Tag: Merger

After months of going back and forth with multiple regulators globally, tech giant Microsoft has finally acquired video game company Activision Blizzard for a whopping US$69b, and is considered the most expensive video game merger in history, followed by Take-Two Interactive’s acquisition of Zynga (US$12.7b) and Tencent’s acquisition of Supercell (US$8.6b).

To understand how big this merger is, Activision Blizzard has five business units under it Activision Publishing, Blizzard Entertainment, King, Major League Gaming, and Activision Blizzard Studios. These units have produced several popular titles such as Call of Duty, Crash Bandicoot, Guitar Hero, Tony Hawk’s, Spyro, Skylanders, World of Warcraft, StarCraft, Diablo, Hearthstone, Heroes of the Storm, Overwatch, and Candy Crush Saga.

With APAC evidently becoming a lucrative market for gaming–especially with the region ranking first in esports followers globally according to YouGov–the question is: how does this global merger impact the overall gaming market in the region, and does it stand a chance to the staple regional companies in the region like Bandai Namco and HoYoverse?

Will the merger create significant change in APAC for more opportunities?

For Tessa Conrad, head of innovation at TBWA\Asia, the Microsoft-Activision Blizzard offers a ‘fascinating development’ opportunity in Asia-Pacific, in terms of how the tech giant can convince gamers in the region to make more titles accessible to its own console brand Xbox.

“It’s a fascinating development, especially given how PlayStation still reigns supreme across APAC as the console of choice versus Microsoft’s Xbox. Knowing that APAC holds the largest number of gamers globally, this majority is significant and this shift – if it includes Xbox-exclusive content – could sway some users,” she said.

With that being said, Conrad notes that innovation in gaming has been rapid with the pace set by cloud gaming which makes it much easier to play games you want, across any device (including regular computers and phones). This then means that the change likely won’t be as monumental as many ponder, as gamers are getting more and more choice around how they want to play various games.

“Therefore, this acquisition alone is unlikely to spur too much change in the short-term and I’d liken it to content streamers like Netflix, HBO, etc – it’ll boil down to what content is brought to the table before we truly see the effects. As more people opt to game without a console, the rights to games get blurrier as publishers and parent companies are forced to determine whether to go for larger game-specific profits or to use specific games to boost ownership of hardware and/or subscription services. The likes of this have been seen through early battles of streaming providers, SmartTV evolution and the like – so it’s mostly a known evolution,” she explained.

Meanwhile, Jamie Paraso, regional vice president of marketing at Mineski, commented that the merger doesn’t only offer business opportunities for Microsoft in the region but also how they can properly diversify their gaming portfolio, given the diverse demographic in APAC.

“In business merger and acquisitions usually happen geared for growth. Growth can be in the form of market share, expansion in terms geographic location, diversification of products and of course knowledge transfer. This but shows the merger is not just valuable company wise but also opens up more opportunities for the gaming market to grow and scale,” he said.

On standing a chance against regional video game companies

In APAC, regional publishers are gaining momentum in the region with many popular titles released such as HoYoVerse’s Genshin Impact and Honkai Star Impact, as well as Bandai Namco’s Dark Souls and Elden Ring. Moreover, other game companies such as CapCom and Riot Games are also ramping its marketing efforts in the region.

For TBWA’s Conrad, it will eventually boil down to what content they are going to consider making exclusive to Xbox – and how gamers react – to make its merger successful in the region, marketing-wise.

Stating an example how PlayStation’s The Last of Us game spawned a TV series and a PC release later on, she says that while these console battles will continue, there’s a good chance that Microsoft is taking notes on which big game titles they will make it exclusive to its own hardware.

“When you take into consideration the now globally successful TV series based on the game driving more people to want to play the game – you see how the long-term console battle can evolve. I’m sure Microsoft is taking note of this and will consider some big-name games that might temporarily be available only on Microsoft-owned hardware,” she says.

Meanwhile, for Mineski’s Paraso, Microsoft will still be able to compete with regional publishers in terms of how will they market themselves to earn value to their customers.

“In a time where there is a lot of expansion and scaling of Intellectual Property and Publisher business, diversification in terms of portfolio allows not just businesses to grow but gives way to an even more crucial aspect in today’s world which is value creation within communities, whereby the real and true winners are the end consumers,” he said.

Conrad also echoes this sentiment, noting that the success of the merger in APAC boils down to what content they can create for gamers in the region.

“Is it powerful? Is it captivating? How is the value for money? Is it a play-through or a community-focused game? These considerations and many more force gaming companies to adapt around each title they release in the short-term, to build to their long-term plan,” she explains.

However, she notes that with regional publishers sprouting up in the region, mergers to much larger game companies, and that game loyalty from gamers of said titles may change depending on what merger may ensue.

“I love seeing the regional publishers cropping up as well as the indie gaming companies because competition is often the best thing for consumers (like myself). With that said, more gaming studios have been getting bought up over the last few years so I wouldn’t be surprised if some of our regional players follow suit,” Conrad said.

She added, “This can be a positive when it comes to investing more into the making of the games (and the marketing around them) – but then can quickly isolate loyalists to these smaller shops if quality/gameplay rapidly shifts. It’s a careful balance to strike and no doubt will require ever-changing adjustments based on gamer feedback.”

Are marketing opportunities for the merger unclear?

Both Conrad and Paraso have agreed that while Microsoft’s plans for the region remain unclear, there is room for marketing opportunities the industry can ride into in terms of changing their strategies towards marketing ardware releases, subscriptions and individual games.

For Paraso, the opportunity that arises will revolve around creative campaigns that challenge the industry into how they can appease to the diverse APAC gamer demographic.

“New ways of working, new creative ideas, etc. this allows the market to both be challenged creatively and strategically but more importantly allows a plethora of expanded knowledge and learning to transpose within the region. This becomes very healthy in the long term whereby the region is stimulated to produce best in class output to win the hearts of end users and consumers,” he said.

Meanwhile, Conrad said that the trends that marketers should be looking at regardless of this merger revolve around three factors: gaming often is equal to socialization, gaming subcultures have radically evolved, and cloud gaming is the future.

“It used to be that being a “gamer” was largely perceived as liking games around war, fighting, racing or the like. Nintendo has likely been one of the biggest creators in opposition to that with the likes of Super Mario and Animal Crossing – but there’s now more than ever “different” types of games and people are showcasing a much wider palate for gaming. Subcultures like cozy, sandbox, puzzle, etc are giving a much wider view of what it means to be a gamer and game creators have done well in expanding content to suit those niches,” she said.

Conrad also added, “he fact that you no longer need a console or a proper PC gaming rig to play intensive games is still relatively new but it opens the doors to a lot of more casual gamers to delve deeper into more intense content. While the catalogue for cloud gaming still leaves plenty of room for improvement – it will grow and attract more users that don’t want to pay large amounts for the latest hardware. This will force console/rig creators to drastically evolve the tech to enable gaming in a completely new realm – which is exciting.”