions… even as regulators review its deal for ATVI.
Last week, while attending the Tokyo Game Show, Spencer was asked by CNBC if the company would pause its acquisition spree while waiting on approval of the big deal. Spencer said, “This is such a competitive market, I don’t think we get to press pause on anything.”
Competition for valuable gaming assets among video game giants has already resulted in record deal values and dollar totals this year, and there are few signs this activity is slowing down. Unless 2023 proves otherwise, which it clearly could, this year will be known as “the year of video game industry consolidation” …
And with so much consolidation occurring, and more likely to come, Spencer seems to be telling the market that there is no time to slow down its growth-by-acquisition model, as its competitors forge forward with the same plan.
Simply put, Microsoft may continue to acquire video game companies, publishers, and studios to outgrow the competition, regardless of the status of its ATVI deal.
There’s no time to wait.
Sony and Tencent, two of Microsoft’s largest competitors, have been on acquisition sprees of their own, recently teaming up to acquire 14.09% and 16.25% of FromSoftware, respectively. Then, within a week of this deal, Tencent announced a 49.9% stake in French gaming company, Ubisoft for $296 million.
Spencer’s response to the competition: “We strive to be a major player here…” Adding, Microsoft will continue to hunt for more gaming assets.
Of course, this could be fantastic news for investors in the space, as companies (investors) on the receiving end of buyouts have been the recipient of some hefty premiums.
But Microsoft is not the only big video game company that’s committed to continued growth-by-acquisition.
As CEO of Sony Interactive Gaming, Jim Ryan, noted earlier this summer, “We’ve been extremely active in the area of M&A and investment. The purpose of these investments is to increase our core strength at PlayStation Studios, but also to acquire expertise in areas of game development where historically we have not had a significant presence…
“New IP is the lifeblood of all entertainment. In terms of future M&A activity, the answer to that is we are not at all finished with our strategy of trying to grow PlayStation Studios inorganically…
“And to the extent that potential targets fit with our strategy, to the extent that potential targets allow us to accelerate the way in which we are able to deliver on our strategy, we will certainly consider farther M&A activity to add to our business portfolio.”
Last year, a record $85 billion in industry deals happened. It’s now expected that 2022 will smash that record (it already has) to the tune of $150 billion in mergers, acquisitions, IPOs, financing, and direct private investment.
With this massive consolidation occurring in the industry, it may be wise for individual retail (and private placement investors) to examine opportunities in the space.
If bidding wars for unique IP-owning gaming companies, or companies with patented technology occur, the potential for huge premiums paid to early investors could be rather high…
Even in a bear market for stocks.
Discover a video game company with patents in in-game commerce, HERE
Or read more of Phil Spencer’s comments, HERE