Bloomberg is reporting that Activision Blizzard, with its $3 billion in cash and no debt, is looking to acquire game developer companies on the cheap as the economic downturn continues to worsen. This is scary.
Am I the only person who's concerned about the consolidation going on in the video game business? Activision surpassed Electronic Arts, formerly the world's largest developer, last year in its merger with Vivendi and now it wants to roll up even more developers to expand internationally and "fill holes in its product line," according to Bloomberg.
In the past five years alone, Electronic Arts has acquired developers JAMDAT Mobile, Mythic Entertainment, Phenomic Game Development, Digital Illusions CE, Headgate Studios, and VG Holding Corp. And it controls 15 percent of Ubisoft. All told, the acquisitions cost the company billions of dollars.
For its own part, Activision has been just as active. The company acquired Vicarious Visions, Toys for Bob, and Beenox in 2005 and followed that up in 2007 by acquiring a controlling stake in Bizarre Creations, which was trailed by its 2008 merger with Vivendi to become Activision Blizzard. In the meantime, its cash-on-hand has grown to more than $3 billion, and over the past four years, the company's revenue has grown from $1.4 billion to almost $3 billion annually.
Why does it matter that the two largest developers in the video game industry incur that much revenue each year? Because smaller developers like Capcom, Konami, Bethesda, and others have less chance than ever to compete. I understand capitalism, but the more we embrace these companies, the greater the chance that we will be left with an industry that mimics Hollywood: titles will be derivative, bank-breaking wastes of time.… Read more