Analyst: Industry Consolidation "Makes Financial Sense"
See Full ImageWith the recent news that Activision is making a play for Take-Two Interactive, the current state of the video game industry is once again a topic of discussion.
We asked EEDAR analyst Jesse Divnich what he thought of the possibility of the Call of Duty publisher snagging the Grand Theft Auto producer, and although he wouldn't comment on that particular scenario, he did talk about consolidation. In his eyes, it "just makes financial sense" if the industry wants to compete with the biggest entertainment corporations around. Said Divnich:
"Our industry will continue consolidate, it just makes financial sense. If there is anything we’ve learned over the last ten years it is that our industry is more than just about making video games, it’s about making entertainment. Companies such as Sony, Time Warner, and Disney are worth 4x that of our biggest company (Activision). To compete in the entertainment industry, our industry’s companies need to be larger and need access to greater resources.
I have no doubt in my mind that over the next 5 years are industry will continue to consolidate or they themselves be acquired by a media conglomerates. I prefer the former, as should we all."
Oh, I think we'll all agree on that last point. As gaming has become legitimate big business, we need to accept some inevitable changes, and hope those changes don't come at the expense of our entertainment. The sacrifice of quality is something the fans always fear but having our best companies snapped up by media conglomerates...well, that fills us with even more anxiety.
Tags: activision, take two, grand theft auto, eedar, jesse divnich
2/28/2011 11:55:32 AM Ben Dutka
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Comments (18 posts)
Nlayer
Monday, February 28, 2011 @ 12:48:53 PM
"On the other hand, such consolidation can also have a chilling effect on innovation and competition as it's often easier to squish your competition by purchasing them, and either absorbing them, or snuffing them out. "
I also share this belief. I'd rather have more small companies than one or two really large one. I'd rather not buy a game that has been overseen by one company. These large companies that buy small ones usually force them to do things they don't want to do. The only large company style that I don't mind, so far, is something like EA. Activision seems like they enjoy buying small companies, then closing them down and moving all the employees around within one of their larger offices, wasting valuable talent.
I'd rather have a small company with people who care about making a game Together instead of a large company with bits and pieces of random good talent. Ego's will clash that way.
But who knows, I could be absolutely wrong!
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Excelsior1
Monday, February 28, 2011 @ 1:52:25 PM
i agree with you about the price of oil being a huge drain on the economy. all the speculators driving it up is a real concern of mine.
i don't like this trend towards consolidation. ea and its download pass. activision with its $15 map packs, and annual sequels. i don't want that crap getting into other developers games.
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jaybiv
Monday, February 28, 2011 @ 8:41:21 PM
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maxpontiac
Monday, February 28, 2011 @ 1:17:27 PM
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Highlander
Monday, February 28, 2011 @ 1:28:11 PM
Expensive oil is like a huge money vacuum cleaner sucking money out of the economy.
4 up, 1 down
maxpontiac
Monday, February 28, 2011 @ 2:13:45 PM
While the economy is limping up in certain areas, it still remains on life support in others.
This new Middle East crisis is just another reason why the system need to get repaired. The entire world depends on each other at a level that should make anyone uncomfortable.
As an American, I am not thrilled with the prospect of the US Dollar possibly being dumped as a the World's Currency Reserve. You take the US Dollar out of that picture, the American buying power will die due to inflation (maybe hyperinflation). If my memory serves me correct, that's 2.3 trillion worth.
The system is broken. The band-aids are not working anymore, and now my head hurts.
Last edited by maxpontiac on 2/28/2011 2:28:26 PM
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Highlander
Monday, February 28, 2011 @ 3:22:52 PM
I'll stop there, because this isn't the place for a 1500 word rant about economics...LOL!
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Ben Dutka PSXE [Administrator]
Monday, February 28, 2011 @ 3:44:03 PM
Just use your eyes. Malls and restaurants are so jam-packed around here on weekends, you can't even move. Purely leisure and luxury; such little trips would be the first to go if people didn't have any money.
Seems to me that people aren't hurting in the slightest.
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Highlander
Monday, February 28, 2011 @ 3:50:56 PM
I think the reason for that is people are tired of being 'down, and many have killed a lot of their debt, and are enjoying living under the weight of less debt. People with little or no debt can better afford those little luxuries like eating out, and impulse buys. I just hope that people don't forget the lessons of the credit crunch and therefore keep a handle on their use of credit this time.
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maxpontiac
Monday, February 28, 2011 @ 4:10:55 PM
My whole point was not to drag this topic off it's course but just to bring up the fact that the system is in a mess. Gaming, when looking at the big picture is insignificant on the events that are on the horizon or occurring today.
Ben, I am not concerned over the expendable money that people have, especially around tax refund time. It's the local, state and federal end of things. Governments are running out of money nation wide. It's all going to come to a head soon enough, but hey. I'll stop.
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kraygen
Monday, February 28, 2011 @ 2:22:29 PM
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BikerSaint
Monday, February 28, 2011 @ 2:40:27 PM
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But once the big conglomerates get their money-grubbing claws into the smaller company, it then becomes only about all the Benjamin's waiting at the end of their speeding mass-produced assembly line.
And all the former artistry & flair got flushed right down the crapper.
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Lawless SXE
Monday, February 28, 2011 @ 3:01:17 PM
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However, often from a creative standpoint, it's a negative point. Smaller developers are closed down or pushed to the side. The projects that they love are sidelined for them to work at the publishers behest.
Being a part of a media conglomerate is dangerous. The developer could be forced to work on nothing but film or comic adaptions. Or, they could make a mark like Bethesda, who is wholly owned by Zenimax Media.
I know that the industry needs to grow, but I think the way that it is now is good enough. The large number of publishers makes for stronger competition, which pushes up quality. Start to chip away at that and anything could happen.
Peace.
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BIGRED15
Monday, February 28, 2011 @ 5:16:21 PM
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maxpontiac
Tuesday, March 01, 2011 @ 8:32:48 AM
It's quite the diversion, and it's obvious that I am not alone on the subject.
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Jotun
Thursday, March 03, 2011 @ 10:22:03 AM
As Ben said in reply to Highlander, now more than ever people search for cheaper, more affordable ways to entertain themselves during their downtime and can't afford huge vacations or day trips with their famalies, by and large. That's where malls, movies, and videogames come in. Why spend 4k to go to Disney for 5 days when you can spend $50-60 for a game you can play for months on end with your family? The Wii is a gigantic success exactly because so many famalies are looking for fun thigns to do together that don't cost a lot of money.
Last edited by Jotun on 3/3/2011 10:26:50 AM
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___________
Tuesday, March 01, 2011 @ 3:15:02 AM
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in fact if antivision buy out 2K ill eat my hat!
that would be a bigger surprise then me waking up tomorrow, and finding myself on another planet with a lambo parked on the driveway, and pigs serving me breakfast and reading the news paper!
just does not make financial sense for 2K.
if they were not doing well then ok, but they have one of the most innovative games in the history of games just about to release.
they have max payne 3, bioshock infinite, agent, GTA, RDR2, oh so many games thats going to be massive sellers for them!
id be the death of the industry too, 2K are one of the few third party publishers releasing great MP games.
without them, we would be stuck with antivision, EA and the only good publishers would be THQ and sony.
talk about a post apocalyptic world, antivision buying 2K would be the final nail in the coffin and completley destroy the industry!
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Highlander
Reply
Monday, February 28, 2011 @ 12:23:36 PM
Consolidation leads to bigger players, and fewer players. The more powerful the companies get, the less influence or power the consumers have. Activision kinda proves that point. With the drift towards digital downloads and other less expensive forms of distribution, I would have thought that actually, consolidation might stifle the market more than grow it. As the costs of operating in the market decrease, the need for consolidation also decreases.