The Acquisition of Activision: Anti-trust, E.U. Approval, U.K. Disapproval, and Sabotage

The Acquisition of Activision: Anti-trust, E.U. Approval, U.K. Disapproval, and Sabotage

Today I wanted to talk about something that I believe is overlooked in our society. That being the video game industry. Believe it or not, the video game industry is a gigantic piece of everyday consumer spending in the United States and will continue to be so for some time. According to Insider Intelligence and a cited blog from July 6^th, 2022 from The NPD Group. The U.S. consumer spending on video games or video game devices was at 55.5 billion dollars for the year 2022. Couple that with spending in the cinema box office industry at 26 billion dollars for 2022, and you will see where media may be heading. The video game industry is evolving faster and faster due to technological innovation being a key pillar and those that lead with change are beginning to consolidate power.

Hence, the acquisition of Activision Blizzard inc. by tech giant Microsoft. You may be wondering what all of this is about and to give you a quick rundown I will be as concise as possible. Microsoft is looking to acquire large video game publishers to sell the publisher’s product on their platform and bring the publisher under the corporate umbrella of Microsoft. Essentially, think of an author who writes a best selling novel every couple of years and the publisher has an exclusivity deal with that author to publish. Unlike a novel, video games are highly technical, very expensive to make, and require a great deal of support after the game is released. In the video game industry, if you have the best support and a very memorable experience in a video game, and you have an exclusive deal to sell that game only on your platform. You are the company outselling your competitors with the hardware you make. Owning a large publisher/producer of noteworthy and highly supported games gives you an advantage in a couple ways. One, you can have that video game exclusively restricted only to the gaming system you create (i.e., Xbox, or Microsoft games.). Two, you recognize strong sales from the actual game being sold to consumers. At this point Microsoft is having an issue with the acquisition of Activision because they are trying to consolidate the exclusivity piece of the puzzle. If you cannot play the hottest game on a different system other than the ones created by Microsoft then you must buy Microsoft hardware. That practice is seen as anti-consumer and leads to a slew of antitrust issues. Namely, a main competitor who has exclusivity contracts with Activision claiming Microsoft is abusive and attempting sabotage of their PlayStation platform.

Here is what I think. I remember when Disney was buying up brands of media we remember and there was little news or problems. There was also very little news on antitrust law violations. It started with Disney acquiring Marvel for 4 billion dollars in 2009 then moving on to Lucas Film (Star Wars Franchise and Indiana Jones creator) in 2012. In both instances the FTC approved the deals with little to no drama. Microsoft’s acquisition has been denied by the United Kingdom and, according to polygon.com, has the U.S. FTC vowing to block the merger legally. So why is it that movies and merchandise are easier to consolidate than video game companies? In my mind the answer is simple. Regulators do not understand the video game industry as well as they understand movies and T.V. To some video games are a useless distraction that has not changed since the days of Atari or Nintendo. While video games to others are a new form of interactable media that is just as important as film, T.V., or Print. I believe that this industry is having trouble self-regulating as well. Much like any rapidly growing industry. When you have trouble regulating yourself others will step in to do it for you. The solution to the problem? Congress should pass legislation for consumers and monitor the subscription service industry in regard to media, online services, and retail online consumerism. We live in an amazing time where technology is rapidly changing the way we live our lives. Someday you may find yourself enjoying a video game with someone you love just as much as that dark movie theater and popcorn.

Brendan A Sanchez