The video game market..a goldmine for technology companies and a relentless war for influence

Video games have become a big and rapidly growing business in recent years.

In January, Microsoft announced that it was planning to buy Activision Blizzard, one of the world's largest video game developers, which manufactures the popular Call F Duty, Warcraft and Candy Crush Saga.
The $68.7 billion deal, if completed, would make Microsoft the third-largest video game company by revenue, after Tencent and Sony, and allow Microsoft to gain more influence in how video games are made and distributed.
Microsoft has a market value, according to the latest estimates, of $2.3 trillion, and there is no doubt that this helped it to enter into a $68.7 billion acquisition. Technology monopolies, especially since the deal is the largest acquisition in the history of the video game industry.
In fact, Microsoft has largely escaped criticism of giant tech companies' monopoly, other than companies such as Apple, Meta (formerly Facebook) and Amazon.
Over the past years, the company has been steadily building its power in the world of video games. In 2021, it acquired Zenmax Media, which gave it control of Zenmax Media's subsidiaries, in addition to about 23 game studios.
Microsoft has also built its own brand of controllers for those games known as "Xbox", and the company recently announced that the subscription service for the "Xbox game" has reached 25 million subscribers since its launch in 2017.
In fact, the announced deal comes at a moment of decline for Activision Blizzard, as allegations of sexual harassment of female employees and misconduct sent the company's shares down more than 37 per cent, after hitting record levels last year.
In this context, engineer Per Atcons, an expert in the field of video game development, told Al-Eqtisadiah, "Today, video games are the most dynamic category in the field of entertainment across all platforms, and will play a major role in the development of Metaverse platforms, and the deal shows that Microsoft has a big bet. On the virtual worlds of the Internet, where people can work, play and socialize.”
Atcons adds, “The video game industry consolidation may not seem as dangerous as the retail monopoly in strategic goods, but Microsoft’s growing power in the multi-billion dollar gaming industry could reduce the company’s desire to work with other parties or companies, and it would be It is difficult for independent game producers to enter the market, and this greatly weakens the competitiveness in the markets.”
But he believes that Microsoft has great confidence that it will conclude that deal, and will overcome the regulatory obstacles, because there is a fine of three billion dollars, if the deal fails, which indicates the confidence of the Microsoft board of directors to win the acquisition.
It is certain that video games have become a large and rapidly growing business in recent years, even before the Corona pandemic, but the closures have enhanced the attractiveness of these games, whether for those who are experienced in them by giving them more time to play, or for beginners to overcome the boredom of staying at home for long hours, The revenue of the video game industry during 2020 grew by about 23 percent to reach nearly $180 billion.
To understand the nature of the current conflict in the market, as soon as Microsoft announced that deal, and although it had not yet taken place and still had many challenges ahead and not completed before 2023, the announcement led to a decline in the value of its competitor, the Japanese company Sony, by 13 percent, and it lost About $ 14 billion, or about 9 per cent of its total value, and it took a few days for Sony's shares to recover after it announced a deal to buy game developer "Bungee" for $ 3.7 billion.
For her part, Tracey Doris, a researcher in the field of artificial intelligence, told the Economist, "In the previous decade, video games constituted the price of revenue in Sony, which relied on televisions and portable music players. Today, video games and network services are Sony's largest sectors. It currently represents nearly a third of revenue and operating profit, and therefore competition with Microsoft is very fierce, because it determines the future of the two companies in the video game industry.”
And she adds, "Sony has so far refused to disclose its strategy in the field of video games after Microsoft announced its deal, but it is noted that the launch of the Sony Playstation 5 for sale in November 2020 almost coincided with Microsoft's launch of its latest Xbox devices, as the competition has extended for two decades between the two companies. Since last September, Sony has sold 13.4 million units of the Playstation 5 and this number would have been higher if there had been no shortage of semiconductors.
But investment expert Jack Simpson believes that the issue of competition between Microsoft and Sony is more complex than that.
He told Al-Iqtisadiah, "The profits in this industry are achieved, in large part, from exclusive content, meaning that you have games that are not available to your competitors, and it is likely that the coming period will witness intense competition between Sony and Microsoft, as games such as "Cool" have been classified. F Duty of Activision Blizzard, which has sold 400 million games since 2003, are among the top ten best-selling games of Sony's Playstation.
He added, "If Microsoft acquires Activision Blizzard, it may block Playstation from accessing Call F Duty, and although the head of Microsoft's video games tweeted pledging to Sony that the game will be available on Playstation, there are no guarantees." official about this happening after the acquisition is completed, or about other video games."
At the global level, it is expected that the revenue of the video game industry will reach 198 billion dollars in 2024, and the bulk of this growth will be from mobile games. Zynga for video games, with a value of 11 billion dollars, said that the market will witness a fierce struggle and huge acquisitions during the coming period, which opens the way for the entry of large players such as Apple, which, although it does not manufacture popular video games or produce consoles such as Playstation. And Xbox, it made operating profits from games last year, which amounted to $ 8.5 billion through its digital market.
In turn, he told Al-Eqtisadiah, the economist R. De Dan said, “The competition seems to be fierce between Microsoft and Sony, but the video game market is a real gold mine for many companies, including Apple. In the fiscal year 2020, customers spent a total of $54 billion on mobile games through the Apple Store.” Of this money, 31 percent came from China and 26 percent from the United States, and Apple's share of those sales amounted to $13 billion, or 5 percent of the company's total sales of $275 billion.
He adds, "The profits in this new market are illusory, and there is a violent and relentless cold war between the adults, and as is the case in other sectors of the digital economy, none of the giant companies can risk not being in that war or losing it."

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