Consolidation strategies emerge for the big three in gaming: Nintendo seems unwilling to play
from the-inner-game department
We’ve talked a bit about industry consolidation through mergers and acquisitions (M&A) in the video game industry lately. The impetus for this discussion was a series of high-profile acquisitions for several notable companies, namely Microsoft and Sony. Microsoft recently acquired Zenimax for $7 billion and Activision Blizzard King for $69 billion, while Sony got into gaming by acquiring Bungie for $3.6 billion. These pages are of interest for the different approaches that these companies have taken in these acquisitions. Microsoft wondered if it would start creating Microsoft exclusivity for the products of its acquisitions, eventually landing on very broad exclusivity, while Sony took a much more passive approach and made it clear that Bungie games would always be cross-platform. For those of us interested in digital and technological economies and business models, this is something of interest.
But there is a name missing here. The traditional “Big 3” in gaming have long been Microsoft, Sony and Nintendo. Well, if you like real-world experiences in trading strategies, it looks like it’s going to get even more fascinating, because Nintendo is making some noise to take an entirely different path.
As Xbox and Sony enter an arms race, Nintendo is not so eager to take over a large number of game studios. At a recent investor meeting, Nintendo Chairman Shuntaro Furukawa was asked about acquiring video game companies – a timely question, that’s for sure.
“Our brand has been built on products made with dedication by our employees, and having a large number of people who do not have Nintendo DNA in our group would not be a plus,” Furukawa replied, as reported Bloomberg and Reuters.
Now, that shouldn’t really shock anyone who knows the industry and how Nintendo works. Whatever I want to say in my series of articles about how “Nintendo hates you” the company has also built a successful business in the space that relies on first-party game titles and franchises compared to Sony and Microsoft. However successful these others, for example, Microsoft and Sony simply don’t have a version of the Super Mario Bros. franchise. Nintendo has many of these : Super Mario Bros., Zelda/Link, star foxetc So Nintendo has always was less dependent on third-party titles compared to its competitors.
But the open question is whether this more insular focus will work in the post-pandemic period where industry consolidation is not just for the video game industry, but for many others. the harvard business review had a study published in 2021 that predicted what many others also have: the middle and post-pandemic economic space will be the one that strongly encourages mergers and acquisitions. Consolidation is the order of the day/year.
So now we have three distinct strategies from the Big 3 of the video game industry: Microsoft will do M&A and try the exclusivity route, Sony will do M&A and be more open and permissive or cross-platform releases, and Nintendo will simply largely choose not to play this game at all.
At its core, Nintendo is not a company built on corporate consolidation. It is a company that manufactures hardware and games for said hardware. It’s etched in his DNA.
And now we can sit back and see how it works in a post-pandemic world.
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Filed under: consolidation, video games
Companies: Microsoft, Nintendo, Sony